The birth of the 21st Century’s World Wide Web (www) brought forward a new age of prospects and opportunities in terms of business. The onset of the Internet laid down new possibilities for the scope of trade in India. E-Business has emerged as one of the most exciting new avenues in the field of commerce, reviving, re-introducing and reestablishing itself in the Indian market today. It has become the standard operating procedure for a vast majority of companies. As of October 2014, India has over 270 million users of Internet. The penetration by the new entrants in the electronic business has been much faster in recent years. Everyday, India is witness to the launches of hundreds of websites. Consequently, establishing and operating an e-business model successfully requires technical, marketing and advertisement expertise and thus only very few are really successful.
Now, people often mistake E- Business is the same as E- Commerce. Let me clarify that first! E- commerce is a subset of E-business with a special focus on commerce. Commerce can broadly be defined as the exchange of goods and services for other goods and services or for cash payment. E-Commerce is all that is commercial which a company conducts through electronic technology. E-Commerce re-establishes the very foundations of competitiveness in terms of information content, delivery mechanisms and customer satisfaction. For instance, a few years back, to buy a book or a T-shirt, one would have to go to the market searching for a desirable product at the right price without any guarantee that the book or the T- shirt were actually being sold at the best price. But in today’s day and age, E-commerce offers the chance to completely change such outdated practices. Today, businesses are willingly coming to our doorstep; delivering the right product at the best price, almost always cheaper than the prices charged by brick and mortar shops. It has innovated the system of Indian Retail Business. Hence, arises the obvious question – How do online retailers offer the same products at lower prices? Before answering this question, I would like to share some interesting facts on the current happenings of E-Business in India and the world.
Alibaba’s initial public offering now ranks as the world’s biggest at $25 billion – (convert that into the India rupee and never stop counting the zeros)
India’s e-commerce market was worth about $3.8 billion in 2009, it went up to $12.6 billion in 2013.
Amazon goes one up on Flipkart, to invest $2 bn.
Amazon in talks to acquire Jabong; move to counter Flipkart’s Myntra buy ( Rs 2,000 crore).
E- Commerce is predicted to contribute over 60% of Online shopping by 2016.
Facebook and Google have over 13 crore unique visitors every month and generates over 1 billion search hits everyday on Google.
Flipkart sold over Rs 600 Crore in 10 hours on their ‘Big Billion Day’ while Snapdeal recorded sales of Rs.1 crore every minute on Snapdeal savings day.
More than 10 lakh domains booked in 2014. E-commerce market is expected to reach Rs 1,07,800 crores (US$24 billion) by the year 2015.
Let this sink in ! These facts are enough to give one goosebumps and incite them into attempting something along these lines. But as one studies in detail the amount of risk and expertise required to get it to multi-million level, it becomes quite apparent that replicating their business models is almost impracticable.
E-Commerce facilitates easy, convenient shopping from the comfort of home. It is faster, easier purchase. However, it must be kept in mind that the product is not immediately delivered and hence, instant gratification is not possible. But with the growing logistics industry in India, this barrier will soon also be removed in the near future. In the online business trend, the World Wide Web acts as an infrastructure to provide better opportunities to take your business to the next level. The combination of the Internet and E-commerce has introduced a new era for Indian business. Its emergence changed the traditional ways of doing business. Sellers do not have to hold huge stocks, thereby reducing the interest cost on inventory. They can get greater audience as and when their products are sold and stocks are liquidated. The drop ship model of logistics has made it convenient for retailers to connect the product to the consumer. The Cash On Delivery option is the average consumer’s preferred method for completing transactions. The 7 < 30 days return policy has enhanced customer confidence in online shopping. Larger variety of products seduces the customer towards online purchases. The online shop is open 24*7*52 hours as compared to 8*5*50 hours. Sellers have reduced their cost by reducing the salary and expenses paid to salesmen, monetizing their stocks faster to greater potential customers, selling the product at a price higher than the local market, liquidating their slow moving stocks, generating large volumes of sales, experiencing economies of scale and reducing sales efforts to convince the customer to buy the products, all these ultimately contribute to a more competitive price on e-commerce websites. Thus, it is in the best interests of small business owners to get into the world of E-business.
Nowadays, in the E-Business world, everyone talks about e-business models. In fact, most people discuss the structure of their ‘B-Plan’ without having the knowledge or awareness to hold firm opinions. People often confuse Business Model with Business Strategy , but both are entirely different from one another. The former deals with identifying revenue source, financing, detailing of product and services, customer base, market segment, and other business factors whereas the latter deals with competitive strategy. Some of the most popular business models are :
Business to Consumer (B2C) – Applications that provide an interface from businesses directly to their consumers. The most common example of a B2C application is the retail web site featuring the business’s products or services that can be directly purchased by the consumer. The importance of B2C varies dramatically from company to company. For some companies, reaching consumers has been the critical aspect of their business. For some companies that run a chain of retail stores, B2C should be one of the most important pieces of their Internet strategy. Even some companies that already have third parties to distribute, market, and sell their products are not that concerned about B2C. Many companies have never sold directly to consumers, realising it was clearly much more cost efficient to open a B2C site than to open a physical store, and began to lean towards B2C. In this case, it becomes necessary for them to address a whole lot issues, both big and small. But still B2C applications remain on top of the applications of the Internet as they are related directly to the masses.
Business to Business (B2B) – Forging new relationships between businesses has become critical for businesses to survive and blossom in today’s increasingly fast paced world. B2B applications provide new opportunities for businesses to leverage emerging technologies to build their businesses. Examples of B2B applications include facilitating transactions for goods/services between companies, selling goods/services to businesses on the Internet, and supplying chain integration. Another example is online procurement of goods of one company from another. Legacy integration is a huge issue in B2B applications. If existing applications such as EDI or EFT are extended to help the B2B process, then the existing legacy applications can be a big help in moving forward. On the other hand, if two companies want to trade data, but have dramatically different legacy systems, legacy integration can be quite a challenge to overcome. Other issues such as security, speed, and flexibility, also exist in B2B applications.
Business to Business to Consumer (B2B2C) is one of the emerging models of e-commerce. B2B2C is basically defined as using B2B to help support and rejuvenate companies attempting B2C. This is due to the fact that B2B has been an overwhelming financial success and B2C has not performed upto the expectations. This model is poised to do well as it capitalizes the success of B2B and the potential demand of B2C. eg : Judial, Grotel, are some famous among these. B2B provides a way for B2C companies to reduce costs and improve their B2C services. An example of B2B2C is developing products to help B2C companies increase profit by integrating inventory from the manufacturer to the distributor. An application that links one online catalog to another would be considered a B2B2C application as it capitalizes on both B2B and B2C.
Consumer to Consumer (C2C) – C2C is an interesting relatively new piece of the e-commerce world. C2C applications involve consumers conducting commerce directly with other consumers. This obviously means that the company facilitating the transaction must find some non-traditional revenge stream. This could be a small cut of the transaction, a service fee, advertising, or some combination of these. E-bay is an excellent example of a C2C application that is extremely popular with consumers. Olx and quikr are doing great in this model.
Customer to Business to Consumer (C2B2C) involves consumers conducting transactions with other consumers using a business as an intermediary. www.autotrader.com is the best example for this sort of application. This site facilitates the transactions of selling used cars between consumers, but also contains an inventory of used cars to sell to the consumer.
Auction Model – The Web offers many different kinds of auction sites. Auction sites act as forums through which Internet users can log-on and assume the role of either bidder or seller. As a seller, one can post an item to sell, the minimum price he requires to sell his item and a deadline to close the auction. As a bidder, one can search the site for availability of the item he is seeking, view the current bidding activity and place a bid. Also there are sites designed to search existing auction sites in order to pinpoint the lowest prices on an available item. Although auction sites usually require a commission on sales, these sites are only a forum for online buying and selling. They get the commission from both parties once the deal is over.
Apart from above categorized e-commerce applications, there are several specific models of businesses operating, I have discovered some very potential innovative business models that can be thought about such as Social Tagging Business model, Coupons and Flash Sales Business Model, Online Brand Reputation Management Model, Health Center Business Model, Mobile Commerce Business Model, Celebration Connection Business Model , Night Delivery Business Model and Collaborative Business Models. These have a huge potential if someone really has the passion to make it BIG.
With my experience in different E-commerce websites, lets understand the Indian Consumer mindset before we set any business model. Most Indian buyer prefers Cash on Delivery option. People still hesitate paying through credit cards or net banking. They feel COD a safer option (so do I ). The statistics have shown that online purchasing is more frequent in South India, then North, Central, West and finally East India, in the ascending order. A consumer is likely to purchase a product even if it is 10 rupee less than the competitor. Most of them are price centric than the delivery time. Its important to acquire the customer at the early stage and build the trust on the website. Fashion Industry followed by Electronics Industry have shown a tremendous growth in E- Business today. It is always suggested to look for discount coupons before buying any product online. Generally, many websites provide coupon to reduce the pinch on your pocket. A good packing of the consumer products is critical for safe delivery of the products. Remember first impression is the last impression.
Now, there are a lot more new companies companies coming up to facilitate logistics to ecommerce. However, one must be careful is selecting the right logistics partner and the negotiations of rates. Before staring up anything, make sure you read the government rules and regulations properly. There are several ways to reduce your start up capital investment. Advertisements at the right time and in the right medium is extremely critical for survival. Social media and mobile devices are propelling Indian e-commerce and online shopping into massive growth. There are millions of Facebook users in India and almost a billion wireless subscribers. The tier 2 and tier 3 cities have a huge scope of business. It is equally important to know the possibilities Exit plan of the business to maximize the gain out of the business plan or to reduce the risk of investment.
Before choosing ant E-Busniess model you should not think of earning profits from the very first day. Profits should be thought about after gaining handful experience of 1-2 years. Customer acquisition and implementing fail-proof processes of business could be the initial objectives. Think of improving consumer experience through the technological improvements and quality staff. Human resource is the biggest assets of any E-Business model. After having a considerable people in the organization it is advisable to employee a HR manager for quality asset building. It has been seen that the attrition and hiring ratio is high in E-Business organization. Name any successful website , Flipkart, Amazon, Snapdeal, Ebay , Jabong, Infibeam etc, all of them has 1000+ employees. India has limited skilled manpower, yet its growing every year.
E- Commerce experts and analysts believe in a promising, growing, and glorious future for the Industry in the 21st Century in India. E- commerce interface has been living upto the users expectations in many ways and has a huge foreseeable potential to drive the Economy’s GDP. E- Business continues to grow with rapid innovations and experts predict that online sales will be increasing 100% in 2015. I believe that the future of E- commerce lies in its customized user experience and value addition. For a successful E- Business Model one must think deeply on customer satisfaction, user experience, USP, innovation in process, social media, mobile commerce and most importantly the value addition to the society in the long run.
About the Writer:
Saket Toshniwal is a freelance writer, an E-market expert, an young entrepreneur, and a student of St. Xaviers College, Kolkata. He has been affiliated with the different ecommerce market places in India like Flipkart, Amazon.in, Snapdeal, Ebay , Pepperfry, Paytm, Rediff, Shopclues , Ask me Bazar.com , Bazao.com , Sareeshut.com and many such websites to sell multi-brand products across the world. He has been awarded 2 times for the Best Entrepreneur at various National Competitions and has won the Business Plan Competition several times. His keeps interests in Swimming, reading , researching and participating in team events. He has done his Schooling from The Assam Valley School.