E-Commerce

or
Internet Marketing
A Business Review from Indian Context

Abhinav Mehra
Chitkara Business School,
Chitkara University ( Punjab)

Introduction
The E-commerce Industry in India has come a long way
since its early days. The market has matured and new
players have entered the market space. In the present
dynamic scenario, e-commerce market in the B2C space
is growing in demand as well as in the array of services.
The transition to online purchasing from traditional
purchasing is taking a long time in the Indian market. E
commerce includes not only buying and selling goods
over Internet, but also various business processes within
individual organizations that support the goal. As with ecommerce, e-business (electronic business) also has a
number of different definitions and is used in a number of
different contexts.
The technology plays a vital role in improving the quality
of services provided by the business units. One of the
technologies which really brought information revolution
in the society is Internet Technology and is rightly
regarded as the third wave of revolution after agricultural
and industrial revolution. The cutting edge for business
today is e-Commerce. The effects of e-commerce are
already appearing in all areas of business, from customer
service to new product design. It facilitates new types of
information based business processes for reaching and

interacting with customers like online advertising and

marketing, online order taking and online customer
service etc. It can also reduce cost in managing orders and
interacting with a wide range of suppliers and trading
partners, areas that typically add significant overheads to
the cost of products and services [Rajiv Rastogi].
Businesses are increasingly using the Internet for
commercial activities. The ubiquitous nature of the
Internet and its wide global access has made it an
extremely effective mode of communication between
businesses and customers. Thompson (2005) introduced
that the growth of Internet technology has enormous
potential as it reduces the costs of product and service
delivery and extends geographical boundaries in bringing
buyers and sellers together.
Devendra (2012) defined that electronic commerce,
commonly known as e-commerce or e-Commerce,
consists of the buying and selling of products or services
over electronic system such as internet and other
computer network. Intent is the technology for ecommerce as it offers easier ways to access companies
and individuals at very low cost n order to carry out dayto-day business transactions. Search engine marketing
(SEM) is a form of web advertising that companies use to
promote their products and services on search engine
results pages (SERPs). SEM is focused on the effective

use of search engine advertisements (a.k.a., sponsored

results, sponsored links) that appear on the SERP. SEM
which allows firms to target consumers by placing ads on
search engines has proven to be an effective audience
acquisition strategy. Unlike traditional online advertising,
advertisers pay only when users actually click on an ad
when successfully implemented, SEM can generate
steady traffic levels and tremendous return on investment
(ROI).
Boughton (2005) remarked that most online advertising
campaigns have two main objectives: brand development
and direct response. Selecting an appropriate marketing
channel ultimately depends on which strategies will
provide the greatest ROI. Firms that offer products and
services through the Web clearly stand to gain from
Internet advertising because their prospective customers
are already online. Non web-based companies may
choose online marketing in order to increase exposure and
promote brand. SEM allows companies to closely track
their ROI from an audience acquisition standpoint. SEM
delivers ads to users who are already searching for the
products or services that an advertiser is offering,
meaning that theoretically, they are only receiving
qualified traffic. Unlike traditional banner ads, advertisers
are charged based on the number of clicks they receive,
not on the number of impressions (number of times an ad

appears). Furthermore, many marketing campaigns place

a great deal of importance on branding. PPC ads can be
very effective in terms of driving home a brand name
because they appear alongside search results for
thousands of different search terms. SEM is a form of
Internet marketing that involves the promotion of
websites by increasing their visibility in SERP through
optimization (both on-page and off-page) as well as
through advertising (paid placements, contextual
advertising, and paid inclusions).
This paper deals the conceptual knowledge of search
engine marketing or e-commerce, literature review,
current and future aspects of e-commerce in Indian
context. This paper discussed about the top motivator
factors of shopping online. The present development
would be a valuable addition to researcher and
academicians; and useful theory for practitioners,
advertisers, and entrepreneurs. The further research areas
are; the quality of sponsored ad text, ad position, Search
Engine Optimization (SEO), PageRank, yellow pages, bid
management etc.
Electronic commerce or e-commerce refers to a wide
range of online business activities for products and
services. It also pertains to any form of business
transaction in which the parties interact electronically

rather than by physical exchanges or direct physical

contact.
A more complete definition is: E-commerce is the use of
electronic communications and digital information
processing technology in business transactions to create,
transform, and redefine relationships for value creation
between or among organizations, and between
organizations and individuals.

DIFFERENT TYPE OF E-COMMERCE:

Waghmare G.T. (2012) has defined the following types of ecommerce:
(i) B2B E-Commerce: Companies doing business with each
other such as manufacturers selling to distributors and
wholesalers selling to retailers. Pricing is based on quantity of
order and is often negotiable.
(ii) B2C E-Commerce: Businesses selling to the general public
typically through cataloes utilizing shopping cart software. By
dollar volume, B2B takes the prize, however B2C is really what
the average Joe has in mind with regards to ecommerce as a
whole. for example indiatimes.com.
(iii) C2C E-Commerce: There are many sites offering free
classifieds, auctions, and forums where individuals can buy and
sell thanks to online payment systems like PayPal where people
can send and receive money online with ease. eBay's auction
service is a great example of where customer-to customer
transactions take place every day.
(iv) Others: G2G (Government-to-Government), G2E
(Government-to-Employee), G2B (Government-to-Business),
B2G (Business-to-Government).

E-COMMERCE IN INDIA
For developing countries like India, e-commerce offers
considerable opportunity. E-commerce in India is still in
growing stage, but even the most-pessimistic projections
indicate a boom. It is believed that low cost of personal
computers, a growing installed base for Internet use, and
an increasingly competitive Internet Service Provider
(ISP) market will help fuel e-commerce growth in Asias
second most populous nation. The first e-commerce site in
India was rediff.com. It was one of the most trafficked
portals for both Indian and non-residents Indians. It
provided a wealth of Indian-related business news a reach
engine, e-commerce and web solution services. The past 2
years have seen a rise in the number of companies
enabling e-commerce technologies and the internet in
India. Major Indian portal sites have also shifted towards
e-commerce instead of depending on advertising
revenues.
The web communities built around these portal sites with
content have been effectively targeted to sell everything
from event and mouse tickets the grocery and computers.
The major in this services being Rediff.com and the net
and India plaza with started a shopping section after In
spite of RBI regulation low internet usage e-commerce
sites have popped up everywhere hawking things like
groceries, bakery items, gifts, books, audio and video

cassettes, computer etc. none of the major players have

been deterred by the low PC penetration and credit card.

FUTURE OF E-COMMERCE IN INDIA

India is developing rapidly and if development is to be
measured, how can we ignore the role of e commerce in
it. The internet user base in India might still be a mere 100
million which is much less when compared to its
penetration in the US or UK but it's surely expanding at
an alarming rate. The number of new entrants in this
sphere is escalating daily and with growth rate reaching
its zenith it can be presumed that in years to come,
customary retailers will feel the need to switch to online
business. Insights into increasing demand for broadband
services, rising standards of living, availability of wider
product ranges, reduced prices and busy lifestyles reveal
this fact more prominently thereby giving way to online
deals on gift vouchers. Going by the statistics, the E
commerce market in India was worth about $2.5 billion in
2009. It rose to $8.5 billion by 2011 thus depicting a
definite surge in the last two years. According to a
statement released by the Internet and Mobile Association
of India (IAMAI), these figures would reach up to $12
billion by 2012! To understand this scenario, we can
divide E-commerce into three broad categories which
include physical services, physical goods and virtual

goods. Another category that is gradually making its mark

is the local commerce (couponing, yellow pages,
classifieds etc.) which offers significant overlaps with Ecommerce. The 1st category of physical services is
definitely the major contributor which includes travel
ticketing, jobs, matrimonial and event management
websites with travel sites accounting for 75% of all Ecommerce industries! It provides attractive deals too.
The 2nd category of physical goods is the one currently
gaining considerable attention, thanks to the hype created
by new startups/stores being launched daily. Leaders in
this division are Flipkart, Infibeam, Homeshop18,
Indiatimes, Naaptol, Letsbuy etc. each of which offers
everything from mobile phones to pet food.
The 3rd and final category of virtual goods and gift
vouchers like online music, software's, movies, games,
Taj Hotel gift vouchers, Reebok gift vouchers, Pizza Hut
gift vouchers etc. have been relatively lagging behind in
India as compared to Europe and America, primarily due
to piracy concerns and the social perspective of Indians.
But the scenario is expected to change with the digital
downloads segment expected to grow in the Indian Ecommerce market due to the explosion of mobile devices
and the services available over the Internet at special
discounts.

Segments that recorded growth

Online channels are playing an important role of
connecting with consumers of unexplored markets. The
journey of online spending that started with an increasing
number of buyers of travel and holiday plans in the last
decade has now extended to an increase in spends on
household appliances and luxury products. While
segments like apparel and luxury products have registered
unprecedented growth in 2011, jewellery, electronic
appliances and hardware products have shown promising
growth trends as well. Indian consumers are showing
greater appetite to transact online, fuelling the ecommerce boom, said Anuj Kumar, CEO, Affle.
The report also found that coupon sites are rapidly
gaining popularity, with 16.5 per cent of the Indian online
population visiting the category in November 2011 27.2
million online users in India aged 15 and older accessed
the retail category from a home or work computer, an
increase of 18 per cent from the previous year, as
consumers continue to turn to the web to shop for and
purchase items and retailers continue to increase their
online visibility through active marketing campaigns.
Increase in shoppers of the coupon sites indicate that
pricing is playing the role of catalyst in bringing more and
more shoppers online. Many of these shoppers have
shown affinity towards affordable online goods, which
was priced lesser than the market price. Some of the

largest retail subcategories revealed that coupons category

was the largest with 7.6 million visitors as consumers
rapidly adopt daily deal sites. Consumer electronics
ranked next with 7.1 million visitors, growing at 12 per
cent over the previous year, while 5.8 million online users
visited comparison shopping sites, an increase of 25 per
cent from the previous year.

INDIAs PROSPECTS IN E-COMMERCE

1. OPPORTUNITY FOR RETAILERS:
A retailer can save his existence by linking his business with the on-line
distribution. By doing so, they can make available much additional
information about various things to the consumers, meet electronic orders
and be in touch with the consumers all the time. Therefore, E-Commerce is a
good opportunity.
2.

OPPORTUNITY FOR WHOLE SALERS/DISTRIBUTER:

In the world of Ecommerce the existence of the wholesalers is at the
greatest risk because the producer can easily ignore them and sell their
goods to the retailers and the consumers. In such a situation those
wholesalers can take advantage of E-Commerce who are capable of
establishing contractors with reputed producers and linking their business
with the on- line.

3.

OPPORTUNITY FOR PRODUCERS:

Producers can take advantages of e-commerce by linking themselves with
on-line, by giving better information about their products to the other links
in the business chain and
by a having a brand identity.

4. OPPORTUNITY FOR PEOPLE:

As more people are getting linked with E-commerce, the demand for centre
providing internet facility or cyber cafe is also increasing. Hence, the people
who wish to take advantage of it can establish cyber and have their benefits.

Essential factors for growth of E-Commerce in India:

Customer

convenience: By providing Cash on delivery payment

option service to customers.
Replacement guarantee: Should be Offers 30 day replacement
guarantee to their customers.
Reach: Enabling mobile-capable sites and supporting M-Commerce
services.
Location based services: Since customers these days are always on
the move, promoting the right product at the right time and location
becomes an integral aspect
Multiple payment option: standard credit cards, debit cards and bank
payments option should be there.
Right content: Getting the right content and targeting customers with
crisp and relevant information is of utmost importance to users on the
move.
Price comparison: Providers offering instant price comparison are
highly popular amongst the price conscious customers.
Shipment option: Low cost shipment should be there. The
convenience of collecting orders post work while returning home should
be there.
Logistical challenges: In India, the geographical spread throws
logistical challenges. The kind of products being offered by providers
should determine the logistics planning.
Legal challenges: There should be legal requirement of generating
invoices for online transactions.
Quick Service: Timely service provided by the company.
Terms and condition: T & C should be clear & realistic.

 Quality: The product quality should be same as shown on the portal.

Customer care centre: A dedicated 24/7 customer care centre should
be there.

EXPERTS VIEW ABOUT FUTURE GROWTH OF

E-COMMERCE IN INDIA:
Leading e-commerce portals in the country include Flipkart.com,
Futurebazaar.com, Ebay.in, Homeshop18.com, Snapdeal.com,
Indiaplaza.com, Starcj.com, Amazon.com, Fashionandyou.com,
Rediffshopping.com., inkfruit.com, myntra.com, futurebazaar.com,
yebhi.com, zoomin.com and hushbabies.com.
Internet on mobile phones and e-commerce are set to lead the trend in
the IT sector, Google India MD Rajan Anandan saidon June 2012.
Speaking at the 13th annual Confluence at the Indian Institute of
Management, Ahmedabad (IIM-A) here, Anandan identified trends such
as mobile internet, social networking, e-commerce and internet video as
being the most important trends for any technology company to take
advantage of.
"We have seen 80-90 per cent growth in traffic month-on-month over the
last three quarters. We have been gradually increasing the pace of hiring
and over the next six months, we will add about 500 people," Snapdeal
Chief Executive Director Kunal Behl said.
"With the growing e-commerce industry in the country and major
international players entering the market, the number of job offers would
certainly look up," e-commerce firm Homeshop18.com CEO and
founder Sundeep Malhotra said.
The online retail segment is expected to report strong growth in the
coming years owing to growing Internet consumer base thanks to
increasing use of smartphones, laptops/PCs and availability of Internet
in the remotest part of the country.
"e-commerce space is a booming space as Internet audience are likely to
double in the next two-three years and this industry will require talent
from various sectors like technology, product, analytics, sourcing,
general management talent, merchandising and marketing," online
retailer Fashionandyou.com co-founder and CEO Pearl Uppal said.

Another e-commerce player HomeShop18.com has grown by over 70

per cent in headcount terms in 2011 over the last year and is further
poised to grow by a similar percentage this year, including an
augmentation of the technology team.
Meanwhile, the e-commerce sector is fast hiring the best talent available
in the country and this placement season saw e-commerce companies
recruiting big numbers at premier institutions like the Indian Institutes of
Management (IIMs) and Indian Institute of Technology (IITs).
According to a report by industry body Assocham, online retail segment
is likely to be worth Rs 7,000 crore by 2015 due to rising broadband
availability and increasing Internet penetration, from the Rs 2,000 crore
at present. It is growing at an annual rate of 35 per cent.

Literature Review
Literature on web theory is scant because it is a relatively a new area and
the technologists at the forefront of Web design are typically not
sufficiently academically inclined to formulate the relevant theories
(Day, 1997). While previous research has examined Internet usage (Teo,
Lim, & Lai, 1999), commercial websites (Gonzalez and Palacios, 2004),
website design (Kim, Shaw, & Schneider, 2003), website effectiveness
from the consumers perspective (Bell & Tang, 1998), pricing paid
placements on search engine (Sen et. al., 2008), and bidding (Bernard
and Simone, 2011). This form of online advertising emerged in 1998
[Fain and Pedersen 2006], rapidly has become the central business
model of the major search engines, and is one of the most rapidly
growing segments of the online marketing area.
Search engine has become a necessity for people to surf the web [HsienTsung Chang, 2011]. It is a simple user interface is designed. Any user
simply fills in several fields and the system makes the decision about
what to find, where to search and how to look at. The threshold of search
is lowered. SEM is an internet marketing model aiming at promoting the
ranking of websites in the search engine's search results page which can
make a web site introduce into more web users and website traffic
[iProspect 2008]. (2011) explained about exploration of SEO technology
applied in internet marketing, (2011) studied the importance of website
quality towards the success or failure of any e-vendor. Khan and (2009)
studied that the quality of internet banking (i-banking) services in India
from customers perspective. In (2007) carried out a research to find the
i-banking adoption by the banks in India. Thus, it is high time that India
should act fast and decisively in order to use the growing electronic
trade to our advantage.

E-Commerce in India
The internetworldstates.com shows that Asia has 44.8% internet users in
the world distributed by world regions 2012 Q2
Waghmare (2012) pointed out that many countries in Asia are taking
advantage of Ecommerce through opening of economies, which is
essential for promoting competition and diffusion of Internet
technologies. Large enough to have a critical mass of 10 to 20 million
users to be able to make an impact on e-commerce and e-governance. In
the next 3 to 5 years, India will have 30 to 70 million Internet users
which will equal, if not surpass, many of the developed countries.
Internet economy will then become more meaningful in India. With the
rapid expansion of internet, Ecommerce, is set to play a very important
role in the 21st century, the new opportunities that will be thrown open,
will be accessible to both large corporations and small companies. A
recent report by the Internet and Mobile Association of India (IMAI)
reveals that India a e-commerce market is growing at an average rate of
70 percent annually, and has grown over 500 percent in the past three
years alone [geocart.com].
Zia and Manish (2012) proposed that ecommerce revenues in India will
increase by more than five times by 2016, jumping from US$1.6 billion
in 2012 to US$8.8 billion in 2016

Economic times (2013) stated that the next billion users will come from
emerging markets, with at least a fourth from India. Half of those
without net access now live in just 5 countries: India Indonesia, China,
Pakistan & Bangladesh. Another newspaper Times of india (2013)
written that leading online stores such as Indiatimes Shopping, Jabong
and Myntra say that almost half, and in some cases more than half, of
their sales now come from tier-II and tier-III towns and cities. E-

commerce in the country grew 128 per cent year-on-year last year, with
25 per cent traffic coming from places outside the top 20 cities, it says.

Shoppers in Metropolitan India

Zia and Manish (2012) found that, currently, shoppers in metropolitan
India are driving eCommerce: These consumers are primarily buying
travel, consumer electronics, and books online. And although spending
per online buyer remains low, some 59% of online consumers in
metropolitan India already make purchases online at least monthly.

Shoppers in non-metropolitan India

Consumers in nonmetropolitan areas will also help fuel growth; unlike
online consumers in cities, they are more likely to shop online for goods
that are unavailable at local stores. Zia and Manish (2012) estimated that
eCommerce retailers in India are expanding their offerings to the online
population outside metropolitan India and are investing heavily in the
infrastructure to support these cities.10 Online apparel retailer
Myntra.com is already seeing demand for its products outside
metropolitan India: 50% of its sales are outside Indias 10 biggest cities.
To widen their reach, for example, multiple retailers are building
warehouses outside central locations; testing shipping options that work
in rural areas; offering payment options like cash on delivery (COD) that
provide options for the unbanked; and subsequently marketing these to
semi-urban and rural consumers.
Moreover, Aditya Kulkarni , Product Manager at Google (Jan 15, 2013)
pointed out that India maybe behind the curve on the numbers, but they
are growing fast, and when they reach the 200-300 million online
shoppers, you can safely assume that there will at least be as many eCommerce players in India as there are in China. That is to say, there
will be at least 10-20 successful, large and growing e-Commerce
companies in India over the next few years!. I think the successful
companies of tomorrow are going to look different from the ones that are

on the top now. Theres going to be 100-200 million new e-Commerce

customers that are going to be up for grabs in the next few years.
Another way to look at it is that in 80% of the e-Commerce shoppers of
2016 still are available to be nabbed by e-Commerce sites. And theyre
going to come from predominantly two categories. First, from Tier-2 and
Tier-3 cities as the logistics and connectivity there improve and second,
young people that get jobs/pocket-money and start shopping online.

Major Search Engines in the Market

By distinct search engines, means that search engines, portals, and
websites who have alliances and who solicit bids for paid placements
from a single source are treated as one search engine. For instance, by
successfully bidding for a paid link with Overture exposes a seller to
traffic from several websites, including MSN, Yahoo!, AltaVista,
InfoSpace, AlltheWeb and NetZero. There are various search engines by
content/topic such as Baidu (Chinese, Japanese), Bing, Blekko, Google,
Sogou (Chinese), Soso.com (Chinese), Volunia, WireDoo, Yahoo!,
Yandex (Russian), Yebol, and Yodao (Chinese). Among PPC providers,
Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are
the three largest network operators, and all three operate under a bidbased model.

The Advantages and Disadvantages of Internet

Marketing
Melody and Robert (2001) remarked that the Internet can provide timely
information to customers because of its ability for instant
communication, and its availability 24 hours a day, 7 days a week [Lane,
1996]. On-line marketing offers more choices and flexibility
[Lamoureux, 1997] and, at the same time, eliminates huge inventories,
storage costs, utilities, space rental, etc., [Avery, 1997]. People tend to
associate Internet marketing with direct marketing because companies

participating in online marketing usually shortened the supply chain

[Edwards, et al., 1998] and reduced commission and operating costs.
The ability to serve as both a transaction medium and a physical
distribution medium for certain goods is a unique feature of Internet
marketing. Such advantages can be best realized by companies that
provide digital products/services such as software, music, news,
consulting services, online ticketing and reservations, telemedicine,
insurance, banking, stock brokerage, tax, and other financial service
industries. Using the Internet as the distribution channel can reduce not
only the delivery cost substantially, but also ensures instant delivery of
products/services.
Moreover, Ruckman (2012) suggested that Internet research becomes an
increasingly important tool during the purchasing process; more
marketers are seeing the advantages too. Its a win-win situation.
Marketing departments are investing more into online marketing today
because its:
Attractive to a significant segment of the demographics for most
customer profiles. It can effectively reach the target customer.
Faster and less expensive to conduct direct marketing campaigns
Measurable, which means that successes are identifiable and
repeatable
Open 24-hours a day
Cost-effective, in the long run.
examination, Internet marketing maybe less appropriate. While internet
marketing cannot allow prospective buyers to touch, or smell or taste or
'try on' the products, However a survey of consumers of cosmetics
products shows that email marketing can be used to interest a consumer
to visit a store to try a product or to speak with sales representatives
[Martin at el (2003)]. Some of the disadvantages of e-Marketing are
dependability on technology, Security, privacy issues, Maintenance costs
due to a constantly evolving environment, Higher transparency of
pricing and increased price competition, and worldwide competition
through globalization.

Top Motivators for Shopping Online

Times of India (February 12, 2013) has published that top motivators for shopping
online which include cash back guarantee, cash on delivery, fast delivery,
substantial discounts compared to retail, and access to branded products, while
barriers include inability to touch and try products before purchase, fear of faulty
products, apprehension of posting personal and financial details online and
inability to bargain

Conclusions and Recommendations

This paper deals the conceptual knowledge of search engine marketing

or e-commerce, literature review, current and future aspects of ecommerce in Indian context. This paper discussed about the top
motivator factors of shopping online. The present development would be
a valuable addition to researcher and academicians; and useful theory for
practitioners, advertisers, and entrepreneurs. Some of the disadvantages
of e-Marketing are dependability on technology, Security, privacy issues,
Maintenance costs due to a constantly evolving environment, Higher
transparency of pricing and increased price competition, and worldwide
competition through globalization. While considering the aforesaid
limitations; advertisers and end-users can effectively use this modern
platform to make life easier and faster. In the next 3 to 5 years, India will
have 30 to 70 million Internet users which will equal, if not surpass,
many of the developed countries. Internet economy will then become
more meaningful in India. With the rapid expansion of internet,
Ecommerce, is set to play a very important role in the 21st century, the
new opportunities that will be thrown open, will be accessible to both
large corporations and small companies [Waghmare (2012)]. Karoor
(2012) explained that Ecommerce encapsulates many of the dynamics of
21st century of India. The potential huge and wit and energy of the
entrepreneurs in the sector is impressive. Online commerce in India is
destined to grow both in revenue and geographic reach. The further
research areas in ecommerce are; the quality of sponsored ad text, ad
position, Search Engine Optimization (SEO), PageRank, yellow pages,
and bid management etc.
The future of E-Commerce is difficult to predict. There are various
segments that would grow in the future like: Travel and Tourism,
electronic appliances, hardware products and apparel. There are also
some essential factors which will significantly contribute to the boom of
the E-Commerce industry in India i.e. replacement guarantee, MCommerce services, location based services, multiple payment option,
right content, shipment option, legal requirement of generating invoices
for online transactions, quick Service, T & C should be clear & realistic,
the product quality should be same as shown on the portal, dedicated

24/7 customer care centre should be there. We found various types of

opportunities for retailers, wholesalers/distributors, producers and also
for people. Retailers meet electronic orders and should be in touch with
the consumers all the time. Wholesalers can take advantage of ECommerce who are capable of establishing contractors with reputed
producers and linking their business with the on- line. Producers can
also linking themselves with on-line, by giving better information about
their products to the other links in the business chain and by a having a
brand identity. As more people are getting linked with E-commerce, the
demand for centre providing internet facility or cyber cafe is also
increasing. Hence, the people who wish to take advantage of it can
establish cyber and have their benefits. People could found various
opportunities of employment. On the behalf of above said reports and
experts view showed that the future of e-commerce in India would be
bright in the upcoming years if all essential factors would be
implemented.

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