Editorial Articles

Editorial Article



 Dr. Ranjeet Mehta

Today, an evolution is occurring that will forever change the relationship between retailers and their customers. This new retail model, known as electronic commerce (e-commerce), consists of (a) Mobile commerce supported by mobile devices and tablets (mcommerce) and (b) Emerging social commerce platforms that bring together advertising, shopping and selling in a social media environment (s-commerce).

While the e-commerce piece of retail today is significant and a huge growth engine, the total impact of digital on the retail enterprise today extends to the majority of retail sales. Around 60 per cent of retail sales in the US are influenced by digital tools in some way. The influence works both ways. According to a November 2013 survey of US digital shoppers by consulting firm Accenture, 78 per cent of respondents reported "webrooming," or researching online before heading to a store to make a purchase. At the same time, some store trips eventually led to a digital purchase. The same  Accenture study found that 72 per cent of respondents said "showroom," or "buy digitally after seeing a product in a store". Consumers, then, have merged online and offline into a single shopping experience.

But sales alone do not tell the whole story of US retail e-commerce. Consumers may not buy online all the time, but they are shopping through digital channels constantly. Digital shopping doesn't always lead to an immediate conversion but it does translate to influence throughout the path to purchase. In US, Industry experts expect e-commerce sales to increase to 11 percent by 2018. While this may seem like nominal growth, some major retailers have already experienced e-commerce revenues accounting for 14.3 percent of their total revenue as of the second quarter of 2014. The top 43 Internet retailers in the U.S. reported $24.52 billion in combined ecommerce transactions during the second quarter of 2014, a 19.2 percent increase over the same quarter in 2013. Indian online shoppers will spend Rs.54,700 crores buying products from other countries, and that is expected to rise by more than 75 per cent in 2016, a report by payment firm PayPal said."The Indian ecommerce space is experiencing an exciting time where innovation is the key. Our research reveals that the advent of technology is slowly diminishing borders for online shopping. With the number of online shoppers set to  grow exponentially, it will lead to increase in the number of shoppers who shop from global retailers with online presence, as per managing director of PayPal India.

The emerging trends show that young consumers have developed a strong taste for shopping online. It  has also been seen that the primary source of traffic for online shopping (and other e-commerce portals) and social media activity are young consumers in the age group of 13 to 25. As a result of this, the number of online shopping platforms has increased and expanded dramatically over the last few years. As per a report out of about a total 10 million online shoppers in India, roughly3.8 million shop across borders. The average cross-border spend is also higher than domestic online shopping spends. Average spend on cross-border transactions by the estimated 3.8-million cross border shoppers was estimated to be about Rs1.42 lakh per cross-border shopper in 2015. A Goldman Sachs report in May 2015, pegged the average transaction size of about Rs. 1,800 for the Indian e-commerce industry . In the survey, 62 per cent of those surveyed only shopped domestically, 36per cent shopped domestically and cross-border while 2 per cent shop only cross-border. That number would be higher, but for concerns about shipping and custom duties that would be levied on the products. Trouble returning products that proved defective or not as described also contributed to fewer people buying from foreign countries. And 53 per cent of those who bought products in other countries, used the address of a family or a friend in another country.

In 2013, the number of active sellers participating in Amazon's FBA program rose65 percent; 73 percent of participants who were surveyed admitted their unit sales on Amazon increased 20 per cent since joining the program. Alibaba - China's biggest ecommerce company that also held the largest initial public offering in history in 2014 – handled a total of $248 billion in transactions on its online sites during 2014, more than those of eBay and Amazon combined. Alipay, Alibaba's online payment platform, handled more than triple the amount of mobile payments processed by PayPal. (Osawa, 2014) Alibaba's IPO and business operations stirred a great deal  of interest among investors but delivered precious few details about how they intend to operatein the United States.

 Part of their strategy, experts believe, is to reach an estimated 50 million people of Chinese descent living outside their country and to provide Chinese locals with access to the world's best retail brands. These two factors, they say, are likely to expand Alibaba's global influence and have a ripple effect across the world's real estate markets.

 Benefits of Digital Shopping

Shopping online is better for many reasons. You don't have to go out to find what you want, you can avoid traffic, compare prices easily and get better discounts. However, all this comes with risks of Internet security. We are all familiar with phishing mails and the dangers of transacting on an unsecured site and using public computers or shared wi-fi connections.

 Precautions to be taken for online shopping

The online shoppers should be careful about the following:-

 (a)   Beware of devious discounts

You see a 40 per cent discount sign and conclude you are getting a good deal. However, check the current market price of the product before clicking on the buy button.  Prices of products, especially electronics, fall within a few months of launch. Many websites, however, give discounts on the original maximum retail price. A simple solution is to compare the price on a site like Junglee.com. Or, check out the price at your neighbourhood store. You may get a better deal there, especially if you go for an exchange offer. Also, find out about the site's business model. Is it an eretailer, where the site is the seller, or a trading platform such as ebay, where the site is just a middleman? In the latter, the guarantee comes from the seller and not the website facilitating the transaction. Similarly, complaints will have to be resolved with the seller, not the site that lists the product.

 (b)   Check for Coupons

 While websites themselves offer discounts and deals, you can end up with an even better deal if you follow certain coupon websites. Few websites list deals and offers (some of which may be offered exclusively by them) across different websites, product categories, even specific products. Pick a deal from here before making the payment to save more money.

 (c) Avoid direct bank transfers: Pay through official payment service

Cash on delivery and net banking are the safest ways to transact online. However, if these options are not available, go for a virtual credit card. It is an add-on 'card' issued on your primary credit card. All relevant details are available only online. It has a validity of a few months and you can set a credit limit of your choice. A lot of shopping websites are following

the marketplace model-they are essentially a platform for sellers to list the products they are selling. The website itself doesn't stock inventory, it monitors the order till it is delivered to you. A lot of sellers accept payments using credit cards, debit cards, e-wallets, cash on delivery, or direct transfers to their bank accounts. Each shopping website has its own payment service through which you can pay using cards and wallets.The websites can then track the order status and help with refunds, if needed. Strictly avoid direct bank transfers, unless you know the seller really well.

 (d) Shoddy security and privacy policy

Many websites require you to register before placing an order or even viewing products. The web merchant might ask you to enter personal details such as name and address. This should act as a red alert. Such information can be used to send spam mails. Don't answer questions that you think are unnecessary for processing the order. Moreover, such sites require you to agree to certain terms and conditions. Read through these as you might be giving permission to share your details. E-merchants often share your information with affiliate companies. An easy way to avoid privacy issues is to shop from sites that are members of a 'seal-of-approval' programme that sets voluntary guidelines for privacy-related practices such as TRUSTe (www.truste.org) and VeriSign (www.verisign.com).

 (e) Clear your browsing history daily

Have you ever wondered how e-commerce sites show you previous searches when you visit later? Websites use cookies and other technology such as pixel tags and clear gifs to capture information to track shopping habits. Some of  these cookies are saved on your system and are used to send advertisement banners and mailers, both by the site and third-party sites with which the information was shared. You can opt out of this by changing your browser settings to not accept cookies.

However, this usually means a poor shopping experience as disabling cookies may make parts of the site inaccessible. The middle path is to clear your browsing history daily.

 (f) Don't forget to check the reliability of Seller

The ratings are good parameters to know the reliability of sellers as they are based on user feedback and how previous orders were executed. Any seller with a higher ranking will be a safer bet than one which has been flagged for wrong order delivery or poor-quality products. For example, there may be five sellers on a particular web site selling a particular product. Always compare their ratings and go for the one which has a better past record.

 (g) All about apps

Smartphone apps are a rage among shopping websites. Online shopping sites have apps and some deals are available only through these apps. More so other players are also pushing apps. In essence, you can shop easily using your smart phone but always ensure that you are running the latest version of the app. Keep looking for the update notifications whenever a new version is available-install these, because there may be critical security and usability updates. Though the online shopping has made the consumers life very easy but there are certain precautions to be taken before making a decision to purchase online. Now since we are completely in the digital world, the use of e-commerce can not be avoided. This is a simple time saving and cost-effective way of shopping.


(The author is Director, PHD Chamber of Commerce and Industry, New Delhi.
e-mail : ranjeetmehta@gmail.com)