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https://www.quora.com/What-are-the-biggest-challenges-facing-eCommerce-sites-in-India
What are the biggest challenges facing eCommerce sites
in India?
What are the challenges and competition I face if i
plan to create a site that teaches engineering
concepts in a different,fun way?
What is the eCommerce potential in India?
What is the potential of eCommerce in India in thecoming years?
Do you know about india's ecommerce? Who is the
frontier of ecommerce in India?
What are the biggest challenges face by education in
India ?
What challenges do rising ecommerce companies
face with photography?
What are the biggest challenges startups face in India
compared to other locations like San Francisco, Berlin
or London?
What are the most popular eCommerce sites in India?
Will eCommerce ever saturate in India?
What are the biggest challenges facing Indian
companies as they seek success in the global
marketplace?
Amazon Payments (product) Venture Capital in India Online Retail in India
Entrepreneurship in India Business in India E-Commerce in India Startups in India
43 Answers
1.Winner takes it all-No room for small players
Flipkart, Amazon and Snapdeal are deep pocketed major players making it tough for the
small players to survive in the market. The mortality rate in Indian e-commerce is rising
day by day as the small retailers are choking to attract investors or customers alike.
Some of the e-commerce portals like Babyoye, Zipdial, Tastykhana, Indiaplaza have failed
in making it big and have made a tragic exit whereas sta r players like Flipkart,
Bookmyshow, Zomato, Makemytrip are becoming household names as they could instill
confidence in the investors and took risks from the inception and have gained popularity.
2. Succumb to hurdle in Indian e-commerce value chainReminiscing from one of my experiences, I was trying to send a gift to my friend studying
in Raebareli (a small district in UP), but was shocked to see that it declined to send the
item and it surely made me believe that what e-commerce retailers boasts holds untrue.
Big players are facing issues in delivery, personalisation, cyber security and payment issues
which has made their chain of command weak and fragile. It is seen that the plethora of e-
commerce value chain is posing as counterproductive for free-flow of e-commerce delivery.
The delivery boys are pricey and there is reliability issues during COD which undermines
the profit. Also, many companies in online marketplaces rely on fees from sellers and not
own sales.
They do not hold inventory and rely on the distributors for it and which leads to fall in
standards.
3.Digital Literacy and C onsumer Connect
With Narendra Modi’s digital india campaign,ecommerce market is showing signs of boom but when we compare it with the digital literacy of the consumers it fails to show the same
sign.
There is a major chunk of population i.e 147 million who are still using feature phones. The
stalwarts of online marketplace should try and tap this sector by bringing out easy access
to websites and helping in digital literacy.
Also try to fix the loopholes like fast customer service, return policies, pa yment security and
to lure more customers for the website
4. No profits in sight
Flipkart, Snapdeal and others have infused immense capital from investors and are
burning them with customer acquisition and heavy discounts.
As projected in the picture the amount of loss incurred by top players and the gap between
the valuation and the funds raised in the market. So the profits which are not in sight will
pose threat to the overall business model if the break even is not met.
Ankita Bhatta, Client Experience Manager at LetsAlign.com
5.2k Views
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Related Questions
More Answers Below
What are the challenges and competition I face if i plan to create a site that teaches
engineering concepts in a different,fun way?
What is the eCommerce potential in India?
What is the potential of eCommerce in India in the coming years?
Do you know about india's ecommerce? Who is the frontier of ecommerce in India?
What are the biggest challenges face by education in India ?
So to rise above all the shortcomings in the Indian e-commerce sector the retailers and
government need to join hands for working on increasing penetration of internet. Also the
credit card diffusion should be emphasized so that the perilous cash on delivery mode can
be restricted.
You can read the detailed article here Current challenges encountered by E- commerce
retailers in India
Written Jul 15, 2015 • View Upvotes
Speculation
Without a doubt, India has been a profitable eCommerce region in the last 7 years. Thus
many venture capitalists, angel investors, private companies and high net-worth
individuals are pouring money in eCommerce, no matter how small or big the company.
But there are challenges that will test sustainability of this growth.
Logistics, the big one
With a population of more than 1.28 billion, Indian is a goldmine waiting to be explored.
But logistics has been and still is a major issue because of which eCommerce companies
haven’t been able to reach all pockets.
Experts believe that in the next decade organized retail will grow from 0.1% to 5.3%. Tier 1
cities are nearly exhausted. The next decade would belong to infiltrating Tier 2 & 3 cities
and reaching out further down. This would require strengthening the logistics & delivery
arm, which would also include building ample warehouses, good tracking systems and
hiring trained & trustworthy workers.
Reasonable investments
The future demands market leaders in eCommerce to raise funds in order to sustain the
growth. An ETRetail news report stated ‘Indian online retailers such as Flipkart and
Snapdeal must collectively raise $20 billion (Rs 1.27 lakh crore) in the next five years to be
able to sustain growth, investment bank Goldman Sachs has estimated.’ Is this why
Flipkart is looking to raise debt for the first time with Rs 3,000-crore rupee bonds and
Snapdeal revived talks with Alibaba ?
Building customer loyalty
As far as top etailers are concerned, none of them are competing on a ny product/service
differentiating factor. All are fighting on discounts. This won’t help in building customer
loyalty as buyers would go where the discounts take them. And delivery blunders and
moves such as going ‘app-only’ don’t help either. So maybe it’s time to work on building
a distinct identity if etailers wish to survive well.
Reformed policies
The threat of restrictive FDI policy is hanging as the government contemplates whether or
not to allow foreign investments in the e-commerce sector. And it will take at least a couple
of months to get a clearer picture. Tax and regulation issues crop up too every now and
then. If favourable ecommerce policies with regards to FDI don’t become a reality, then
it is going to be a huge challenge.
Pooja Vishant, Ecommerce expert in India
6k Views
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Written Sep 7, 2015 • View Upvotes
Guess already well documented challenges like logistics and payments above. Rest is here:
The biggest and the only problem faced by ecommerce sites in India is
measuring how long term the game would be. How large the market is, how
fast it will grow. And how to remain profitable.
I firmly believe that any business works by delivering value. You deliver value, you charge
for it. A site needs to sell on the basis of THIS:
explains how difficult it is to deliver value in a sustainable and profitable manner in India.
Offline has been inherently cheaper and for most things would remain. Even if not, do not
expect a shift like online ticketing in online shopping.
Given that you now understand how to deliver value, the biggest opportunity is to find the right product set. One cannot be profitable selling the regular
stuff like mobile phones online. It is far too competitive of a market offline as
well as online. Accessories onthe other hand is a much more lucrative market and while
it isn't sexy as a mobile phone, it gives value to the consumer and gives margins to the
retailer. I will end that there.
Some quick points on other issues
Logistics:
Is good in India with companies like Aramex, TNT and Bluedart. Isn't good for COD
though. Thats why I believe most players backed it up with their own service.
Though I wish the postal service in India was as good.
Banking and Gateway
The sheer amount of effort taken to get a gateway and the failing transactions. This is an
issue, but since it is all online and I trust RBI a lot with their efficiency, I expect this to
improve very fast. In the long run, I DO NOT believe that COD is the way to go.
Trust:
The reason new players have to burn so much on COD is that the old players have spoilt
the name badly. People don't trust service and quality of good they will receive. Go and
read the online complaint boards you will get what I am saying. The original
Annkur P Agarwal, Online retailer in India since the time no payment gateways were
around, full...
13.7k Views
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Baazee / eBay has spent tons training the consumers to buy online and merchants to sell
online, but the bulk of Indian internet biggies have spoilt the market ('Sagla ghaan karun
thevle ahe') by giving horribly poor service. You can order something and forget it for 30
days or get a poor / broken product and wait for email replies to help you. Far too many
people have burnt their hands
shopping online to trust the medium again. Thats the reason COD is so big in India, it is
not that people dont have credit cards or netbanking access, it is that they do not see the
value in trusting. If payment was such a big issue, ticketing wouldn't have been so big.
Written Feb 17, 2012 • View Upvotes • Answer requested by Mehul Ved
Here are my observations from references gathered from primary and secondary research
on the subject
References
Logistics to be the game changer for e-commerce in 2016
Written Jan 25 • View Upvotes
Sonesh Prakash, I am a marketing consultant for tech startups
1.3k Views
E-commerce has seen an unprecedented rise in business in the past year, with Paytm
joining Flipkart and Snapdeal in the eight-member unicorn club. A report by Bank of
America Merrill Lynch in 2015 stated that the e-commerce market in India will be
worth $220 billion by 2025.
Yet, e-commerce is beyond just sales and GMV numbers. Speed of delivery is as
important as the product quality for a customer. I wouldn't be wrong in saying that
logistics could be the defining factor for success of e-commerce companies in retainingtheir customers.
Last mile deliveries account for 30% of all logistics costs & there is still no effective
resource utilization by logistics service providers. Hence logistics companies are now
relying on tech companies to provide the solutions, which can actually improve the
overall efficiency and support the entire ecosystem.
Technology companies can answer the following questions for Ecommerce companies
which give them logistical nightmares.
How do I locate the shipments in real-time across line haul and last mile?
How do I measure my service levels for same day/next day deliveries?
How long my shipments remain unscanned even after arriving at the hub?
Is there a trend in the delivery delays?
There aren't too many companies in India who have been lauded for answering the
above questions in entirety and accuracy. LogiNext is one of those few who has been
successful in this space and answers these questions for more than 50 of its customers
in India. It has been voted for and recognized as the best Logistics and Supply Chain
Cloud solution provider by the 400+ strong CIO Community & ICT Business leaders
of India. They are the only start-up to win this honor and recognition within two year
of beginning its operations.
The eCommerce trend in India has been on the upswing particularly among the urban
households. But there are challenges
Ramesh M, eCommerce Analyst
2.8k Views
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Establishing Trust and outwitting Competition
Indian people tend to stay loyal to a brand their convenient with. Once they trust someone
they just cannot think of changing. So winning over their trust is something very tough.
Currently sites like flipkart, amazon, snapdeal have penetrated the Indian household and
it will be really tough to find a place among these big three.
Payment delivery
Once again if you see in majority people opt for Cash on Delivery. Because the very
thought of paying for a product virtually even before receiving it would shudder them. Of
course this is the case of the previous generation. But since younger generation is
dependent on the previous generation COD is the most preferred payment mode. However
sometimes miscreants use this wrongly.
Offering Discounts
This is one of the biggest challenges an eCommerce site faces. The prime reason nowadays
why every Indian household adopts for eCommerce is because of the throwaway price at
which products are being sold. They get the most coveted brands for a paltry sum. So
offering discounts is essential to survey.
These are some of the external challenges. Internal challenges will be to make you site
superior in terms of functionality like site speed, secure payment gateway, appealing
design, whale of product and diverse collections. These challenges can be mitigated by
hiring the services of professional eCommerce development firms .
Written Jul 31, 2015 • View Upvotes
Challenges in Indian eCommerce Market
1. High Customer Acquisition Cost
2. High Churn/ Low Loyalty
3. Cash on Delivery
4. High Cash Burn Rate
5. High Inventory/ Poor Supply Chains
If you are looking for eCommerce solution provider firm , then go for MMF Infotech as
they are offering the best eCommerce, product uploading and bulk listing services in a very
afforda ble packages. For more information visit: http://www.mmfinfotech.com/servi...
Written Feb 19, 2015 • View Upvotes
Marine Li, Social Worker
2.3k Views
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Major challenges, which is indian e-commerce industry facing today:
Poor Knowledge and Awareness: once it involves magnitude relation of net
customers, situation isn't thusadmirable one. Majority of Indian rural population ar
unaware of net and it uses. amazingly, most of net savvies or urban population are littered
with poor information on on-line business and its functionalities.
Online Transaction: Most of Indian customers don't possess plastic cash,mastercard, charge account credit andinternet banking industry, that is one
in every of the prime reasons to curtail the expansion of ecommerce.
Cash On Delivery: Cash on Delivery (COD) has evolved out of less penetration of
mastercard in Republic of India. Most of Indian E-commerce corporations are giving COD
united of mode of payment for the patrons. 30%-50% of patrons are taking advantage
of this mode of payment whereas creating purchase of any product and repair over net.
COD has been introduced to counter the payment security problems with on-line
dealings,however this mode has been proving to be loss and valuable to the businesses
Online Security : Such pirated computer code leaves space for virus, malwares and
Trojan attacks and it'sextremely risky task to create on-line transactions within the
systems, which can disclose or leak sensitive details of credit cards and on-line banking of
the users. These varieties of droopiness ought to be illegal in Indian ecommerce sectors
Logistics and Shipment Services: In Republic of india, supply and traveller services
needed several improvement. While, excellent and robust supply service is one in every of
the key reasons behind the success of any on-linecompany, Republic of India is insulant so
much behind during this sector as most of the city and little villagesar still not coated
underneath serviceable space of the many of the traveller and supplying corporations.
Fear factor: concern of constructing on-line payment may be a universal psychological
factor of Indian customers. With the unfold of information on on-line transactions and its
reliableness, some percentages of consumers have unmarked this concern and that they ar
dauntlessly participating themselves in on-linesearching
Tax Structure: charge per unit system of Republic of Indian market is another issue for
lesser rate of eCommerce in India as compared to different developed countries like USA and GB. In those countries, charge per unit is uniform for all sectors whereas tax structure
of Republic of India varies from sector to sector.
‘Touch and Feel’ factors: Indian customers are easier in shopping for merchandise
physically. they have an inclination to settle on the merchandise by touching the
merchandise directly. Thereby, Indian patrons aradditional inclined to try and do ticketing
and booking on-line in Travel sectors, books and physics.
Written Mar 1, 2014 • View Upvotes
Manoj Mishra
3.4k Views
Puja Singh, Team Lead - Enterprise Sales at KAPSYSTEM-Bulk SMS Service
Provider
4k Views
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Hello,
After evaluating options to take a plunge in the e Commerce space and hence have
analyzed the sector very closely. I believe that the opportunity is large but there are
issues that require urgent attention. The top five concerns of the e Commerce market
in India are as follows:
1. HIGH CUSTOMER ACQUISITION COST :
One area that most of the entrepreneurs consistently underestimate in their business plans
is the cost of acquiring a customer. Most business plan assumes heavy reliance on
social media and internet advertising. The general myth is that the cost of acquisition oninternet is very low. Overtime, when the customers start coming directly to the site, the cost
of customer acquisition falls significantly but till that time, the business owners need to
cover the cost.
2. HIGH CHURN / LOW LOYALTY:
I have heard multiple times that the Indian market is very large and we have just hit the
tip of the iceberg in terms of customer adoption. I have no doubts on the size of Indian
market but the problem is low loyalty. The big brands are yet to be created on the internet
and hence the brand loyalty is very low.
In the high acquisition cost scenario, it is important to retain the customers for a long time.
Currently this is not happening. Most of the sites are getting high number of new
customers every month camouflaging the high churn. The e Commerce companies aremeasuring the gross profitability and not the customer lifetime value. The
moment the new customer addition drops, the profitability goes for a toss. This is not
limited to group buying sites and other e Commerce formats are also witnessing the high
churn and low loyalty problems.
3. CASH ON DELIVERY :
Cash on Delivery (COD) has been touted as the innovation to counter the low credit card
penetration and payment security issues on the internet. Given the low profitability
and small ticket size on e Commerce sites, the entire gross margin gets
erased by COD. On top of this the problem is that of high returns as the consumers often
change their mind by the time the goods arrive. What amazes me is the fact that
there is no incentive for the customers to use electronic payment on sites like Flipkart. Why
would I take any risk with electronic payment if I can get cash on delivery at the same
price?
4. HIGH CASH BURN RATE:
The capital requirement for any e Commerce venture is very high contrary to the popular
belief that it is easy to set up an electronic shop. Leaders in the e-commerce space (ones
that have raised money, have large teams and are aggressively pursuing growth) are
spending $1-2 million (Rs 5-10 crore) a month, including on marketing, overheads and
salaries. At this rate of burn, smaller firms with scant capital are unable to cope. Therefore
it is important to raise money early in the game.
5. HIGH INVENTORY/ POOR SUPP LY CHAINS:
Most of the e Commerce venture is complaining of the excess inventory and absence
of liquidation market in India. The poor supply chain compounds inventory
problems due to unpredictability of the supply. The cost of carrying the inventory is very
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high and successful ventures would need to tackle the supply chain issues if they really
want to run a scale business.
SUMMARY:
I do not think any of the above mentioned issues are unbeatable. The opportunity is huge
to let it go. Entrepreneurs need to be disciplined sticking to the basics of business without
getting carried away by the rush of capturing the opportunity.
For more details & any other business solutions kindly keep in touch with us at Bulk SMS
India Company
Written Aug 5, 2015 • View Upvotes
I feel India is still in developing phase when you consider eCommerce. Other then few big
players like Flipkart, Myntra, Yepme, Jabong, Snapdeal, Amazon you might have not
heard of any other players.
This is primarily because they are funded and can advertise. But others either have low
traffic or die over the years.
As per my understanding, please find below the real challenges for eCommerce in India.
Budget
We have come across people who have very low budget for an eCommerce, while planning
for an eCommerce store they have either forgotten about marking budget or are not aware
about it. So my question is you can build an eCommerce in Rs 5000 ( Start an eCommerce
Store at Rs 5000 ) but how about marketing. Since if you don't market, it will die.
Marketing
As mentioned above, due to big players like Flipkart, Myntra etc digital marketing is not so
cheap anymore. Hence if you are looking for a huge traffic for recently launched
eCommerce store, you need to market it well using well know mediums like PPC, SEO,
Social Media, Display Advertising & Email Marketing. All these need money, so you
technically need good financial back up. A basic math that I use, if you need to open retail
outlet in GK, Delhi and it would cost you approx Rs 50 Lac, then you should at least have
a budget between Rs 5 to 15 Lac for an eCommerce to start with. Anything below this is not
worth trying.
Poor Mapping by leaders like Google
Google still have to mapped 100% of India, hence if you are looking for targeted traffic for
specific location etc at times its not available. You can still not set age group in Google
Adwords. Say if I am launching a eCommerce Store for age g roup 50 to 60, I don't have an
option to choose my target age group. Hence it will take some time to come up with what
USA etc have.
Goodwill & Trust
Due to increase in number of fake eCommerce store, people usually don't feel safe
transacting on a new website, hence you really need to put in effort to build a goodwill and
trust for your brand. Yes if you already have a retail chain and plan to go online, this could
help you. But for a new player its a challenge. Hence you need to be patient, keep making
your presence feel and ensure you share your complete details like office address, phone,
email, VAT No etc. It takes year to build goodwill hence don't expect that you will start
getting thousands of orders within few weeks of launch.
Logistic
Logistic is a huge issue in India, specially if you are a new startup. Each logistic partner
you will speak to, will ask about volume, packet size, etc, difficult to answer these since you
don't have an answer for most of these questions, you don't know what kind of traffic and
Amit Shroff , an expert in eCommerce with 12yrs of exp in eCommerce
5.5k Views
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business your eCommerce store will receive. Then there are issue like price calculated on
weight and volumetric, players like firstlight etc have their api but if you have included
shipping in your cost how do you bring in the best is a challenge. Also in India not all
logistic company covers 100% India, so its a big challenge, where as if you considered USA,
UK etc they are well connected and everything is streamlined with complete API support to
help you with price calculation etc
COD
COD plays are very important role in India, since majority of transaction are cash
transaction and people feel more comfortable making a cash transaction then online.
There are multiple reason for it like comfort, trust factor, non existence of payment optionetc. Like a house wife or a student who don't have a online banking/debit card facility.
Hence to attract these kinds of customer COD is mandatory option. But then it has cost. If
the product is returned you have unwanted cost, hence you need to ensure you have min
COD returns. You also have customer support expense like you will have to make
confirmation calls to COD customer ensure that the order is delivered to right person and
so on.
Product & Quality
Just because its India you cannot sell shit online, you need to maintain quality and need to
offer good quality product. Hence you need to ensure that what ever you sell is of good
quality and there is a syn between the website and product. Like showing real pictures of
RayBan sunglasses and selling a fake. Be a genuine seller, sell what you say. This would
also help you build goodwill & trust.
Sales & After Sales Support
To be successful you need to have excellent sales and after sales support. You need to
ensure you are in touch with your customer after the order is placed till it is delivered.
Additionally you need to handle return, exchange efficiently.
Online & Offline Completion
If you have a retail chain and selling a product online and offline make sure you sell it at
lesser price because you have lower overhead cost compare to offline store, hence you need
to part with your profit margin.
I hope I was able to answer your question - if you need additional information please feel
free to speak to me - 72interactive - Digital Agency Delhi
Written Jul 27, 2014 • View Upvotes
Breaking-even!
The most basic requirement of any business is to make money. If you are running a
business which gives you a return that's as good as Government bonds, then you are in a
bad position.
Alternatively, if you a re running a business where your spending is significantly higher
than your profits over a long period, then you are in the worst position.
AbdulMajed Raja, A worried Indian
1.4k Views
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Almost all Indian eCommerce sites are in this worst position. Even India's R BI Governor
Rajan says, 'I would like to see when they (ecommerce companies in India) become
money-making company from money-spending company'.
Paytm founder Vijay proudly sets a vision of becoming the first Indian ecommerce
company to break-even as so on as by 2017 which clearly shows how the so-called
biggies Flipkart and Snapdeal are much worse position.
Losses:
Unlike the US, In India, Loyalty to a specific e-commerce site is almost non-existent across
the landscape. Despite knowing this, Most of the Indian ecommerce companies are just
trying to emulate the Amazon-model which by itself is a highly non-repeatable magic.
Good Luck entrepreneurs!
Written Oct 18 • View Upvotes
Snapdeal's loss rises to nearly Rs 1,350 crore in March 2015
Flipkart reported a loss of Rs 400 crore in FY-14
Amazon in India incurred a net loss of about Rs 320 crore after its first year of
operation (2013-14)
The biggest challenges for ecommerce sites in India are:
1. In India, Cash on delivery is the preferred payment mode- Because of low trust in
internet payment options many customers believe to pay through COD only.
2. Internet Penetration is Low- In India, Internet penetration is quite low as compare to
several western countries like USA, UK, France and more. Still, the country is a small
fraction of what other countries are getting.
3. Indian Customers Return Much of Their Products They Buy Online- The first time
buyers are still not sure about wha t to expect from eCommerce websites in India ; thus,
purchasers fall prey to hard sell. Finally, when the product is delivered, they started feeling
regret and return the goods.
4. Many Times, Postal Addresses are not consistent- Because of the inconvenience faced by
many of the online shoppers due to not receiving their orders at their prescribed address it
created a low trust on them
Neha Singh
2.3k Views
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Sitemap # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
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Written Mar 5, 2015 • View Upvotes
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