e commerce - overview

Exam or Interview view point : 

Economic issues : FDI in G2C; FEMA - ED;  supply chain management issue- MSMEs, agriculture ; opposing and promoters ; consumer protection;

Legal issues : IT act ; due diligence concept ; 

1. Introduction

Definition : E-commerce means sale or purchase of goods and services conducted over network of computers or mobile or TV channels by methods specifically designed for the purpose.

Even though  goods and services are ordered electronically, payments or delivery of goods and services need not be conducted on-line.

E-commerce transactions can be between businesses,households,individuals, governements and other public or private organisations. There are numerous types of e-commerce transactions that occur online ranging from sale of clothes, shoes books etc. to services such as airline tickets or making hotel bookings etc.

Eg. : Goods providing : MSMEshopping, Flipkart, Amazon, snapdeal etc
Service providing : IRCTC, Paytm, Bookmyshow, makemytrip, redbus etc.

Factors which are expected to boost e-commerce : 

1. rising disposable incomes, rapid urbanisation, 
2. increasing adoption and penetration of technology such as internet and mobile (digital india scheme),
3. rising young population, 
4. increasing trust on e-retailing,
5. increasing cost of running offline stores across the country,

2. Models :

1. Based on interaction between producer and consumer:

• B2B (wholesale) : transaction over 90%
• B2C (retail): minuscule just over 10%
• G2C :
• G2B : eg: e-Biz by dipp

2. Based on business view

1.  Market place model
2. Inventory based model

a. Market place model :  Here, e-commerce provides as a platform for business transactions between buyers and sellers to take place and in return for the services provided, earns commission from sellers of goods/services. Owenership of the inventory in this model vests with the number of enterprises which advertise their products on the website and are ultimate sellers of goods and services. Thus, the 'Market place' works as a facilitator of e-commerce.
Eg: Amazon india, MSMEshopping

b. Inventory based model : Here, the owenership of goods and services and amrket place vests with the same entity. This model doesnot work as a facilitator of e-commerce but is directly engages in e-commerce.
Eg: Flipkart before april 2013


3. e-commerce Market: Global trend


The biggest e-commerce markets are in USA followed by UK and Japan.
In Asia, China , India and Indonesia are fastest growing e-commerce markets.
Major global e-commerce giants : Alibaba , amazon , walmart, apple, dell, e-bay, etc.



4. Status of e-Commerce in India

A.T.Kearney's 2012 E-Commerce Index examined the top 30 countries in the 2012 Global Retail Development Index(GRDI). Using 18 infrastructure, regulatory and retail-specific variables. However, India failed to make into top 30 because of low internet density (11%) , poor financial and logistical infrastructure compared to other countries,


Although many factors support the growth of e-commerce in india, the fledgling industry is faced with significant hurdles wrt infrastructure, governance and regulation.

1. Low internet penetration of 11% impedes the growth of e-commerce by limiting the internet access to broader segment of population. 
2. Poor last mile connectivity due to missing links in supply chain infrastructure is limiting the access to far flung areas where a significant portion of population resides.
3. High dropout rates of 25-30% on payment gateways, consumer trust deficit and slow adoption of online payments are compelling e-commerce companies to rely on costlier payment methods such as Cash on Delivery.

5. Existing regulation in India

1. FDI policy : up to 100 % under automatic route is permitted in B2B 'e-commerce activities'. Thus, as such FDI policy doesnot permit FDI in B2C e-commerce.

The problem is in the thin line between operations of a B2B (wholesale) company and a B2C (retail) company. Currently,India permits 100% FDI in B2B e-commerce activities but not in B2C companies. Players operating in the latter space have adopted the marketplace model, wherein they take order but which are filled by other domestic retailers. 

The problem arises when a domestic B2C e-commerce company operates through the marketplace model but uses their other FDI-funded ventures in the B2B space for retail sales.

READ : http://www.business-standard.com/article/companies/fdi-rules-for-multi-brand-retail-to-apply-to-e-commerce-nirmala-sitharaman-114082200455_1.html

2 .  IT Act, 2000  provides legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred to as "electronic commerce", which involve the use of alternative to paper-based methods of communication and storage of information, to facilitate electronic filing of documents with the Government agencies.

3. Consumer Protection Act, 1986 : nothing in th act explicitly refers to e-commerce consumers. It provides for regulation of trade practices, creation of national and state level Consumers Protection Councils, consumer disputes redressal forums at Nationa, State, and District level to redress disputes, class actions and for recognised consumer associations to act on behalf of the consumers. The Act provides a detailed list of unfair trade practices, but it is not exhaustive.


4. The legal requirements for undertaking e-commerce in India also involve compliance with other laws like Contract law, IPC, etc. Further, online shopping in India also involves compliance with the banking and financial norms applicable in India. For instance, take the example of PayPal in this regard. If PayPal has to allow online payment receipt and disbursements for its existing or proposed e-commerce activities, it has to take a license from RBI in this regard. Further, cyber due deligence for Paypal and other online transferors in India is also required to be observed.


Also refer":

Legal issues: http://ecommercelawsinindia.blogspot.in/

http://ecommercelawsinindia.blogspot.in/2012/04/legal-requirements-to-start-e-commerce.html

http://ictps.blogspot.in/2011/06/cyber-law-due-diligence-in-india.html

http://ptlbindia.blogspot.in/2011/12/cyber-due-diligence-for-indian.html



So, Questions :

1. Allowing FDI in B2C ? Examine Pros and Cons
2. Changes needed in IT act , due diligence concept, consumer protection act especially for violation of Patent , IP laws by e-retailer?
3. What about online frauds, fake online e-retailers ?
4. Be ready to operate once Digital India is ready?
5. How will e-retail help in rural development ?

Vegetable and fruits online marketers 

• http://bigbasket.com/pc/fruits-vegetables/vegetables/
• http://www.sabzikart.com/#

few points : perishables, time taken to deliver from time of order, Quality.

Glossary :

due diligence: reasonable steps taken by a person to avoid committing a tort or offence.

Reference :
Discussion paper on E-commerce in india, DIPP  http://dipp.nic.in/English/Discuss_paper/Discussion_paper_ecommerce_07012014.pdf