ecommerce

In this article, Bhawana Tiwari who is currently pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses Types of E-Commerce Business in India.

Introduction

Electronic commerce is popularly known as e-commerce. An e-commerce business model “enables a firm/individual to conduct business over an electronic network, typically the Internet.”[1] The biggest advantage of an e-commerce is that the size of the market gets enlarged, hence the business gets bigger and the consumers have better access to quality products and services. The consumer and seller or service provider interaction gets better and efficient.

With the better access to the Internet e-commerce is also taking a root in India; however, it is still in its infancy. The emergence of middle class with good purchasing power is also an important reason for the growth of e-commerce in India. In addition to this the schemes of government like Startup India, Make in India and Digital India and policies like cashless India are also affecting the e-commerce in India. In this assignment, we are looking into various e-commerce business models.

Types of ecommerce business model

There are various business models that can be followed in pursuance of the objective of the business and to achieve the desired results. These business models are as follows

  1. Online Subscriptions
  2. Exclusive Brand Stores
  3. Deals Websites
  4. Marketplace

We will look into these models one by one.

Online Subscriptions

These websites work like an offline subscription. Here the users can choose from subscriptions available on the website and subscribe according to their needs. The payment for subscription can be made online and also the recurring payments can be made in the same manner and the consumer can get the services.

Hence, online payment for the service is the pressure point here. This makes the services more accessible and easier payment options make it more attractive to the users.

In India magazines like Frontline can be subscribed online and so can the newspapers like The Hindu. Amazon.com has also started the monthly subscription service where it provides the consumers the option of monthly subscription with discounts from normal rates and the consumers can pay the subscription fees on their website.

Online Exclusive Brand Stores

Here the brands create their own online brand stores. The brand’s catalog is uploaded on the website where the consumers see it which is also available in their physical stores. Here the consumers get the advantage of shopping from their trusted brands online without having to visit the physical stores.

Examples of online exclusive brand stores are HP, Samsung, Peter England, Monte Carlo etc.

Deals Websites

there are various ecommerce websites which provide the best deals to the consumers. Such websites give the consumers various deals available on other websites or stores. For example coupondunia.in etc.

Marketplace

Here the consumers and sellers are provided with a platform to interact with each other. Based on this there are various websites with different models that they follow. These models are:

Business to Consumer (B2C)

This is the most common business model that usually people know about. Here the sellers of products or services, as well as the buyers of such products or services, are present on an online platform. Virtual stores give the consumers access to wider variety of products at cheaper rates. The best example for this is Amazon.in, Flipkart.com, Myntra.com, Snapdeal.com etc where the consumers can find almost anything be it books, electronic products like washing machines, USB storage devices, clothes, shoes or personal care etc.

In India the B2C model is growing at a fast pace, however, there are still various challenges. The major challenge is poor internet connectivity. Also most consumers do not posses credit cards. Most consumers still depend on cash on delivery mode of payment. In addition to this the ecommerce websites do not have very good customer services leaving the consumers doubtful about using these websites and apps.

Business to Business (B2B)

here both the parties are involved in business activities. Here commercial transactions take place between both the parties. The parties involved can be a manufacturer and wholesaler or a wholesaler and retailer.[2] In India the B2B model has 100% Foreign Direct Investment allowed through automatic route, unlike the B2C model. However, this model is still in its nascent stage in India. Online business transactions in India are limited and the market is less receptive. However, the experts do believe that this situation shall change in coming times and the B2B ecommerce space is expected to grow almost 2.5 times by 2020.[3]

Some of the ecommerce B2B companies in India are as follows[4]

  • com- this is the first B2B ecommerce company set up in India. The objective of the company was to empower the small and medium sized enterprises by making the raw materials accessible for them. The company deals in variety of things like hardware, medical supplies, electrical etc.
  • com- this B2B ecommerce space provides industrial goods and supplies. Its business is expanding exponentially.
  • com- this ecommerce space connects the manufacturers and the retailers thereby eliminating the distributors. It empowers the retailers to buy the products after registering their business. Credit facility is also available to the retailers.
  • com- this is subsidiary of IndiaMart which aims at providing raw materials for small and medium sized enterprises. It deals in hardware, lab supplies, handtools etc.
  • in- the company deals in buying and selling in bulk of the packaging materials.
  • in- it is based in United States of America. It is aimed at providing products in bulk and wholesale prices. The company deals in a variety of products like cleaning and laundry, mobile and accessories etc.

Consumer to Consumer (C2C)

Here both the parties are individuals undertaking a business activity on a platform. Here the individual can sell something they no longer need or can sell products made by them as they engage in a small home based business activity like bags or some handicraft items. The best example of this model in India is Ebay.in, OLX.com, Quikr.com etc.

OLX and Quikr are almost alike and provide a platform to the consumers to connect and buy and sell anything be it land, flats, paying guest facilities, mobiles, laptops, bikes, bicycles etc. The companies have become very successful and work as electronic classifieds.

Consumer to Business (C2B)

In this model the consumer sell their products and services to businesses. The best examples for this model are the job portals.

In India websites like Monster.com, TimesJobs.com etc can be put in this category. Here the consumer, the job seeker, puts her resume on the website in order to get a job offer from employers.

The ecommerce business models are selected by the companies as per their objectives, desired results and target consumers. There can be modifications done in these business models as per the requirement of the companies.

Conclusion

We have seen various types of ecommerce models that are prevalent and the examples of such models in Indian context. Indian economy is growing at a very fast pace and as such the new avenues like ecommerce is here to stay and grow in India. However, there are various challenges that must be overcome in order to make ecommerce efficient in India.

The major problem is poor e-infrastructure. The internet in India is still not very easily accessible. The penetration of internet is very low at 34.8% of the total population,[5] as compared to other countries. Also the ecommerce companies face logistic issues. As a start up this issue is more pressing. In addition to this the long held habit of Indian consumers to see and inspect what they are buying makes them doubtful of the ecommerce. Also the major part of ecommerce business is limited to the urban areas and excludes the rural areas and the major portion of the population is still rural hence, there is a need to make ecommerce inclusive of rural areas and population. Hence, there is a need to frame a strategy to make the Indian economy more conducive to the new and upcoming ecommerce market and accommodate in the economy.

However, recently ecommerce has seen a growth in India basically because of easy access to smart phones. Most of the urban population is on the internet and have access to at least netbanking and debit cards. Although even in the developing countries India lags behind many countries in ecommerce it is growing at a fast pace.

With the schemes like Startup India, Make in India and Digital India the future of ecommerce seem to be bright. The young entrepreneurs are making full use of technology to make their business plans success. Where the ecommerce space has ability to connect the young entrepreneur with the global market its importance cannot be neglected for long and will see improvement in the near future.

References

[1] http://www.investopedia.com/terms/e/ecommerce.asp last visited on 15th February 2017

[2] http://www.investopedia.com/terms/b/btob.asp last visited on 15th February 2017

[3]http://www.hindustantimes.com/business/now-investors-turn-to-b2b-e-commerce/story gTosGSG0dNzz9iyaL2A3iP.html last visited on 20th February 2017

[4]http://indianonlineseller.com/2016/08/6-business-to-business-b2b-online-marketplaces-in-india-worth-exploring/ last visited on 21st February 2017

[5] https://cluecommerce.com/blog/scope-of-ecommerce-business-in-india last visited on 20th February 2017

Did you find this blog post helpful? Subscribe so that you never miss another post! Just complete this form…

6 COMMENTS

  1. Thank you for the ideas,
    Here we’ll take you through types of e-commerce business, revenue and product models that will surely help you decide which business is for you

LEAVE A REPLY