E-commerce (electronic commerce) is the activity of buying or selling of products and services online over the Internet. Electronic commerce is based on, technologies such as internet, mobile phones etc. E-Commerce consists of various business activities like electronic funds transfersupply chain management, warehousing and delivery of goods and services,  Internet marketingonline transaction processingelectronic data interchange (EDI), inventory management systems, and automated data collection systems.

E-Commerce uses the internet and e-mail, along with advertisements on YouTube and dedicated websites of E-Commerce companies. Typical e-commerce transactions include the purchase of online, apparels, clothing, jewellery, toys, household electronic gadgets, cosmetics, sports goods, food and grocery items, fruits & vegetables, ready to eat food products & snacks, pharmaceutical products, crockery, cutlery, books, hiring of cab/taxi service, various software & music, either physical or in a download form. The payments for transactions under E-Commerce are also settled through credit cards, internet banking and online payment platforms. Generally E-Commerce can be classified under 3 types: Online retailingElectronic markets, and online auctions. The first E-Commerce transaction was done in USA in 1994, by an online sale of a music CD. E-Commerce has made it easier for prospective customers to identify the products by referring to the electronic catalogues and to purchase them online. Independent freelancers, small businesses, and large corporations have all benefited from E-Commerce, which enables them to sell their goods and services at a scale that was not possible with traditional offline physical retail trade.

Types of E-Commerce Models

There are four main types of E-Commerce models

1. Business to Consumer (B2C) When a business sells a good or service to an individual consumer.

2. Business to Business (B2B) When a business sells a good or service to another business (e.g. A business sells software-as-a-service for other businesses to use).

3. Consumer to Consumer (C2C) When a consumer sells a good or service to another consumer (e.g. You sell your old furniture on eBay to another consumer)

4. Consumer to Business (C2B) When a consumer sells their own products or services to a business or organization (e.g. An influencer offers exposure to their online audience in exchange for a fee, or a photographer licenses their photo for a business to use).

Impacts of E-Commerce

  • Employment – E-Commerce helps create new job opportunities in technology sector due to information related services, software app and digital products. It also causes job losses, through reduction in normal retail counter staff. The manpower in warehousing and transport acquainted with E-Commerce model has better job opportunities.
  • Customers – E-Commerce brings convenience for customers as they do not have to leave home and only need to browse the website online, especially for buying the products which are not sold in nearby shops. It could help customers to research and buy wider range of products and save customers’ time with discounted prices. Customers can also review and track the order history online. However, e-commerce lacks human interaction for customers, especially who prefer face-to-face connection. Customers are also concerned with the security of online transactions, guarantee of products and after sale service during and after warranty products. Sometimes the customers are required to change the clothes or shoes of wrong size. There may be issues as to return of products and refund of money.
  • Environment – Use of huge packing material and its recycling is a major issue. The business of safe packaging material and its cost is bound to increase as the E-Commerce transactions are going to rise. The additional factor is of disposal of plastic and non recyclable packaging material.
  • Retail Trade – Since the major part of requirements of individual customers are satisfied by E-Commerce with much less physical hassles at the optimum cost, it has affected the retail shops and departmental stores.

Government Regulations & Control of E-Commerce Transactions in various Countries:

The scope of E-Commerce is increasing world over. The E-Commerce activities are governed by various countries. In USA through (FTC) Federal Trade Commission, in Europe through EU, in Asian countries through organization for Asia Pacific Cooperation. The adoption of uniform cyber laws and trade laws will be the right tool to facilitate domestic and international E-Commerce trade.  UAE Government has implemented a detailed E-Commerce policy and permits E-Commerce by granting DED Trader Licenses.

Indian Scenario

In India, the Information Technology Act 2000 governs E-commerce. The Consolidated Foreign Direct Investment Policy of 2017 prohibits foreign funded market place players from engaging in inventory based model of E-Commerce, but there is no such bar on domestic funded market place players and foreign funded players have to comply with certain conditions. In the Press Note No.2 Dated 28th December 2018, foreign funded market emarket place players viz. Wallmart backed by Flipkart and Amazon India, Uber Taxi Service company etc. require restructuring to comply with norms. 

In India, Government needs to pay more attention to E-Commerce by having a concrete plan and policy in place to encourage E-Commerce transactions and promote cashless transactions. Even E-Commerce hubs and E-Commerce zones/cities need to be developed to handle efficient transport, warehousing etc. This will not only lead to economic development and generate employment opportunities but will result in generation of good amount of tax revenue to the Government. For this purpose it is desirable to have a full-fledged legislation to regulate, monitor and to address all the aspects, including settlement of disputes. But it’s quite sure that in future E-Commerce transactions are going to increase substantially and play an important role in the economy of all developed and developing nations.

Future of E-Commerce

The future of E-Commerce is very bright in light of recent restrictions on movements due to pandemic, development of technology and fast life of customers. Internationally W H SmithTesco, Virgin Megastores, Great Universal Stores (GUS), InterfloraDixons Retail, Amazon, eBay from USA and Alibaba  of China are some of the important and successful E-Commerce models. Flipcart and Tata Cliq, Big Basket, Amazon, Uber are some of the major players in India. Global trend is of continuous increase in E-Commerce and is likely to occupy about 20% to 30% of total trade and commerce in any economy. U.S.A., U.K., Brazil, U.A.E., India, China, Australia are the countries, where E-Commerce is increasing its share.

Increasing communication networks, wide use of mobile phones and spread of E-Commerce websites, increasing use of social media websites, are also additional factors which give boost to E-Commerce. Growing courier network is also extending supply chain management & logistic support, in giving door delivery of goods. The E-commerce trend is forcing companies to widen and alter the traditional business model by focusing on range of products. E-commerce requires the companies to build the ability to satisfy multiple needs of different customers at different locations and provide them with wider range of products, without physical shopping.

Ajit Phadke

Ajit Phadke, B.Com.(Hons), M.B.A., LL.B, has been operating as a freelance industrial consultant for 35 years and specialises in 100% EOU / Export / Import, Foreign Exchange Rules and Industrial Regulations.

The views and opinions expressed in the article are those of the authors and do not necessarily reflect the official policy or position of The Tilak Chronicle and TTC Media Pvt Ltd.

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