A

Project Study Report

EFFECT OF GLOBALIZATION ON E-COMMERCE
Submitted in Partial fulfillment for the degree of
Bachelor of business Administration

S.S. JAIN SUBODH P.G. COLLEGE JAIPUR

(2016)

SUBMITTED BY:

SUBMITTED
TO:

AKSHAY SHARMA

MR. AKSHAT
ADITYA RAO

B.B.A. SEMESTER IV

CERTIFICATE
Certificate that this project entitled EFFECT OF GLOBALIZATION ON ECOMMERCE is a report of project work done independently by Mr. AKSHAY
SHARMA under my guidance and supervision and that it has not previously
formed the basis for the award of any degree, fellowship or associate ship to
him.

AKSHAT ADITYA RAO

S.S. JAIN SUBODH P.G. COLLEGE
JAIPUR

DECLARATION

I hereby declare that the project report entitled EFFECT OF GLOBALIZATION ON ECOMMERCE is bonafide record of done by me that it has not previously formed the
basis for the award to me foe any degree, associate ship, fellowship, or other similar title
of any other society.

AKSHAY SHARMA
S.S. JAIN SUBODH P.G. COLLAGE
JAIPUR

ACKNOWLEDGEMENT
I am using this opportunity to express my gratitude to everyone who supported me
throughout the course of this BBA project. I am thankful for their aspiring guidance,
invaluably constructive criticism and friendy advice during the project work. I am
sincerely grateful to them for sharing their truthful and illuminating views on a number of
issues related to the project.
Furthermore I would also like to acknowledge with much appreciation the crucial role of
my faculty guide Mr. Akshat Aditya Rao who gave the permission to use all required
equipment and the necessary materials to complete the task. I have to appreciate the
guidance given by other supervisor as well as the panels especially in our project
presentation that has improved our presentation skills thanks to their comment and
advices.

INDEX

S.No.

Content

1.

Introduction

2.

Indian e-commerce landscape

3.

Objectives of the study

4.

Methodology

5.

Limitations

6.

Statistics & Facts about E-commerce in India

7.

Result of the Study

8.

Conclusion

9.

Scope of the Study

10

References

INTRODUCTION

The environment formed by the globalization and technological change triggered

political, social and cultural change all around the world by the second half of the 20th
century. As well as the social and cultural changes the globalization have also created a
new global economy which provide opportunities for the firms to access to new markets
and participate in global production networks. Beside the opportunities the new economy
formed a more competitive environment for the firms in which the winners are the ones
that can adopt global telecommunications and transport links. The adoption the internet
makes it cheaper and easier for firms to extend their markets, manage their operations
and coordinate value chains across borders. Reduction in the costs of transactions and
information, technology has reduced market frictions and provided significant impetus to
the process of broadening world markets. ICT adoption fosters globalization by reducing
the cost of transaction and coordination and creating new and expanded markets with
economies of scale (Totonchi and Kakamanshadi 2011:271). Regarding globalization and
e-commerce together it is clear that globalization process has formed basis for emergence
of e-commerce. However in the next step the relationship between globalization and ecommerce is Controversial. In this study this relation has been evaluated. Evidences
presented in the study shows that the further globalization goes e-commerce diffuse in the
less developed parts of the world. On the other hand the diffusion of ecommerce also
supports the development of the globalization. In this sense it can be said that rather than
an effect of globalization on e-commerce or vice versa mentioning a mutual relation
exists. Turkish case also demonstrate that internationalization of the economy supports
the diffusion of e-commerce however the direction of the relation varies depending on the
technological development level of the country in question.

1. Globalization of the Economy

By the second half of 20th century economic globalization is recognized as one the most
powerful forces that shaped the modern world. In this period international trade and
financial flows have become increasingly significant (Frankel, 2000:2). Globalization is
not only characterized by the growth of the International trade of goods and services, but
also the political and social linkages that accompany growing economic integration.
Outwardly, the driving forces seem to be the decline in administrative barriers to trade,
sharp falls in the costs of transportation and communication, fragmentation of production
processes and the development in information and communication technology (Gaston
and Khalid, 2010: 3). Globalization process integrated the countries in economy just as
the other many fields. As a natural result of the integration liquidity of knowledge, labour,
capital and goods fairly increased. This liquidity brought new construction processes
together. Parallel to globalization, macroeconomic balances have been reasonably
affected due to dynamic movements of foreign capital, in this framework globalization
affected economy deeply as well as culture and politics. The goal of globalization is to

provide organizations a superior competitive position with lower operating costs, to gain
greater numbers of products, services and consumers. This approach to competition is
gained via diversification of resources, the creation and development of new investment
opportunities by opening up additional markets, and accessing new raw materials and
resources (Investopedia, 2012).

2. Globalization and E-Commerce

OECD (2001) defines e-commerce in two scopes sorted as broad and narrow ones.
According to the broad definition, e-commerce is the purchase or sale of goods between
the businesses, households, individuals, governments and other public and private
organizations over computer networks. Narrow definition on the other hand is almost
same as the broad definition of the exception that the instrument of trade is limited with
the internet (OECD, 2001).
Globalization and e-commerce are expected to change economic structure of nations. The
expected superior economic structure is mainly influenced by the above two factors. In
literature the new structure is generally referred as Knowledge Economy, New Economy
or E-economy. E-commerce not only reduces communication costs, but also increases
flexibility in locating activities. The studies in the subject clearly shows that internet
technology has led to an increase in international trade (Totonchi and Kakamanshadi,
2011:273). In the course of transition from the old economy to the new one, e-commerce
has eliminated the problem of time and space which in return has lowered costs in
production process. Thus e-commerce has become a dynamic factor in the new economy.
Although electronic communication technologies has been being used since the
beginning of 1980s, use of those technologies for trade has become widespread since the
second half of the 1990s. Because its rather new, it has been perceived in several ways
by different institutions, organizations and individuals (Savrul and Kl, 2011:251). Ecommerce consists of the exchange of data to facilitate the financing and payments. Ecommerce is the exchange of goods and services between four broad groups over the
Internet. This can happen between businesses and consumers, businesses and businesses,
intra-companies, and consumers and consumers. E-commerce encompasses any
commercial activity that takes place directly between a business, its partners or its
customers through a combination of computing and communications technologies. It
takes into account sales, marketing, communications, service, and workflow (Rosen,
2000).
Regarding the globalization issue the arguments provided above raise the question
whether globalization support ecommerce or e-commerce accelerate the globalization
process. The study of Kraemer et. al (2002) introduce that the internet is used mainly for

the information exchange with customers and suppliers and e-commerce has a direct and
meaningful effect on globalization. Likewise literature on the issue shows that firms use
the internet mainly for purchasing rather than sales. Its major reason is that firms in their
foreign purchases face lots of complex processes, also purchasing from foreign countries
requires coordination with those suppliers which have a long distance from them, and so
electronic purchases via the internet have so many economic advantages for companies.
Consequently because the e-commerce concept is much border then its perceived the
relationship between globalization and e-commerce is nebulous. Rather than talking
about the effect of globalization on e-commerce or vice versa mentioning a mutual
relation would be more accurate additionally technological structure of a country fairly
affect the direction of the relation.

About OECD
The Organization for European Economic Co-operation (OEEC) was formed in 1948 to
administer American and Canadian aid in the framework of the Marshall Plan for the
reconstruction of Europe after World War II. It started its operations on 16 April 1948.

Since 1949, it was headquartered in the Chteau de la Muette in Paris, France. After the
Marshall Plan ended, the OEEC focused on economic issues.
The Organization for Economic Co-operation and Development (OECD) (French:
Organization de cooperation et de development economies, OCDE) is an international
economic organization of 34 countries, founded in 1961 to stimulate economic progress
and world trade. It is a forum of countries describing themselves as committed to
democracy and the market economy, providing a platform to compare policy experiences,
seeking answers to common problems, identify good practices and coordinate domestic
and international policies of its members.
In 1948, the OECD originated as the Organization for European Economic Co-operation
(OEEC), led by Robert Marjolin of France, to help administer the Marshall Plan (which
was rejected by the Soviet Union and its satellite states). This would be achieved by
allocating American financial aid and implementing economic programs for the
reconstruction of Europe after World War II. (Similar reconstruction aid was sent to the
war-torn Republic of China and post-war Korea, but not under the name "Marshall Plan
the American recovery program in Europe was the most successful one.
In 1961, the OEEC was reformed into the Organization for Economic Co-operation and
Development by the Convention on the Organization for Economic Co-operation and
Development and membership was extended to non-European states. Most OECD
members are high-income economies with a very high Human Development Index (HDI)
and are regarded as developed countries.

INDIAN E-COMMERCE LANDSCAPE

Several players have established their place in e-commerce market just in few years. With
the rising demand of digital commerce, innovative startups are emerging in all segments.
Home grown players are trying to compete head-on with global players who have the
advantage of scale, technology and deep pockets. According to Deloittes study Global
Powers of Retailing 2015, Amazon continues to dominate the world of e-Commerce
with net product sales of $61 billion in 2013. Flipkart is the largest e-tailer in India with a
valuation of about $11 billion and trying to raise funds to compete with global biggies
like Amazon and Alibaba. Snapdeal is another homegrown player with a valuation of $5
billion. 6 In October, Snapdeal raised $627 million from the Japanese telecom and media
group Softbank, who also has a 37% stake in China's e-commerce leader Alibaba. Other
merging players are BookMyShow with almost 90% of the online entertainment
ticketing market; Paytm with almost 20 million users is leading provider of virtual wallet.
The global e-commerce market is more advanced in terms of technology, awareness, and
payment systems. Amazon and Alibaba are two big players when it comes to global ecommerce market. Alibaba accounts for more than 80% of all online purchases in China
and has a global presence. It manages the marketplace and has commission based
business model with no products of its own. Amazon, on the other hand, started as online
book store and expanded the business as marketplace and also sells its own consumer
electronics such as Kindle eBook readers, Fire Tablets, and Fire TV. Only two pure play
web-only e-tailers (Amazon and JD) of the top 50 e-tailers were large enough to rank
among top 250 retailers.

Enabling Technologies
The greater adoption of Internet and smartphones is the biggest driver of e-commerce in
India. Internet penetration is rapidly increasing with around 300 million users in 2014.
The smartphone is steadily growing and consists of 35% of the overall mobile phones
market in the country. 7 The success rate of some of the technologies is directly
connected to the success of e-commerce.

Cloud: Most of the e-tailers are depending on cloud technology for its
flexibility, scalability, availability, mobility, and efficiency.

Mobile Applications: More than 235 million people in India access internet
through mobile devices. This is the primary reason for e-tailers to focus their
efforts on mobile app penetration across the country.
Digital Advertisements: The digital advertisement industry is growing rapidly
as there is a growth in digital communication devices around the world. The
increase in smartphones, tablets is enabling advertisers to reach a wider
audience.
Search Engine Optimization (SEO): With thousands of products in the digital
catalogues, the e-commerce players find it easy to be visible with the help of
SEO technology.

Trends

E-tailing (electronic retailing): E-tailing (less frequently: etailing) is the selling of

retail goods on the Internet. Short for "electronic retailing," and used in Internet
discussions as early as 1995, the term seems an almost inevitable addition to e-mail, ebusiness, and e-commerce. E-tailing is synonymous with business-to-consumer (B2C)
transaction.
M-tailing: Mobile devices are revolutionizing shopping in India and brands that embrace
mobility as a primary marketing platform could potentially double or triple their sales in
the short and medium term, according to research by creative and digital communications
agency Draftfcb India. So committed are Indian mobile phone users to mobile shopping,
57% of people surveyed said they would buy anything on a mobile phone, versus the
global average of 49%.
From proprietary research commissioned by Draftfcb across eight major global
economies, China has the most active smart phone market in the world where people use
their mobile devices for more functions than in other countries. On average, Chinese
smart phone users embrace 4.9 activities, with the USA average at 4.7 and India users at
4.4.
E-commerce: The internet has been likened, in its ability to change the nature and
operations of markets, to such past epochal events as the advent of railroad and the
introduction and growth of the telephone system. Globalization has been defined as the
process by which markets and production in different countries are becoming
increasingly interdependent due to the dynamics of trade in goods and services and flows
of capital and technology. Globalization can be defined as any economic transactions
where the buyer and seller come together through the electronic media of the Internet,
form a contractual agreement concerning the pricing and delivery of particular goods and
services, and complete the transaction through delivery of payments and goods and
services as contracted. E-Commerce refers to a wide range of online business activities
for products and services
M-commerce: The phrase mobile commerce was originally coined in 1997 by Kevin
Duffey at the launch of the Global Mobile Commerce Forum, to mean "the delivery
of electronic commerce capabilities directly into the consumers hand, anywhere,
via wireless technology. Many choose to think of Mobile Commerce as meaning "a retail
outlet in your customers pocket.
Mobile commerce is worth US$230 billion, with Asia representing almost half of the
market, and has been forecast to reach US$700 billion in 2017. According to BI
Intelligence in January 2013, 29% of mobile users have now made a purchase with their
phones.

OBJECTIVES OF THE STUDY

1
2
3
4
5
6

Analyze the Production process across different countries.

Describe the integration of trade by globalization.
List the factors that have enabled Globalization.
To describe the present status and facilitators of E-Commerce in India.
To analyze the present trends of E-Commerce in India.
To examine the barriers of E-Commerce in India.

1. Analyze the production process across different countries.

Until the middle of twentieth century, production was largely organized within countries.
Only raw materials, food stuff and finished products were exported to other countries.
India exported raw materials and food stuff and imported finished goods. Trade was the
main channel connecting distant countries. Towards the end of 20 th century large
companies called Multi-National corporations (MNCs) emerged on the scene. A MNC is
a company that owns or controls production in more than one Nation. MNCs set up
offices and factories for production in region where they can get cheap labour and other
resources.

2. Describe the integration of trade by globalization.

For a long time foreign trade has been the main channel connecting countries. Even as
early as 8th century extensive trade took place between South Asia, Including India, and
the east and west. Trading interests attracted various companies. Foreign trade created an
opportunity for the producers to reach beyond the domestic markets, i.e markets of their
own country. Producers could compete in markets located in other countries of the world.

3. List the factors that have enabled globalization.

1. Technology = Rapid improvement in technology has been one major factor
that has stimulated the globalization process.
(a) Transportation technology = The dramatic improvement in transportation
technology has played a vital role in faster delivery of goods across long

distance at lower cost and in the movement of people from one country to
another in a short time.
(b) Information and communication technology: Information and communication
technology (or IT in short) has played a major role in spreading out
production of services across countries. Many MNCs are service based
companies therefore the transfer of information is very vital to them.
2. Liberalization of foreign trade and Investment policy
(a) Removing Trade Barriers: when the government on imports imposes tax it is
called a trade barrier. Government use the trade barriers to increase or
decrease (regulate) foreign trade and to decide what kind of goods and how
much of each should come into the country.
(b) Liberalization of Investment policies: Barriers on foreign investment were
removed to a large extent enabling many MNCs to set up their factories in
India. Thus the rapid improvement in technology and the liberalization of
foreign policies paved the way for globalization in India.

4. To describe the present status and facilitators of E-Commerce in India

Today e-commerce is a byword in Indian society and it has become an integral
part of our daily life. There are websites providing any number of goods and services.
Then there are those, which provide a specific product along with its allied services.
Facilitators of E-Commerce in India.
Information directories
Banks

5. To analyze the present trends of E-Commerce in India

India is developing rapidly and if development is to be measured, how can we ignore
the role of ecommerce in it. The internet user base in India might still be a mere 100
million which is much less when compared to its penetration in the US or UK but it's
surely expanding at an alarming rate. The number of new entrants in this sphere is
escalating daily and with growth rate reaching its zenith; it can be presumed that in years
to come, customary retailers will feel the need to switch to online business.

6. To examine the barriers of E-Commerce in India

Some of the infrastructural barriers responsible for slow growth of ecommerce in India
are as follows. Some of these even present new business opportunities.
a) Payment Collection: When get paid by net banking one has to end up giving a

significant share of revenue (4% or more) even with a business of thin margin.
Fraudulent charges, charge backs etc. all become merchant's responsibility and
hence to be accounted for in the business model
b) Logistics: You have to deliver the product, safe and secure, in the hands of the
right guy in right time frame. Regular post doesn't offer an acceptable service
level; couriers have high charges and limited reach
c) Vendor Management: However advanced system may be, vendor will have to
come down and deal in an inefficient system for inventory management. This will
slow down drastically. Most of them won't carry any digital data for their
products. No nice looking photographs, no digital data sheet, no mechanism to
check for daily prices, availability to keep your site updated.

METHODOLOGY

For the purpose of research, our method needs analysis of certain indicators which can
bring the clearer picture on relationship between e-commerce and globalisation.
Analytical preparation will need following methods.
1. Interview with an optimal sample space which will variously include general
populace, trade analysts, media, government etc.
2. Finding correlation between various trends such as rural-urban disparity,
increasing consumerism and per capita expenditure, trends of conspicuous
consumption, etc.
3. Doing personal experiments and reading to identify array of parameters, such
as those related to cash on delivery, goods return, window shopping etc.
4. All the above methods will need data collection at primary and secondary
levels.
Following is the list and example of certain indicators which will be analysed in the next
section.
a. Impact on small and medium industries.
E-Commerce brings in significant opportunities for the Small and Mediumsized Enterprises (SME) sector in India which accounted for more than 8 per
cent of the GDP in 2014. Notwithstanding the contribution to the Indian
economy, only a miniscule percentage of enterprises in this sector are present
on the web.
b. Ease of spending.
Personalized experienced is a great way to encourage customers to fill their
shopping carts. Many customers are unsure or are too lazy to look through all
the possible options on a website. They are more likely to use your initial
navigations to get to the part of your website that has something like what
they are looking for. From there they may scan through some options.
c. Taxation.
E-commerce sector is buzzing with deals and sales. But when it comes to taxation
policy, the sector does not sizzle, especially on the Budget day. The only spark
was the Governments pledge to implement the much-delayed Goods and Service
Tax (GST) by April, 2016 and the improvement associated with debit and credit
card transactions.

d. Rise in mobiles.
Among the mobile phone users, the percentage of Smartphone users is expected
to increase drastically. There were around 1.13 billion Smartphone users in 2012 i.e.
around 28% of global Smartphone users. The number of Smartphone users increased
by 27.1% in 2013 to 1.43 billion users which is around 33 % of global Smartphone
users. The world Smartphone market sales grew to 250 million in Q3, 2013.
Number of Smartphone users is further expected to increase by 22.5% to 1.75 billion
users in 2014, which is around 39% of mobile users. Around 49% i.e. nearly half of
the mobile phone users globally are likely to use Smartphone by 2017.

e. Per capita income

It is expected that Internet penetration to increase from 32% in 2015 to 59% in
2020, translating to a near-doubling of the Internet user base," the US bank said.
It estimates India will have almost 320 million online shoppers by 2020 compared
with
50
million
in
2015.
Per capita incomes are likely to double by 2025 and this should drive higher
aspirations of the Indian consumer.

LIMITATIONS
The study done has many limitations both foreseen and unseen. The size and composition
of sample space is a very complex task to choose and analyse from. Men, women, girls,
boys, rich, poor, rural, urban, all have different demands and schedules which enable
different experiences of such processes like e-commerce. It is not optimal to do the
averaging from such trends and hence prone to deviant errors.
The interview process is used as one mode of methodology. Such a method is also prone
to errors owing to expertise of interviewer, credibility and interest of the responder, and
other such problems.
The methodology also involves personal studies and reading from various sources, which
will thus bring element of subjectivity in the study and result can thus be biased to some
degree despite best efforts.
Further the field of e-commerce is yet not so evolved and is changing on daily basis.
Study looking for sure conclusions will thus have its limitations.
Marketplace model and inventory model
The marketplace model sprung into the virtual horizon as an alternative especially to
address the downsides of the full inventory model.

New entries in e-commerce market

Study is conducted in India, which has one of the fastest paces of changing values in
parameters such as mobile penetrations, smartphone users, changing laws, some amount
of inflexibility with regard to foreign entry of trade(as is the case with Amazon). Thus
India has its inherent difficulties with regard to study on the subject.

Lack of Verification Measures

Once a customer signs up in an e-commerce portal, the portal is unaware about the
customer except the information he/she entered. The credibility of the customer is
questionable. This heightens when the customer issues a Cash-on-Delivery (COD)
purchase because the business is unsure whether the customer is genuine or not. These
have resulted in huge revenue losses for many e-commerce players.
Product Returns and Refunds
When products are returned because customers are unsatisfied with the product, it scars
the business with heavy loss on shipment and reputation. Cost of logistics have always
been an issue for e-commerce players especially for those who deliver for free.

Lack of Integration

Order management system, customer support system, dispatch system, order tracking
system, etc are applications that can streamline the experience of the customer across the
buying journey. But if these systems are disparate it could ruin customer experience

Customer Issues Going Unnoticed

Being in an industry where customers can take their business elsewhere in a blink of an
eye, customer service goes a long way. E-commerce business receives a lot of inbound
interaction with more than 75% being complaints or concerns. When these concerns go
unnoticed, it compromises the standard of quality of your business, and tarnishes your
image.
Customer Loyalty

E-commerce industry is an industry where the cost of switching is pretty insignificant. A

lot of players have lost customers because their rivals have a better quality of customer
service, or better discounts. Knowing that 86% of clients stop doing business with a
company because of poor customer service, you need to ensure customer service is
always a priority for your online business and part of your retention strategy. Customers
demand consistent and seamless experience across all channels, and players that refuses
to deliver fail to retain customers.

The need to manage the customer relationship:

Most B2B relationships are the responsibility of a sales team. Often, this includes
coordination between inside sales and outside sales or independent
representatives. Website content and e-commerce can be integrated with CRM
solutions, including Salesforce.com, to inform the sales team of customer interest and to
give credit for self-service purchases
Too many products with only slight variations:
This hurdle can be solved with a robust site search function. Parametric search allows
site visitors to search for an item based on specific parameters or particular attributes as
granular as item dimensions or material composition. When a B2B business owner can
bring value to a commodity item, such as a nut or a bolt, theyve done their job and then
some.
Security/ Privacy
Difficult to ensure security or privacy on online transactions.

STASTISTICS AND FACTS ABOUT E-COMMERCE IN INDIA

The fast development of telecommunications technology in the past few decades is

changing many aspects of our lives how we search for information, how we travel and
not at least how we buy products or services. Although classic shop-based retail is still
preferred, e-commerce or electronic commerce, namely the buying and selling of
products and services exclusively through electronic channels, is gaining ground. The
most well-known form of e-commerce or electronic commerce is online shopping, also
known as business to consumer e-commerce (B2C), where private customers can order
various products which they then receive by courier or postal mail. Another category of
e-commerce focuses on transactions between companies, such as manufacturers and a
wholesalers or wholesalers and retailers and is called business to business e-commerce
(B2B). The third category of e-commerce involves transactions from consumer to
consumer (C2C), as in the example of Amazon or other similar websites.
With an expected 33 percent of the global market in 2015 and over 37 percent in 2018,
the Asia Pacific region is becoming the leader of the e-commerce industry. In fact, China,
due to its unprecedented economic boom, is not only driving the regions leadership, but
is also set to outdo the United States as the single country with the largest e-commerce
market in the world. Another emerging Asian market in terms of e-commerce is India.
Recent statistics show that retail e-commerce sales in India have grown tremendously,
from 2.3 billion U.S. dollars in 2012 to an estimated 17.5 billion U.S. dollars,
representing an almost eight-fold growth. As of 2015, the retail e-commerce sales as a
percent of total retail sales in India are set to account for 0.9 percent of all retail sales in
India, but this figure is also expected to grow in the near future, reaching 1.4 percent in
2018.
By 2016 a number of 653 million people in the Asia Pacific region are expected to buy
goods and services online, a figure which translates into over 48 percent of internet
users in the Asia Pacific region purchasing products or services online. Some of the
most popular product categories among online shoppers in the region include airline
tickets and reservations, baby supplies, cosmetics, clothing, accessories and shoes, as
well as computer hardware and software. According to recent data, the number of digital
buyers in India alone is expected to reach 41 million by 2016, representing some 27
percent of the total number of internet users in the country. Furthermore, a growing
number of people in the Asia Pacific area are increasingly using their mobile devices for
online shopping. In India, some 9 percent of the countrys population had made
a purchase via mobile phone within the past month, as of the fourth quarter of 2014.
The most successful e-retailer in India is Jabong.com, a fashion and Lifestyle Company
specialized in apparel, footwear, fashion accessories, beauty products, home accessories
and other fashion and lifestyle products. With 26.26 million unique in October 2014

alone, Jabong.com manages to surpass Amazon, the worlds most successful e-retailer.
In the next 15 years India will see more people come online than any other country. Last
year e-commerce sales were about $16 billion; by 2020, according to Morgan Stanley, a
bank, the online retail market could be more than seven times larger. Such sales are
expected to grow faster in India than in any other market. This has attracted a flood of
investment in e-commerce firms, the impact of which may go far beyond just displacing
offline retail.
Indias small businesses have limited access to loans; most of its consumers do not have
credit cards, or for that matter credit. The e-commerce companies are investing in
logistics, helping merchants borrow and giving consumers new tools to pay for goods.
Amit Agarwal, who runs Amazon.in, holds out the hope that We could actually be a
catalyst to transform India: how India buys, how India sells, and even transform lives.
The jewel in the crown
Amazon wants to make India its second-biggest market, after America. For the time
being, though, with just 12% of the market, it lags behind the home-grown successes,
Flipkart (45%) and Snapdeal (26%). All three, as well as some smaller competitors, are
spending at a blistering rate. As global markets dip and Silicon Valley unicorns stumble,
the international funding that makes this possible may dry up. Doubts about the
sustainability of the companies present plans were underlined when, on February 26th,
one of Morgan Stanleys mutual funds marked down the value of its stake in Flipkart by
27%. If the prospect of changing India a billion deliveries at a time is a beguiling one, it
is not for the faint-hearted.
Indias visionaries keep their spirits up by remembering the example of China. Chinese ecommerce grew by nearly 600% between 2010 and 2014, making the country the biggest
e-commerce market in the world today. It managed this largely through the growth of
indigenous companies: mighty Amazon merely nips at the heels of home-grown giants
Alibaba and JD.com; eBay has all but left the stage. And in the process Chinas top ecommerce firms came to offer an astonishing range of services.
Alibaba, founded by Jack Ma in 1999 and now valued at $184 billion, provides the best
illustration. To calm anxieties about buying online Alibaba created Alipay, which holds a
shoppers payment in escrow until he receives his order. The tool has evolved into a
financial-services company, Ant Financial, which last year serviced more than 400m
Alipay accounts and made over 2m loans to small businesses and entrepreneurs. To
provide Chinese consumers with access to foreign goods the firms services include not
just online listings but marketing, shipping and help with customs.

Alibaba is now building service centres in remote areas where shoppers can order, pick
up and sell goods, as well as pay their bills. It is a further step in its attempts not merely
to benefit from the growth in Chinese consumption, but to shape and accelerate it. The
degree to which it has succeeded suggests that the earlier an e-commerce company
arrives in a countrys development, the wider its role might be.
India is in many ways a tougher market for e-commerce than China. Its population is
poorer and its infrastructure worse. But its prospects look remarkable. Income per person,
which in 2014 was $1,570, could be twice that by 2025. Two-thirds of Indians are
younger than 35, and their phones give a huge number of them access to the internet. In
December 2014 smartphones accounted for one in five Indian mobiles, according to
Goldman Sachs. Just six months later, they accounted for one in four (see chart 1).
Morgan Stanley expects internet penetration to rise from 32% in 2015 to 59% in 2020.
By 2030, India is projected to be a one-billion-person digital market.

The prospect of a second market growing to a near-Chinese size attracts those who made
a packet the first time round. Bob van Dijk, the chief executive of Naspers, a South
African firm that backed JD.com and Tencent, Chinas largest social-media company,

says he looks for countries with big populations, rising smartphone use and few retail
chains. India, where malls, supermarkets and branded chains, or what analysts call
organized retail, account for just 10% or so of the total market, fits the bill perfectly.
The middlemen
Naspers owns a 17% stake in Flipkart; other JD.com investors, including Tiger Global
Management, in New York, and DST Global, a Russian fund, have also backed the
company. Japans Softbank, a big investor in Alibaba, has backed Snapdeal since 2013,
and Alibaba itself followed suit last August. Meanwhile Alibabas Ant Financial owns a
20% stake in Indias Paytm, which began as a mobile-wallet company and now competes
with Snapdeal and Flipkart as an online marketplace. The three firms have a combined
valuation of almost $25 billion.
In contrast to those investors trying to recapitulate their Chinese success, Amazon is
seeking to make up for its failure. Reduced last year to the ignominy of having to open a
shop on Alibabas Tmall site, Jeff Bezos is determined that this time, with more
experience and in a more open market, things will be different.
When Flipkart was founded, in 2007, Amazon was obviously its model. The company
began as a bookseller; the two engineers who started it, Sachin Bansal and Binny Bansal
(not related), had worked for Amazon. Mr. Bezos, though, is of the opinion that if anyone
if going to be the Amazon of India, it should be Amazon. In 2014, shortly after Flipkart
announced a $1 billion round of funding, Mr. Bezos donned Indian clothes in Bangalore,
hopped aboard a rainbow-coloured truck and handed Mr. Agarwal a $2 billion cheque. A
firm which earned over $100 billion in 2015 and has shareholders content to see more or
less nothing by way of profits can afford such largesse.
Neither Flipkart, Amazon, nor any of the other big competitors are following the retail
strategy that led to Amazons success in the West. Indian regulations bar foreign-backed
e-commerce firms from owning inventory, and so acting as a straightforward retailer is
not an option. As a result Indias top e-commerce companies look much more like
Alibaba. Flipkart has become a marketplace where sellers offer everything from mobile
phones to washing machines to handbags. Snapdeal, Amazon and Paytm run
marketplaces too. The firms compete feverishly on price, offering discounts that chomp
away their own margins. In the long term, they must differentiate themselves by honing
services for sellers and shoppers alike, and offering a better, broader range of products to
more Indians than would have them otherwise.
The first step to that goal is to boost the number of sellers on the companys platformit
is the sellers, after all, who pay commissions and shipping fees. So companies offer a
range of services to lure businesses to their sites. Flipkarts programs range from teaching
sellers how to manage peak sales during Diwali to advising fashion brands on trends and

production. In February Amazon announced a travelling studio-on-wheels, offering

training, photography and other services to help shop-owners come online.
But the most important help they offer is in easing access to credit. Small businesses,
given their scarce financial statements and limited credit history, have long had trouble
obtaining loans from Indias banks. They often rely on expensive loans from neighbors or
family. The e-commerce companies have strong incentives to make them better offers
and because they have access to online-sales data they are in a privileged position from
which to help lenders judge credit risk.
Take Sumit Agarwal (no relation to Amazons Mr. Agarwal), a young entrepreneur who
started an online shoe business in 2011. In his warehouse in New Delhi workers pack and
scan shipments among towers of shoeboxes. The early days were uncertain; his familys
reaction when the firm started, he says, was What the hell is this guy doing? Now it is
easier for such entrepreneurs to find the capital with which to grow. When Mr. Agarwal
logs into his sellers account on Amazon.in his screen offers a column of short-term
loans, their rates calculated using data from his transactions. Other e-commerce firms
have similar schemes. In January Snapdeal announced that the State Bank of India would
approve loans of up to $37,000 instantly if it liked the look of the data that Snapdeal
provided on the borrower.
Once a site has sellers, the second challenge is to help consumers buy their wares. Anil
carries a clunky credit-card reader with him on his rounds, but most people pay cash. The
e-commerce sites want to change that. Paytm lets customers add money to a digital wallet
that can then be used to shop online, top up a mobile phone, lend money to a friend, pay a
bill or use a service such as an Uber taxi. It has 120m digital-wallet accounts, nearly six
times Indias number of credit cards. Snapdeal bought its own mobile payments company
in April. Amazon purchased an online-payments service in February.
A fine balance
If a consumer does buy a product, the next task is delivering it. Delivery itself is nothing
new. Indians have long been able to have a delivery boy from the local kiranathe
corner shops that dominate Indian retailbring them a stick of butter. But being able to
deliver on a larger scale is a challenge. The countrys mail service, India Post, is illequipped to wait while a shopper tries on a kurta and ponders returning it. So newcomers
are building networks. But Indias traffic is hellish and its addresses vague.
A startup named Delhivery has hired more than 15,000 staff, from developers to
executives poached from Facebook and posh consultancies. Its headquarters in Gurgaon
are so packed that engineers spill onto an outdoor porch, tapping their keyboards
furiously. Delhivery, which works with a number of e-commerce firms, is using machine
learning to subdivide Indias postcodes, the better to map idiosyncratic descriptions.
Well know the house with the yellow door next to the temple, says Sandeep Barasia,

the managing director. The company moves goods to 700 or so small distribution centres
overnight to avoid congested main roads during business hours. Thousands of delivery
boys then dash to and from the distribution centres throughout the day, bearing more than
20 kilos on their bikes.
E-commerce companies are devising their own solutions, too. Some investments, such as
warehouses, are straightforward. Others are less so. Flipkart last year began using
Mumbais famous network of dabbawallas, or lunch-delivery men, to drop off packages
when they picked up customers lunch tins. Amazon has a pilot Programme that lets
customers order groceries online and have them delivered from the nearest kirana.
Together, e-commerce firms say, these experiments could create a new truly national
marketplace. Neelkanth Mishra of Credit Suisse, a bank, points out that road
construction, electrification and mobile phones have stoked big increases in rural wages,
and thus demand for goods (see chart 2). Flipkart says that about half its sales come from
outside Indias big cities. Snapdeal claims more than 60%. It recently launched seven
regional-language versions of its website.
As they build out their markets the firms trumpet their assistance to small businesses.
Some of the big sellers on Amazon only had a shop in a corner of Bangalore; they were
happy selling to five kilometers around each shop, declares Amazons Mr. Agarwal.
Now they are shipping orders to Kashmir and eastern India. Amazon is helping more
than 6,000 Indian businesses export, as well. Snapdeals Kunal Bahl is equally expansive:
Our ambition is to be a great social, economic and geographic equalizer for the small
businesses of India as they scale up.
All these bold plans are clouded by two obstinate facts. First, spending on discounts,
marketing campaigns and new hires means none of the companies has yet made money.
Visit any firms lobby and you will meet herds of job applicants. Delivery boys like Anil
are in hot demanda top performer in his branch, he earns about 14,000 rupees ($200)
each month.

Amazon is, predictably, outspending its competitors. Last year its sales were two-thirds
the size of its losses. Mr. Agarwal is not bothered by a lack of profit. The priority is
growth, he explains. Ankit Nagori, Flipkarts chief business officer, says that the most
important metrics for his company are not margins but the number of new customers,
how often they shop, how much they buy and the speed of delivery. If you solve for
these four things, he contends, then the top line and bottom line will fall in place.
A billion deliveries more
The second problem is regulatory. Forbidding foreign-backed firms from owning
inventory has costs. Companies have limited control over the quality of products on their
sites, points out Morgan Stanleys Parag Gupta, and they can do little to streamline the
countrys fragmented supply chain. Flipkart has become a tangle of interlinked entities,
including a holding company in Singapore, in an attempt to obey Indias rules while
maximizing profits.
Indias government may nonetheless come under protectionist pressure. Traditional
retailers allege that the online marketplaces flout rules against foreign direct investment.
Facebooks recently scuttled plan to offer Indians free internet services, including its
own, sparked a furore over the risks of digital colonialism.

Offline retailers are watching all this intently. Kiranas are relatively protected, thanks to
meagre tax bills and limited carrying costs (they store little). Big shops and malls are
another story (see chart 3). What is remarkable for me is that in a very short time, ecommerce has become half of what the organized market is, says Abheek Singhi of the
Boston Consulting Group. Two years down the line, three years down the line, the ecommerce market could be larger.

Big foreign retailerssuch as Ikea, a Swedish furniture company, which after years of
kerfuffle may finally be opening an Indian storecannot sell directly online. Matters are
simpler for Indian retailers, but their course remains cloudy. Reliance Industries, a
conglomerate with over 1m square metres of shop floor, is planning its own e-commerce
venture. Future Group, which pioneered hypermarkets in the country, is outfitting small
shop-owners and entrepreneurs with digital catalogues so that consumers can order
Future Group products in places where there will never be a store. However the firm has
scaled back some of its more ambitious plans for e-commerce. The more sales you do,
the more money you lose, muses Kishore Biyani, Future Groups founder. You need to
have continuous funding and someone to back you.
For the time being, the big companies in the sector are having those needs met. You
have at least three, potentially four large players with deep enough pockets, says Mr.
Singhi. Its going to play out at a very high cost. Companies like Alibaba and Amazon

see that cost as worth paying in part because, just as they applied what they learned in
China to India, so they will use their Indian experience in the next markets they move
into. Alibaba, not content to back Paytm and Snapdeal, is also courting Indian businesses
directly. In December it said it would help Indian firms with financing and logistics so
they might use Alibabas platforms to export to China and beyond. Eventually, Mr. Ma
likes to say, any consumer should be able to buy from any seller, anywhere in the world.
The more of those purchases go through one of his firms, the better.
And everywhere these giants go, home-grown entrepreneurs will be hoping that their
local acumen will give them an edge and looking for overseas investors to back them.
Many of them will fail: India does not yet offer an example of how to make a profit, and
it may be a long time before it does. But as long as some of these efforts survive, they
will serve to speed progress, and innovation, in developing markets. As Amazons Mr.
Agarwal says, If millions of small, medium enterprises out there, manufacturers and
retailers, can...sell their product anywhere in the worldthats transformational.

RESULT OF THE STUDY

1. The future of mobile shopping and plans for mobile network growth.
2. How fast users of mobile networks expect shopping websites to load.
3. The projected growth of mobile devices and its impact on e-commerce.
4. The breakdown in mobile site revenue from mobile vs. desktop shoppers.

E-commerce benefits globalization through two channels:

Physical location, mutual processes or other expediting functions are subscribed

by e-business practices.

Firms facing foreign competition are under pressure to adopt technologies such
as e-commerce that enable to protect or expand market share and operate more
effectively.

Firms doing business outside their own country may be more motivated
to their own transaction costs by using information technology.

Using the internet for transaction and coordination save time and money on
delivery of goods by using rich information flows to simplify and streamline the
flow of physical goods in the supply chain.

CONCLUSION

This research shows the relationship between globalization and e-Commerce. The
findings imply that e-Commerce will reinforce existing international competitive
advantages rather than leveling the playing field and enabling local firms to compete with
global firms in international markets. Doing business across national borders involves
more than simply setting up a web site and offering products or services to the world. The
virtual world of commerce must be supported with physical, financial and information
processes that global firms are more likely to already have in place, and which local firms
cannot duplicate easily or cheaply. In fact local firms may have valuable resources that
put them at a competitive advantage in their home markets. These include local
knowledge, strong brand names, distribution channels and service infrastructure. These
resources can be an advantage in B2C e-Commerce and are not easy for global firms to
replicate in each national market around the world. This implies that less global firms can
look for opportunities in local markets rather than trying to use the Internet to reach farflung international markets. If these firms do want to expand into global markets, they are
more likely to do so by adopting B2B ecommerce to break into the global production
networks for multinational Corporations than by trying to sell directly to foreign
consumers.

SCOPE OF STUDY

After many months of rumors and speculation, the world's largest online retailer Amazon entered
India on Wednesday with a marketplace model that sidesteps Indian regulations preventing
foreign retailers from selling online merchandise in India. Amazon.in, the Indian edition of the
retailer, will not own the merchandise but store it and sell it on behalf of those who showcase their
products on the website. Amit Agarwal, vice-president and country manager, told ET in an
interview that Amazon's model is fully compliant with Indian laws.
Amazon.com is a company of online stores. Amazon.com increasing their stores day by day so
for the opening of new stores Amazon.com have the need of new platform where they have
suffer less competition. For the future scope India is that platform where Amazon.com can
open there stores. So looking for the future scope in India Amazon.com open there online store
in India as Junglee.com.

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