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INTERNET MARKETING AND B2C E-COMMERCE: THE INDIAN SCENARIO

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INTERNET MARKETING AND B2C E-COMMERCE:
THE INDIAN SCENARIO
Prateek Kalia1, Navdeep Kaur2, Tejinderpal Singh3

Citation:
Kalia, P., Kaur, N. and Singh, T. (2015), “Internet Marketing and B2C E-Commerce: The Indian
Scenario”, in Vashisht, A., Suri, G. and Kaur, R.B. (Eds.),Innovation Management, Excel
India Publishers, Delhi, India, pp. 127–134.

Abstract:
In the last 50 years e-commerce has evolved as most exciting development in business-to-
consumer marketing. Electronically transacted business particularly in-electronics, books,
education, travel and software has increased many folds within last 5-6 years. Websites like
eBay, moneycontrol, shaadi, jeevansaathi and many more have impregnated in our daily life.
With the boom in information technology, falling prices of personal computers and robust
infrastructure, number of internet users have grown from meagre 0.1% in 1998 to 19.19% in
2014 of the total Indian population i.e. 243,198,922 users, which is more than the total
population of Canada. With such a phenomenal growth rate and dramatic future developments,
most businesses will wither if they do not use web to their advantage. The paper elaborates
basics, origin, challenges and opportunities of internet marketing and e-commerce in India, and
how leading dot coms are using it for achieving effective communication, differentiation and
delivery to have an edge over their rivals.
Keywords E-commerce, Internet, Internet marketing, E-business, World Wide Web

Introduction
"Network of networks”, the Internet is a global system of interconnected computer networks that
interchange data by packet switching using the standardized Internet Protocol Suite (TCP/IP),
consisting of millions of personal, academic or business networks of local to global scope
(Kalakota & B.Whinston, 2009). After 1994 with the introduction of user friendly application --

1
Corresponding Author, Research Scholar, Department of Research Innovation & Consultancy, I.K Gujral Punjab
Technical University, Punjab (India), Email: [email protected]
2
Assistant Professor, Guru Nanak Dev Engineering College, Punjab, Email: [email protected]
3
Assistant Professor, University Business School, Panjab University, Chandigarh, Email: [email protected]
The World Wide Web -- which provides companies’ access to millions of new customers at a
fraction of the cost, the Internet began to grow dramatically (Rai, Chandra, & True, 1997).
It is projected that from 2003 to 2015 the annual increase of computer users worldwide would be
12% (Yates, Daley, Gray, Gownder, & Batiancila, 2007). It is assumed that from 2 million of
computer users worldwide in 2015, Russia, China, India and Brazil will have 775 (Yates et al.,
2007).

Table 1. List of Countries by Internet Usage (2014)

Source: (Internetlivestats.com, 2014)
Country's
Penetration Country's
1 Year 1 Year Total 1 Yr share of
Internet (% of Pop. share of
Rank Country Growth User Country Population World
Users with World
% Growth Population Change (%) Internet
Internet) Population
Users
1 China 641601070 4.00% 24021070 1393783836 0.59% 46.03% 19.24% 21.97%
United
2 279834232 7.00% 17754869 322583006 0.79% 86.75% 4.45% 9.58%
States
3 India 243198922 14.00% 29859598 1267401849 1.22% 19.19% 17.50% 8.33%
4 Japan 109252912 8.00% 7668535 126999808 -0.11% 86.03% 1.75% 3.74%
5 Brazil 107822831 7.00% 6884333 202033670 0.83% 53.37% 2.79% 3.69%
6 Russia 84437793 10.00% 7494536 142467651 -0.26% 59.27% 1.97% 2.89%
7 Germany 71727551 2.00% 1525829 82652256 -0.09% 86.78% 1.14% 2.46%
8 Nigeria 67101452 16.00% 9365590 178516904 2.82% 37.59% 2.46% 2.30%
9 UK 57075826 3.00% 1574653 63489234 0.56% 89.90% 0.88% 1.95%
10 France 55429382 3.00% 1521369 64641279 0.54% 85.75% 0.89% 1.90%

Internet marketing
Internet marketing is the marketing of products or services over the Internet. It thus ties together
creative and technical aspects of the Internet, including design, development, advertising, and
sales. Internet marketing does not simply entail building or promoting a webpage, nor is it
simply a banner ad on another website. Internet carries voice and video along with text to attract
consumers (Lewis & Lewis, 1997). Internet marketing also refers to the placement of media
along different stages of the customer engagement cycle through search engine marketing
(SEM), search engine optimization (SEO), banner ads on social websites, marketing through
email, and Web 2.0 strategies. The Internet has brought many unique benefits to marketing, like,
lower costs for the distribution of information and media to a global audience. The unique
quality of internet marketing is its interactive nature, in terms of providing instant response and
eliciting responses. Internet marketing also includes management of digital customer data and
electronic customer relationship management (ECRM) systems (Villivalam & Potturi, 2007).

E-Commerce
Commerce is referred to all the activities including the purchase and sales of goods or services-
marketing, sales, payment, fulfilment, customer service etc. Electronic commerce is performing
commerce with the use of computers, networks and commerce-enabled softwares (more than just
online shopping) (Kalakota & B.Whinston, 2009).
There are different perspectives for ecommerce like communication, business process, service
and online (Kalakota & B.Whinston, 2009). Electronic commerce is use of the internet and the
web to transact business. In more specific words it is defined as, digitally enabled commercial
transactions between and among organizations and individuals. All transactions brought through
by digital technology are digitally enabled transactions happening over internet and the web.
When these transactions involve the exchange of value (e.g., money) across organizational or
individual boundaries in return for products and services, they are termed as commercial
transactions (Laudon & Traver, 2002). It includes internal processes that supports companies
buying, selling, hiring, planning and other activities apart from business trading with other
businesses (Schneider, 2012).

E-commerce and Marketing on the internet –The Indian scenario

E-commerce and internet marketing in India is in its infancy and has got tremendously bright
future in terms of the available customers or internet users being increasing at a nice pace though
still the internet penetration is far below the emerging nations in the Asian continent as
Singapore, Taiwan, Japan, Hong Kong and China. Internet marketing has increased the
interactivity among the businesses and their target customers or the consumers.
The past few years have seen an increase in the number of companies' embracing e-
commerce technologies. Many Indian portal sites have also shifted towards e-commerce instead
of depending on advertising revenue. The major in these services being Rediff, Indiatimes, eBay,
Sify shopping and India plaza which started a shopping section after their highly successful
content site. Low Internet usage e-commerce sites have popped up everywhere though none of
the major players have been deterred by the low PC penetration and credit card usage in India.
The Indian e-commerce has expanded its wings by entry of an array of e-business like Khojle.in,
Sulekha.com, Indiamart etc. Also, Banking sector successfully adapted EC and EDI
Technologies to provide customers with real time account status, transfer of funds between
current and checking accounts, stop payment facilities), online stock portfolio and status.
From INR 19,249 Crores in the year 2009 to INR 47,349 Crores in 2012 Digital
Commerce industry has seen a significant increase. Online Travel industry which contributes
71% to the total Digital Commerce industry in India is the main driver. Showing a year-on-year
CAGR of 34% since 2009, In 2013, the market is estimated to mature and reach INR 62,967
Crores. Fuelling factor of this ecommerce growth are a growing base for Internet users,
increasingly competitive Internet Service Provider (ISP) and low cost of personal computers
(IAMAI, 2013).

Table 2. Ad revenues in India, by media, 2011-2016

Source: (Digital Marketing Training Institute, 2014)
2011 2012 2013 2014 2015 2016 CAGR
Print 139 154 172 193 215 241 11.50%
TV 116 130 148 170 197 230 14.70%
Out of home 18 20 22 24 26 29 10.00%
Digital* 15 20 26 34 44 57 29.90%
Radio 12 13 16 20 24 30 20.70%
Total 300 337 384 440 506 586 14.30%

*India digital sector is on the rise, with 31% growth as opposed to other media.

Internet is being accessed for several purposes as deriving information, retrieving data, sharing
words marketing of products followed by their sale and purchase by the target e-users. The most
visited web sites include the Google (India) and Google World search, followed by social
networking giant Facebook and video sharing and mail websites as Youtube and Yahoo.
Electronic retailing website, Flipkart leads ahead of Wikipedia and Blogspot. Most of the
electronic retailing websites stack in top 25.
Table 3. Top 10 websites visited by Indian internet users
Source: (Alexa.com, 2014)
SNo Website Product/Service Offered
1 Google.co.in Indian version of this popular search engine.
2 Google.com Enables users to search the world's information.
3 Facebook.com A social utility that connects people.
4 Youtube.com YouTube is a way to get your videos to the people who matter to you.
5 Yahoo.com A major internet portal and service provider.
6 Flipkart.com Flipkart is a leading destination for online shopping in India.
7 Wikipedia.org A free encyclopedia built collaboratively using wiki software.
8 Blogspot.in Blogging Website
9 Indiatimes.com Portal site.
10 Linkedin.com A networking tool to find connections.

Challenges
From the view point of the use of virtual market. Following are the potential challenges:
I. Consumer challenges:
a) Indian buyers are hesitant to buy online: Many consumers are hesitant to purchase items
over the Internet because they do not trust that their personal information will be secure.
Recently some companies that do business online have been caught giving away or selling
information about their customers. Online retailers have been adopting shortcuts in customer
service and have lapses in execution, thus it is not surprising that consumers use this channel
cautiously.
b) Winning customer trust-a big challenge: As the customer is not able to see the online seller
there is a large disliking of majority of consumers to deal with them. Another major security
concern that consumers have with e-commerce merchants is whether or not they will receive
exactly what they purchase. Moreover, the concerns regarding the delay during shipment/courier
are a major cause for disliking of the consumer to fetch for articles online.
c) Newer Technologies and customer’s computer illiteracy: Internet marketing requires
customers to use newer technologies rather than traditional media and thus a major hitch is due
to insufficient e-information among the customers.
d) Loss of ability to inspect products from remote locations: From the buyer's perspective,
Intangibility that is the inability of shoppers to touch, smell, taste or "try on" tangible goods
before making an online purchase is inherent limitation.

II. Seller Challenges: Though internet provide enormous opportunities to the marketers, yet
marketers should be careful to adopt right strategy at right time (Kotler, 1997).
a) Lack of differentiation: Every online store in India sells almost the same items and there is
hardly any strong brand recall. It is time to start thinking about differentiation around other
dimensions such as quality of execution, customer experience (Tarafdar, 1998).
b) Double taxation and fees: The vendor or the e-seller has to pay the website hosting the
products for internet marketing in form of advertising fee followed by the fees to be paid for
internet money transactions and then the shipping/courier costs (has to bear the octori).
c) Logistics: The logistics is a major concern for the seller as majority of the electronic products
including the mobiles, PCs, laptops etc could not be sent by courier or speed post without proper
documents by the customer and the vendor which incidentally leads to delay in the transaction
thus aggravating to incompetence concerns and discredit from the seller point of view.
d) Technology and fulfilment processes: Currently, a lot of customer issues occur because the
fulfilment partner either shipped a wrong product or wasn't able to track the shipping details.
Customers can trust this channel, if they see consistency in execution. To make this happen
online retailer must tightly integrate their systems with the backend fulfilment vendors
(Alshamlan, 2006).
e) Payment mechanism: This is one of the biggest challenge in almost all e-transactions, be it
big or small as there are lot many fidelity and security reasons associated with it. Payments may
be jammed for several weeks to months due to some vendor-customer dispute and even the
smooth and clear transactions are not very seller friendly as only after the shipment as well as
receipt of the item it takes another week to get money credited from the website based money
transaction online.
III. Other concerns:
a) Low-speed Internet connections are another barrier: If the websites are large, complicated
and heavy, individuals connected to the Internet through dial-up connections or mobile devices
may experience significant delays in content delivery.
b) Rapid developing pace of underlying technologies: Now a days there is rapid development
of the underlying or subsidiary technologies and both the sellers as well as the buyers are not
able to cope with this in rush of novel information, leading to hampering of smooth transactions.
c) Need of strong penalties on vendors who fail in execution: The online retailers must start
enforcing strong penalties on vendors who are failing on execution. Gaining profits at the
expense of product quality or execution should not be an option. Consumers will start trusting
ecommerce as a whole.
d) Security concerns: Several new websites are mushrooming up that don’t follow the correct
encryption and security standards required for hacker plagued online transactions. There are
plenty of frauds being evident from the complaints registered in the novel cyber courts while
majority of frauds remaining unnoticed. Enhanced security and encryption is foremost
requirement as hacking or unauthorized encroachment is becoming a common practice leading to
defacement of major Indian websites.
Figure 1. Statistics of Defaced Indian Web Sites
Source: (Indian Computer Emergency Response Team, 2013)

e) Need of standardized policies related to online shopping: The government must do more to
standardize policies related to online shopping. The standardized octroi and rules related to
shipping products across different states must be formulated.
f) Cultural and legal impediments: There are wide spectra of traditions and cultural differences
among the races/populations across continents which makes it difficult for them to trust for
virtual transactions. Moreover, there are differences in the legal procedures and protocols in
different nations as well as absence of universal cyber laws, makes it difficult for assigning
penalties for the defaulters.

Opportunities
So far the challenges of internet marketing and e-Commerce could not hinder the inflow of novel
advancements that could be considered as the opportunities. Figure 3 depicts the rising statistics
of increased online advertisement. Following are certain opportunities of increased use and
dependence of online marketing and e-Commerce:-
a) Increased sales: Increased use of internet marketing would lead to enhanced sales due to
reach of narrow market segments in geographically dispersed locations as well as creation of
virtual communities.
b) Decreased costs: There would be cost cutting of the products which would be dependent on
the sales enquiry, price quotes and finally the availability of the product.
c) Being in the space: There is an increased trend towards visibility of the products by the
companies in the cyber space due to enhanced accessibility to the target customers globally thus
this is a low cost virtual market of goods for sale by the sellers catering individuals from varied
nationalities, cultures and traditions.
d) Benefits to Buyers: Online purchase is more convenient, widely acceptable, easy and private;
buyer has a wider product access and selection, offers comparative, immediate and interactive
information. Internet marketing is relatively inexpensive when compared to the ratio of cost
against the reach of the target audience. A small fraction of traditional advertising budgets can
make companies reach a wide audience. Certain companies also allow the consumers to create
customized products using specification limits mentioned on websites (Tarafdar, 1998).
e) Increased security: Online marketing is becoming more secure by application of new
versions of websites that keep the personal information of the customers in e-walts as well as
more aggressively protect the hacking of passwords and thus the operational accounts.
Encryption is the primary method for implementing privacy policies. Several websites guarantee
that customer information will remain private. Also, the major online payment mechanisms
(credit cards, PayPal, Google Checkout, etc.) also provide back-end buyer protection systems to
address problems if they actually do occur.
f) Benefits to Sellers: The sellers are able to build customer relationships, could relish the
reduction in costs for quick and efficient marketing and sale of their products. Furthermore, there
would be reduction in the communication costs with the customers. Easy and Inexpensive
measurement of statistics is possible for internet marketers. Internet marketing campaign is
traceable and measurable. The advertisers can use a variety of methods: pay per impression, pay
per click, pay per play, or pay per action.
g) Online presence promotes offline sales: Online marketing and selling is not a threat to the
traditional wholesaler and retailer model. For example, the online US market is a fairly mature
channel that accounts for over 10% of retail industry revenues but this hasn't impacted the
traditional channel in any way. The online channel helps consumers explore products and let
consumers make more informed decisions.

Table4. Advertising Trends: 1998-2010

Source: (Media Direction, 2010)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Internet 0 0 0 0 0 30 95 140 260 305 350 490 580
Outdoor 240 290 350 430 520 770 842 890 980 1210 1330 1340 1450
Cinema 106 114 12 126 138 120 145 160 16 165 125 110 120
Radio 120 125 130 135 150 255 275 410 560 620 675 790 870
TV 920 1440 1980 2850 3160 3733 4135 4820 6040 6970 8110 8500 9360
Print 3130 3380 3550 3800 4020 4362 4938 5980 7100 8060 9720 9850 10240

Future perspectives
a) Advent of m-commerce in India: India has ever rising number of mobile users than the
Internet due to less internet penetration makes the mobile-commerce (m-commerce) to be the
next big thing. M-commerce has a lot of potential however certain issues have to be addressed
such as small form factor, lack of standards across mobile devices. These issues can however be
easily overcome. Certain service providers provide payment options through mobile network.
b) Entailment of new business models: eCommerce in India will escalate to a next level with
the evolution/emergence of business models i.e. from the transactional driven model to
relationship driven model as has happened in the US eCommerce scenario thereby an enhanced
emphasis is now on the customer relationships and the value of the repeat customer. The above
forces have led to popularization of social shopping as well as willing of the online retailers to
make short term sacrifices in their profitability to improve the likelihood of repeat purchase by
their customers.

Conclusions
It is evident from the list of countries by internet usage that India has very poor internet
penetration (19.9% of total population) but still it ranks third worldwide. Boom in information
technology, falling prices of personal computers and robust infrastructure have increased internet
users penetration from 0.1% in 1998 to 19.19% in 2014 of the total Indian population, which
accounts for 243,198,922 users, this figure outnumbers total population of Canada. To tap this
potential created by huge human resource, companies and advertisers are making investments
towards digital/internet marketing. But internet marketers and e-commerce companies are facing
certain challenges; these impediments are discussed in this paper as consumer, seller and
other/infrastructural challenges. Internet being futuristic and ubiquitous in nature offers buyer or
marketer numerous benefits and opportunities. With advent of mobile commerce and new
business models millions of people can be reached by businesses. The scenario of eCommerce
and internet marketing in India is supposed to evolve from initial transitory phases to
substantially mature virtual eMarkets or eMarts with a big boom. With the level of abundant
human resource and low potential penetration of internet there is an evident bright future of IT
industry in India. The marketing arena of the personal computers, computer hardwares/softwares
and supporting infrastructure, eCommerce and internet marketing would always remain afloat
sky high.

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