International from organic search traffic. Also at times

 

International Baccalaureate

 

           

 

Extended Essay

 

 

The future of E-commerce

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abstract

 

 

India, with a population of 1.25 billion, offers a
very strong market ground for any manufacturer or provider of services to sell
their products. The companies are selling their products online & offline.
India is not like other developed countries like USA where 74.6% of the
population has access to internet or China where it is 50.3%. In India, the
internet penetration is hardly 26% due to various reasons like education,
access to banking facilities, use of plastic money, lack of logistic services
which includes timely delivery, affordability and availability of technology in
tier II & III cities, towns or remote villages. E-commerce in India is
mostly used in booking of air, railway & movie tickets, hotels booking, for
buying mobile phones, books etc. and at times for making the payment of various
bills.

 

Keeping in view of the above, I started looking at the
present e-commerce technologies, various road blocks and upcoming technologies
to overcome the technical snags in the existing set up and to make them more
user friendly & efficient as the very survival of e-commerce business
depends on all these factors.

 

Coming to technological related problems, it was found
that pages with thin content won’t show up in search engine results and as a
result companies missed out huge amount of revenue from organic search traffic.

 

Also at times users get miffed up due to obtrusive pop
ups, unresponsive pages, long page loading time and structural problems with
the e-commerce website.

 

As e-commerce sites could be profitable when more and
more consumers opt for online transaction, I study closely hurdles faced by
e-commerce companies in India and steps taken by companies to overcome these
problems through changes in website structure, introduction of new methods of
payments like PayTM, UPI, virtual wallets, O2O marketing concept etc.

 

 

 

 

 

Word count
: 299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table of Contents
Weak Internet infrastructure. 4
Direct Purchase through Social Media. 10
Video Content. 10
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The e-commerce technologies phasing                                                                    
out vs the upcoming technologies. The way ahead?

 

 

Introduction1

 

Before I dwell on e-commerce models in India,
change in technologies, let me give you the background of e-commerce business in
India.

 

Taking you back to 2007–08 when 3G started taking pace,
smart phones started coming up and people starting accessing internet from
phones & Mobile phones getting cheaper very minute, that’s when India
caught world’s attention that we are about to be 3rd highest country in the
world in terms of internet penetration (only behind USA and China).

During this time E-commerce started flourishing and
poster boy of India’s ecommerce FLIPKART and INFIBEAM (yes Infibeam was once
neck to neck with Flipkart) started their journey. Foreign investors started
pouring money and everybody thought it’s a boom time. Every body thought we
will be the next USA and E-commerce will take over the entire population, retail
stores would be shut down.

But the biggest problem is, India is India and not USA.
People shopping online or wished to shop online did not have plastic money (Cards)
nor internet banking was good. Infrastructure was not in place, logistics was
haywire, but what fancied people is only the population and thought it’s the
next big thing. As per the graph united states is the country where online
shoppers spend a lot on e-commerce in 2015 but it will increase more as united
states is a developed country and they will introduce new technologies which
will attract more customers in future.

 

 

 

 

2 Weak Internet
infrastructure

A country specific
reason for why many e-commerce fail in India is because of the country’s weak
internet infrastructure. India is a cash based economy and the most recent
statistics indicate that 755 of the online transactions are cash on delivery.
The problem with cash on delivery payment is that it locks up a lot of capital
(Cash). It is a complicated system to retrieve the cash from the different
logistic companies. In addition, the cash is paid in a 30-day or 45-day cycle,
so you have to wait to receive the money you have made selling goods. Add to
this the complication of returns and exchanges, the cash on delivery payment
system is a nightmare for the smartest finance controllers.

Even
though we are only second in the world, in terms of the volume of internet
users – our internet is one of the slowest in the world. The latest 2016 data
suggests only around 142 million Indians have a 3G/4G connection. Whereas China
has more than 500 million of its internet users using 3G/4G networks.
If you have ever tried to use an 2G internet, you would realize that it is
frustrating and almost impossible to browse the web satisfactorily – let alone
complete product comparison and make a transaction. So Indian
e-commerce companies cannot really target the complete Indian internet user
base and expect them to transact.

 

FAST FORWARD 3 – 4 YEARS3

Due to immense visible opportunity (huge population), multiple
E-commerce companies started. They were just replica of each other and nothing
else. So their only differentiation was who gave the cheapest. In this battle,
everybody lost money and who had more money had better chances of survival.

So now the money valve is getting sealed and getting easy
capital to just get customers any how has become impossible. Flipkart, Snapdeal
, Shopclues and many other shut ecommerce companies had only acquired customers
on basis of deep  discounts. Even till date flipkart’s per user
acquisition cost is Rs.700+ and revenue per user is not more than  Rs. 250+

 

Reasons for recent
failure of Snapdeal – the Second biggest company in India

 

1.    No differentiation4

Busy building too many warehouses and burning
cash, Snapdeal never built any category as their USP like Flipkart did with
fashion and electronics, and Amazon with Prime and Pantry.

“Snapdeal was not doing anything
ground-breaking. Online
retail, after all, is also just retail. Your competitors are as good as or better than you. If
you don’t have a striking differentiation, why should a consumer choose you
over the others? . As you can see above in the graph flipkart had the highest
revenue in 2013-14 and second was Amazon but snapdeal was last because they
never introduced a new technology or market them in such a way that they can
increase sales.

2.    Acquisitions for nothing

         

Many of Snapdeal’s acquisitions turned out to end
poorly. Snapdeal’s acquisition of FreeCharge also failed to make waves for the
company, as Paytm continued to be the leader in digital payments and FreeCharge failed to capitalize on demonetization like Paytm. FreeCharge is now rumored to be close
to acquisition by Paytm.

 

3. No thought for
grocery or Furniture

These
are opportunities Snapdeal lost out on. Both grocery and furniture categories
have not been cracked yet in Indian ecommerce.  Even Flipkart is only
building on those now. (Amazon has been quietly building its kirana network and
Amazon Pantry, and was reportedly in talks with online grocery market leader
Big Basket for its acquisition.)

 

4. Multilingual tragedy

The vernacular app was lauded at the time of
launching. However, either rural India was not ready for e-commerce or
vernacular was not the most effective way to reach out to the masses. So there
was no volume of users to cater to with the 14 regional languages in the app.
Moreover, the regional audience has to be much larger in number for such an
initiative to succeed.

 End of the Story

Despite some interesting innovations and services,
Snapdeal was not able to create an offering the customer could not live without.
It’s a game of survival of wealthiest and who has money
will last. Amazon has lot of money and it will continue till they kill all
other existing companies. Snap

 

 

Now let me write
about   what’s phasing out in e- commerce & the
new technologies which are going to be game changer for e-commerce business.

 

Phasing
out

 

     *  Bidding for products has seen a decline. This
shows a clear change in customer buying    
  behaviour

 

     *
Only Online businesses which were operating has shifted to offline as well as e.g.
Lenskart , Amazon after the acquisition of whole foods market etc.5

 

 

Upcoming
Technologies/ Trends

 

·        
Electronic payment modes i.e. Virtual
Wallets, virtual currencies like bitcoin

·        
Unified customer experience across all touch
points like web store, app, kiosk, offline

·        
Virtual online stores providing customer
buying experience same as offline stores

·        
Online merging with offline to provide better
shopping experience. Amazon has recently acquired Whole Foods market for US$
13.7 Billion. E-commerce with brick & mortar business will enable the
customers to opt for any of the model for their convenient shopping.

Online discovery, offline showroom 

·        
One of the most common roadblocks
that online retailers haven’t completely overcome yet is the fact that people
still enjoy the experience of shopping at a physical store. But, how will new
innovations help the e-commerce world become more appealing to consumers? The
solution comes in the form of offline and online merging. Ebay, ModCloth,
Walmart, and Delta Airlines, for example, have all experimented with pop-up
storefronts to use brick-and-mortar opportunities to advocate for their digital
experiences. 

 

·        
Virtual fitting rooms

 

·        
Implementations of technologies can
bring convenience, ease of use, personalization, process simplification, and
the high level of comfort that could be a game-changer. Big brands have started
to use “memory” mirror technologies led
by RFID tags to let customers try on virtual outfits and place iPads in fitting
rooms enabling customers to ask for help, read reviews, see what sizes are in
stock, and so on.

 

·        
Single inventory for online and offline sales
channels. 

·        
Hosting systems on cloud to provide better
infrastructure

·        
Providing customers subscription based
services such as amazon prime to increase customer stickiness.

·        
E- Commerce moving from a B2C model to an
equally strong B2B

·        
E-Commerce of high values items such luxury
watches and handbags has seen a surge as customers are more and more
comfortable buying items offline

·        
Providing a more personalized customer
experience by showing customers products based on their buying patterns and
customer profile. Use of machine learning to determine the same

·        
The online versus offline paradigm has
shifted to an online model complementing offline model.

·        
Availability of multiple platforms which
enable business to go online with a very quick turn round time e.g.  Wix , Shopify 

·        
Launching of “Prime Wardrobe” by Amazon that
allows Prime users to order 3 -15 items to try on for free and return what they
do not want in a re-sealable box.

·        
Technology up gradation by Indian telecom
companies & government of India like moving from 2G to 3G & recently to
4G to provide better & faster services to the subscriber which can boost
the e-commerce business substantially.

 

 

Conclusion:

 

Trending technologies in E commerce.6

There is a massive shift in the E-commerce industry
especially from past 5 – 10 years. Technologies like the 3D view and Zooming
technology made the consumer to engage more on E-commerce sites. But with the
massive growth retailers are looking for advanced technology to retain
customers on website. You know, the consumer leave the site if loading time is
more than 3 seconds.

Still, the e-commerce is like an infinite scrolling of
products to deal with consumer patience. If you know what exactly you want to buy
then the burden is low, solutions like filtering might solve the problem. with
the phenomenal growth of On-line retailers and consumers, these technologies
are going to change current trends in E-commerce

Artificial Intelligence

According to Business Insider, 85% of the customer
interaction will handle without human by 2020. Handling of Emails, Chats and
responses will become more and more efficient. All these things are possible
with artificial intelligence

7In next five years, artificial intelligence takes a bigger role in
decision making. These AI tools are going to create a leap towards E-commerce
growth. In
the near term, the goal of keeping AI’s impact on society beneficial
motivates research in many areas, from economics and law to technical topics
such as verification, validity, security and control.
Whereas it may be little more than a minor nuisance if your laptop crashes
or gets hacked, it becomes all the more important that an AI system does what
you want it to do if it controls your car, your airplane, your pacemaker,
your automated trading system or your power grid. Another short-term challenge
is preventing a devastating arms race in lethal autonomous weapons.

In the long
term, an important question is what will happen if the quest for strong AI
succeeds and an AI system becomes better than humans at all cognitive tasks. As
pointed out by I.J. Good in 1965, designing smarter AI systems is itself a
cognitive task. Such a system could potentially undergo recursive
self-improvement, triggering an intelligence explosion leaving human
intellect far behind. By inventing revolutionary new technologies,
such a superintelligence might help us eradicate war, disease,
and poverty, and so the creation of strong AI might be the biggest
event in human history. Some experts have expressed concern, though, that
it might also be the last, unless we learn to align the goals of the
AI with ours before it becomes superintelligent.

There are some
who question whether strong AI will ever be achieved, and others who
insist that the creation of superintelligent AI is guaranteed to be
beneficial. At FLI we recognize both of these possibilities, but also
recognize the potential for an artificial intelligence system to intentionally
or unintentionally cause great harm. We believe research today will help us
better prepare for and prevent such potentially negative consequences in
the future, thus enjoying the benefits of AI while avoiding pitfalls.

 

 

Visual Search

Visual search is an artificial intelligence tool to
identify the matching objects as per the photo uploaded by the consumer. It is not
easy to perform these tasks while dealing with billions of images. But with the
advancement in Computer power and Big Data, now the computers are able to
identify billions of shapes and sizes.

Google enabled the visual search and last year.
Pinterest also launched visual search on their platform

Personalization

Personalization is the customized shopping experience
for consumers based on their buying behavior, demographic behavior. Still,
E-Commerce is an infinite scroll of products, consumers are looking for
personalized products for quick decision making. Most of the E-commerce sites
have enabled this features as a recommended product based on user search
behavior on Retailer website, Social media or search Engine.

 

 

 

 

Chat Bots8

Engaging customers is the ultimate goal of any Brand.
Most of the online shops launch Email campaign to notify about the new product
launch and offers, but consumers are often flooded with number of marketing
Emails. So the email opening and conversion rate  has taken a hit.

The chat bots works like 24/7 customer care to answer
the consumer queries or to send notifications about new product launch and
offers etc. Chatbots can be found on skype , kik , line and telegram . Also
these chatbots are helping people in improving their health and ordering of
some items. These chatbots are the automated replies which come when user
enters a specific sentence

 

Video commerce

Over the decade the E-commerce website switched from a
plain text to the High graphic product image. 360 Degree view and Zooming
technology are the key players in customer engagement. Now consumer would like
to see the product virtually and a video can bring life to the product. A video
on landing page can create 36% of conversion compared to the website without
video on landing page

But to create a video e-commerce site needs a huge
investment and large IT infrastructure. The free portals like Afnity allow the user to host mini videos which are
less than or equal to 2 min. This portal has the features like mobile
responsive designer video player for better engagement on social media.

Voice-activated Assistants

Holger Luedorf, SVP Business at Postmates, believes voice is a potentially powerful   game changer, and he seems
to be right as voice-activated assistants are picking up speed. Many also
believe this technology will intersect and become one with chatbots/virtual
assistants at some point in the future. 

Amazon’s Echo Alexa,
which represents the beacon of today’s smart home, allows consumers to order
the ‘usual’ pizza or purchase more Tide dish detergent from a local delivery
company. This IoT-connected, voice-activated, convenient and efficient
household assistant is capable of ‘doing’ commerce with a
simple vocal command and
turning off lights to save energy at the same time. Mostly , USA type of
developed countries will be using this AI .

Beacon
Technology 9

Companies have started to offer mobile deals
and greetings when someone walks into the store through beacon technology which
works when consumers’ mobile devices keep searching for a beacon. Physical
stores can implement physical beacons in the shops, so once someone walks in,
their phone accepts the signal and provides something like a promotion.
Marketers can configure their apps to activate messages as soon as certain
conditions are met. If the user, for example, is within
the beacon range for 3 seconds or 3 seconds after the user has left the beacon
range, a marketing message can be triggered. Retailers like Sephora utilize beacon technology,
which sends personalized promotions to users’ mobile device while
simultaneously collecting consumer data. Beacons are truly versatile and have
found wide-scale implementation from airports to retail stores to restaurants
delivering marketing offers and product information. Other brands featuring
beacons for marketing include Starbucks, Macy’s, Target, and
Coco-Cola. 

Direct
Purchase through Social Media

 
More and more “direct purchase” options are popping up on social media
platforms like Twitter, Pinterest, Instagram, and Facebook. In fact, Facebook
is the source of 64% of social sales worldwide, while 93% of Pinterest users
have bought something online in the last 6 months. Moreover, the medium is the
source of 16% of all social sales as Pinterest’s rich pins functionality
enables retailers to fully integrate their site, automatically synchronizing
any change on the product’s page with the product’s “pin”. Clicking on the pin
automatically takes the shopper to the product page, optimized to convert this
prospect into a sale. J.Crew, GAP, and Nordstrom are only a few of the American
retailers that quickly capitalized on this new trend. 
On Instagram, integrated applications now make it possible to go from an
Instagram picture directly to a product page. It drives even more traffic to a
retailer’s website when celebrities and/or influencers promote products. The direct
purchases are happening through pop ups, advertisements and messages . 

Video
Content 

Many
businesses are now taking things to the next level with branded, custom video
content as it can boost a retailers’ site SEO, increase conversions, make content
more shareable, build a lot of trust with prospective customers, and help
shoppers consume more information in less time. Behind-the-scenes production
videos, demonstrations, 360-degree product rotations and even live streaming
are now being looked at as viable strategies. Especially, product videos which
tell an engaging story can revolutionize any brand. Here’s a great example that
shows how a successful video content strategy leads a start-up e-commerce
company to make $1 billion in less than five years. In
2012, Michael Dubin launched an online men’s razor merchant, Dollar
Shave Club, with a
hilarious YouTube video making fun of the pain and
expense of shaving. The video went viral, the website crashed, and the blades
sold out in six hours. Guess what? Two weeks ago, Dollar Shave Club hit the
jackpot as Unilever agreed to buy the online men’s razor merchant for $1
billion which is about five times the revenue that Dollar Shave Club is
expected to bring in this year.  As seen in the graph most of the business
use video content to promote their product like Google does when it launches
any of its product .

 

Delivery through Drones10

Amazon has started working on this
for faster home delivery to the customers. It’s still under trial. These are really just the starting point as we will be
seeing fascinating changes and outside- the- box thinking in the e-commerce
technology space in the coming years. Throughout this period, some technologies
like mobile-first will become a mainstream, while some advances like drones may
disappear in the near future. Regardless, investing in these and other emerging
technologies is undoubtedly a smart move when it comes to positioning a
business that remains with or ahead of the curve over the next 5 to 10 years. A delivery drone, is
an unmanned aerial vehicle (UAV) utilized to transport packages, food or other
goods. Though some
countries will not allow this technology to be used like in India you can’t use
but in developed countries you can use this type of technology. In order for Amazon to make drone delivery available broadly in the
U.S., the company will have to wait for the Federal Aviation Administration to
craft rules about how to fly over populated areas and beyond the line of sight
of the operator. And that could take years.

 

 

1 Interview with
Mr.Nilesh who is an employee of the company

2 Survey conducted in
E-BEE of 6 employees

Date conducted:
12TH June

 

3 Survey of E-BEE
employees

4 https://yourstory.com/2017/05/snapdeal-sins/

 

5  https://www.forbes.com/sites/richardkestenbaum/2017/06/16/why-amazon-is-buying-whole-foods/#123d83bb40f6

 

6  Primary research

7 https://futureoflife.org/background/benefits-risks-of-artificial-intelligence/

8  http://www.ndimensionz.com/kb/latest-e-commerce-technologies-and-trends-for-future/

 

9 http://www.ndimensionz.com/kb/latest-e-commerce-technologies-and-trends-for-future/

 

 

10  http://www.ndimensionz.com/kb/latest-e-commerce-technologies-and-trends-for-future/