International Baccalaureate Extended Essay The future of E-commerce Abstract India, with a population of 1.25 billion, offers avery strong market ground for any manufacturer or provider of services to selltheir products.
The companies are selling their products online & offline.India is not like other developed countries like USA where 74.6% of thepopulation has access to internet or China where it is 50.3%. In India, theinternet penetration is hardly 26% due to various reasons like education,access to banking facilities, use of plastic money, lack of logistic serviceswhich includes timely delivery, affordability and availability of technology intier II & III cities, towns or remote villages. E-commerce in India ismostly used in booking of air, railway & movie tickets, hotels booking, forbuying mobile phones, books etc. and at times for making the payment of variousbills. Keeping in view of the above, I started looking at thepresent e-commerce technologies, various road blocks and upcoming technologiesto overcome the technical snags in the existing set up and to make them moreuser friendly & efficient as the very survival of e-commerce businessdepends on all these factors.
Coming to technological related problems, it was foundthat pages with thin content won’t show up in search engine results and as aresult companies missed out huge amount of revenue from organic search traffic. Also at times users get miffed up due to obtrusive popups, unresponsive pages, long page loading time and structural problems withthe e-commerce website. As e-commerce sites could be profitable when more andmore consumers opt for online transaction, I study closely hurdles faced bye-commerce companies in India and steps taken by companies to overcome theseproblems through changes in website structure, introduction of new methods ofpayments 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 inIndia.
Taking you back to 2007–08 when 3G started taking pace,smart phones started coming up and people starting accessing internet fromphones & Mobile phones getting cheaper very minute, that’s when Indiacaught world’s attention that we are about to be 3rd highest country in theworld in terms of internet penetration (only behind USA and China).During this time E-commerce started flourishing andposter boy of India’s ecommerce FLIPKART and INFIBEAM (yes Infibeam was onceneck to neck with Flipkart) started their journey. Foreign investors startedpouring money and everybody thought it’s a boom time. Every body thought wewill be the next USA and E-commerce will take over the entire population, retailstores 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 washaywire, but what fancied people is only the population and thought it’s thenext big thing.
As per the graph united states is the country where onlineshoppers spend a lot on e-commerce in 2015 but it will increase more as unitedstates is a developed country and they will introduce new technologies whichwill attract more customers in future. 2 Weak Internetinfrastructure A country specificreason for why many e-commerce fail in India is because of the country’s weakinternet infrastructure. India is a cash based economy and the most recentstatistics 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 differentlogistic 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 tothis the complication of returns and exchanges, the cash on delivery paymentsystem is a nightmare for the smartest finance controllers.Eventhough we are only second in the world, in terms of the volume of internetusers – our internet is one of the slowest in the world. The latest 2016 datasuggests only around 142 million Indians have a 3G/4G connection. Whereas Chinahas 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 isfrustrating and almost impossible to browse the web satisfactorily – let alonecomplete product comparison and make a transaction. So Indiane-commerce companies cannot really target the complete Indian internet userbase and expect them to transact.
FAST FORWARD 3 – 4 YEARS3Due to immense visible opportunity (huge population), multipleE-commerce companies started. They were just replica of each other and nothingelse. 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 easycapital to just get customers any how has become impossible.
Flipkart, Snapdeal, Shopclues and many other shut ecommerce companies had only acquired customerson basis of deep discounts. Even till date flipkart’s per useracquisition cost is Rs.700+ and revenue per user is not more than Rs. 250+ Reasons for recentfailure of Snapdeal – the Second biggest company in India 1. No differentiation4 Busy building too many warehouses and burningcash, Snapdeal never built any category as their USP like Flipkart did withfashion and electronics, and Amazon with Prime and Pantry.”Snapdeal was not doing anythingground-breaking.
Onlineretail, after all, is also just retail. Your competitors are as good as or better than you. Ifyou don’t have a striking differentiation, why should a consumer choose youover the others? .
As you can see above in the graph flipkart had the highestrevenue in 2013-14 and second was Amazon but snapdeal was last because theynever introduced a new technology or market them in such a way that they canincrease sales.2. Acquisitions for nothing Many of Snapdeal’s acquisitions turned out to endpoorly.
Snapdeal’s acquisition of FreeCharge also failed to make waves for thecompany, 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 closeto acquisition by Paytm. 3. No thought forgrocery or FurnitureTheseare opportunities Snapdeal lost out on. Both grocery and furniture categorieshave not been cracked yet in Indian ecommerce.
Even Flipkart is onlybuilding on those now. (Amazon has been quietly building its kirana network andAmazon Pantry, and was reportedly in talks with online grocery market leaderBig Basket for its acquisition.) 4. Multilingual tragedyThe vernacular app was lauded at the time oflaunching. However, either rural India was not ready for e-commerce orvernacular was not the most effective way to reach out to the masses. So therewas 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 aninitiative to succeed. End of the StoryDespite 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 moneywill last. Amazon has lot of money and it will continue till they kill allother existing companies. Snap Now let me writeabout what’s phasing out in e- commerce & thenew technologies which are going to be game changer for e-commerce business.
Phasingout * Bidding for products has seen a decline. Thisshows 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 UpcomingTechnologies/ Trends · Electronic payment modes i.e. VirtualWallets, virtual currencies like bitcoin· Unified customer experience across all touchpoints like web store, app, kiosk, offline· Virtual online stores providing customerbuying experience same as offline stores· Online merging with offline to provide bettershopping experience. Amazon has recently acquired Whole Foods market for US$13.
7 Billion. E-commerce with brick & mortar business will enable thecustomers to opt for any of the model for their convenient shopping. Online discovery, offline showroom · One of the most common roadblocksthat online retailers haven’t completely overcome yet is the fact that peoplestill enjoy the experience of shopping at a physical store. But, how will newinnovations help the e-commerce world become more appealing to consumers? Thesolution comes in the form of offline and online merging. Ebay, ModCloth,Walmart, and Delta Airlines, for example, have all experimented with pop-upstorefronts to use brick-and-mortar opportunities to advocate for their digitalexperiences. · Virtual fitting rooms · Implementations of technologies canbring convenience, ease of use, personalization, process simplification, andthe high level of comfort that could be a game-changer. Big brands have startedto use “memory” mirror technologies ledby RFID tags to let customers try on virtual outfits and place iPads in fittingrooms enabling customers to ask for help, read reviews, see what sizes are instock, and so on.
· Single inventory for online and offline saleschannels. · Hosting systems on cloud to provide betterinfrastructure· Providing customers subscription basedservices such as amazon prime to increase customer stickiness.· E- Commerce moving from a B2C model to anequally strong B2B· E-Commerce of high values items such luxurywatches and handbags has seen a surge as customers are more and morecomfortable buying items offline· Providing a more personalized customerexperience by showing customers products based on their buying patterns andcustomer profile. Use of machine learning to determine the same· The online versus offline paradigm hasshifted to an online model complementing offline model.· Availability of multiple platforms whichenable business to go online with a very quick turn round time e.g.
Wix , Shopify · Launching of “Prime Wardrobe” by Amazon thatallows Prime users to order 3 -15 items to try on for free and return what theydo not want in a re-sealable box.· Technology up gradation by Indian telecomcompanies & government of India like moving from 2G to 3G & recently to4G to provide better & faster services to the subscriber which can boostthe e-commerce business substantially. Conclusion: Trending technologies in E commerce.
6There is a massive shift in the E-commerce industryespecially from past 5 – 10 years. Technologies like the 3D view and Zoomingtechnology made the consumer to engage more on E-commerce sites. But with themassive growth retailers are looking for advanced technology to retaincustomers on website.
You know, the consumer leave the site if loading time ismore than 3 seconds. Still, the e-commerce is like an infinite scrolling ofproducts to deal with consumer patience. If you know what exactly you want to buythen the burden is low, solutions like filtering might solve the problem. withthe phenomenal growth of On-line retailers and consumers, these technologiesare going to change current trends in E-commerceArtificial Intelligence According to Business Insider, 85% of the customerinteraction will handle without human by 2020. Handling of Emails, Chats andresponses will become more and more efficient. All these things are possiblewith artificial intelligence7In next five years, artificial intelligence takes a bigger role indecision making. These AI tools are going to create a leap towards E-commercegrowth. Inthe near term, the goal of keeping AI’s impact on society beneficialmotivates research in many areas, from economics and law to technical topicssuch as verification, validity, security and control.
Whereas it may be little more than a minor nuisance if your laptop crashesor gets hacked, it becomes all the more important that an AI system does whatyou want it to do if it controls your car, your airplane, your pacemaker,your automated trading system or your power grid. Another short-term challengeis preventing a devastating arms race in lethal autonomous weapons.In the longterm, an important question is what will happen if the quest for strong AIsucceeds and an AI system becomes better than humans at all cognitive tasks. Aspointed out by I.J.
Good in 1965, designing smarter AI systems is itself acognitive task. Such a system could potentially undergo recursiveself-improvement, triggering an intelligence explosion leaving humanintellect 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 biggestevent in human history. Some experts have expressed concern, though, thatit might also be the last, unless we learn to align the goals of theAI with ours before it becomes superintelligent.There are somewho question whether strong AI will ever be achieved, and others whoinsist that the creation of superintelligent AI is guaranteed to bebeneficial. At FLI we recognize both of these possibilities, but alsorecognize the potential for an artificial intelligence system to intentionallyor unintentionally cause great harm.
We believe research today will help usbetter prepare for and prevent such potentially negative consequences inthe future, thus enjoying the benefits of AI while avoiding pitfalls. Visual Search Visual search is an artificial intelligence tool toidentify the matching objects as per the photo uploaded by the consumer. It is noteasy to perform these tasks while dealing with billions of images. But with theadvancement in Computer power and Big Data, now the computers are able toidentify billions of shapes and sizes.Google enabled the visual search and last year.Pinterest also launched visual search on their platformPersonalization Personalization is the customized shopping experiencefor consumers based on their buying behavior, demographic behavior. Still,E-Commerce is an infinite scroll of products, consumers are looking forpersonalized products for quick decision making.
Most of the E-commerce siteshave enabled this features as a recommended product based on user searchbehavior 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 productlaunch and offers, but consumers are often flooded with number of marketingEmails. So the email opening and conversion rate has taken a hit.The chat bots works like 24/7 customer care to answerthe consumer queries or to send notifications about new product launch andoffers etc. Chatbots can be found on skype , kik , line and telegram .
Alsothese chatbots are helping people in improving their health and ordering ofsome items. These chatbots are the automated replies which come when userenters a specific sentence Video commerce Over the decade the E-commerce website switched from aplain text to the High graphic product image. 360 Degree view and Zoomingtechnology are the key players in customer engagement. Now consumer would liketo see the product virtually and a video can bring life to the product. A videoon landing page can create 36% of conversion compared to the website withoutvideo on landing pageBut to create a video e-commerce site needs a hugeinvestment and large IT infrastructure.
The free portals like Afnity allow the user to host mini videos which areless than or equal to 2 min. This portal has the features like mobileresponsive 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 seemsto be right as voice-activated assistants are picking up speed.
Many alsobelieve this technology will intersect and become one with chatbots/virtualassistants at some point in the future. Amazon’s Echo Alexa,which represents the beacon of today’s smart home, allows consumers to orderthe ‘usual’ pizza or purchase more Tide dish detergent from a local deliverycompany. This IoT-connected, voice-activated, convenient and efficienthousehold assistant is capable of ‘doing’ commerce with asimple vocal command andturning off lights to save energy at the same time. Mostly , USA type ofdeveloped countries will be using this AI .BeaconTechnology 9 Companies have started to offer mobile dealsand greetings when someone walks into the store through beacon technology whichworks when consumers’ mobile devices keep searching for a beacon. Physicalstores 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 certainconditions are met. If the user, for example, is withinthe beacon range for 3 seconds or 3 seconds after the user has left the beaconrange, a marketing message can be triggered. Retailers like Sephora utilize beacon technology,which sends personalized promotions to users’ mobile device whilesimultaneously collecting consumer data. Beacons are truly versatile and havefound wide-scale implementation from airports to retail stores to restaurantsdelivering marketing offers and product information. Other brands featuringbeacons for marketing include Starbucks, Macy’s, Target, andCoco-Cola. DirectPurchase through Social Media More and more “direct purchase” options are popping up on social mediaplatforms like Twitter, Pinterest, Instagram, and Facebook.
In fact, Facebookis the source of 64% of social sales worldwide, while 93% of Pinterest usershave bought something online in the last 6 months. Moreover, the medium is thesource of 16% of all social sales as Pinterest’s rich pins functionalityenables retailers to fully integrate their site, automatically synchronizingany change on the product’s page with the product’s “pin”. Clicking on the pinautomatically takes the shopper to the product page, optimized to convert thisprospect into a sale. J.Crew, GAP, and Nordstrom are only a few of the Americanretailers that quickly capitalized on this new trend. On Instagram, integrated applications now make it possible to go from anInstagram picture directly to a product page. It drives even more traffic to aretailer’s website when celebrities and/or influencers promote products. The directpurchases are happening through pop ups, advertisements and messages .
VideoContent Manybusinesses are now taking things to the next level with branded, custom videocontent as it can boost a retailers’ site SEO, increase conversions, make contentmore shareable, build a lot of trust with prospective customers, and helpshoppers consume more information in less time. Behind-the-scenes productionvideos, demonstrations, 360-degree product rotations and even live streamingare now being looked at as viable strategies. Especially, product videos whichtell an engaging story can revolutionize any brand.
Here’s a great example thatshows how a successful video content strategy leads a start-up e-commercecompany to make $1 billion in less than five years. In2012, Michael Dubin launched an online men’s razor merchant, DollarShave Club, with ahilarious YouTube video making fun of the pain andexpense of shaving. The video went viral, the website crashed, and the bladessold out in six hours.
Guess what? Two weeks ago, Dollar Shave Club hit thejackpot as Unilever agreed to buy the online men’s razor merchant for $1billion which is about five times the revenue that Dollar Shave Club isexpected to bring in this year. As seen in the graph most of the businessuse video content to promote their product like Google does when it launchesany of its product . Delivery through Drones10 Amazon has started working on thisfor faster home delivery to the customers. It’s still under trial. These are really just the starting point as we will beseeing fascinating changes and outside- the- box thinking in the e-commercetechnology space in the coming years.
Throughout this period, some technologieslike mobile-first will become a mainstream, while some advances like drones maydisappear in the near future. Regardless, investing in these and other emergingtechnologies is undoubtedly a smart move when it comes to positioning abusiness that remains with or ahead of the curve over the next 5 to 10 years. A delivery drone, isan unmanned aerial vehicle (UAV) utilized to transport packages, food or othergoods.
Though somecountries will not allow this technology to be used like in India you can’t usebut in developed countries you can use this type of technology. In order for Amazon to make drone delivery available broadly in theU.S.
, the company will have to wait for the Federal Aviation Administration tocraft rules about how to fly over populated areas and beyond the line of sightof the operator. And that could take years. 1 Interview withMr.Nilesh who is an employee of the company 2 Survey conducted inE-BEE of 6 employees Date conducted:12TH June 3 Survey of E-BEEemployees 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/