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The Top 4 Challenges For Indian E-Commerce Firms

Update On :06-August-2016

The Top 4 Challenges For Indian E-Commerce Firms

India, as an e-commerce marketplace, has tremendous potential with 50 million online shoppers in 2015, and by 2020, the number is estimated to go up to 320 million, as per Morgan Stanley. The financial services firm also mentioned that by 2020, the market size would be around USD 120 billion for e-commerce alone. However, despite all the good happening there are some issue which have been bothering most e-commerce businesses, which hinder the long-term growth of the companies, and the industry itself.

1) Spam or False orders

Despite having a host of genuine shoppers who believe in the utility that e-commerce brings, false or spam orders are also a genuine logistical hindrance for e-commerce companies. The trend has been mainly in the Tier II or Tier III cities of India, where people are known to be motivated with the goods and services they see online, place and order, then develop cold feet about the order, end up canceling the order or not receiving it. The sector most affected by it are the luxury products and fashion based e-commerce players, who say an average of 2 per cent spam orders come through, which lead to losses in delivery and return charges, salaries for logistics resources and even stock availability. Luxupolis, a refurbished luxury goods seller founded by Vijay KG, said, “Perhaps a lot of people order on impulse after seeing pictures of luxury goods they have been besotted with. Later, they develop cold feet and cancel the order at the last moment.” Another company, Confidential Couture’s founder, Anvita Mehra mentioned about this problem in some major cities as well, saying, “Every month, about 2 per cent orders fall in this category where we have to stop delivery or return the goods. Most cases are from cities like Ahmadabad, Surat, Chandigarh, Patna, Gurugram, Noida, and sometimes even Pune or Bengaluru.” For this reason, the companies have started double checking, like calling up phone numbers provided, especially where there are discrepancies in pin codes and contact numbers, or a situation where there have been around 10-20 products added into a single shopping cart/order. 

2) The GST Dilemma

GST or the Goods and Services Tax law draft was recently released by the Finance Ministry. As per the structure of the law, the e-commerce companies who generally act as marketplaces, will need to collect a part of the GST from the sellers who advertise on their sites, and then deposit it with the government. Though the duty of paying VAT (Value Added Tax) or GST (Goods & Services Tax) has been from the seller, but now the sellers have to pay the tax at source, before their accounts get cleared by the marketplaces/ e-commerce sites. This is and will have further implication upon the selling price of products, and also the pace of growth with which sellers and other SMEs involved, grow across the country. It is almost in direct contradiction of the current government’s plan to ‘ease the process of doing business’. This perhaps stems from the fact that many sellers, small and big, have used the system to their advantage by not paying the VAT/GST, but due to the fact that the state governments have been able to gather information from the electronic footprint left behind, has now bought about this new legal situation.  

3) Systems Integration

Order management, customer support, order tracking and dispatch, are all technologically managed through various systems, but the issue is the integration between them. In the case of most e-commerce players, all the mentioned systems are independent of each of each other, which make the integration process tough, and often time consuming and cumbersome. The need for the industry is to come up with system integrated into a single one, where accessing information, controlling, and taking action can be seamless and timely, which would allow companies to leverage on better conditions. 

4) Customer Loyalty

In the world of e-commerce and internet, change occurs in seconds, literally. One of the most crucial aspect is customer loyalty. Due to even the slightest negative experience or any hindrance in the channel with the customer, can cause the customer to shift loyalties to other e-commerce companies, who may be operating in the similar space. The internet is a space where discounts and price wars are rampant, which put smaller sellers and e-commerce players at risk of being shown the door in a competitive marketplace, since they may not be able to afford the discounts and benefits to the customers. Also, since customer service is a wide issue which needs attention at many points, even the slightest gap in the delivery chain could adversely affect e-commerce companies. In fact, 86 per cent of clients stop doing any sort of business with a company because of negative customer service experience. 

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