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https://www.quora.com/What-are-the-biggest-challenges-facing-eCommerce-sites-in-India

What are the biggest challenges facing eCommerce sites

in India?

What are the challenges and competition I face if i

plan to create a site that teaches engineering

concepts in a different,fun way?

What is the eCommerce potential in India?

What is the potential of eCommerce in India in thecoming years?

Do you know about india's ecommerce? Who is the

frontier of ecommerce in India?

What are the biggest challenges face by education in

India ?

What challenges do rising ecommerce companies

face with photography?

What are the biggest challenges startups face in India

compared to other locations like San Francisco, Berlin

or London?

What are the most popular eCommerce sites in India?

Will eCommerce ever saturate in India?

What are the biggest challenges facing Indian

companies as they seek success in the global

marketplace?

Amazon Payments (product) Venture Capital in India Online Retail in India

Entrepreneurship in India Business in India E-Commerce in India Startups in India

43 Answers

1.Winner takes it all-No room for small players

Flipkart, Amazon and Snapdeal are deep pocketed major players making it tough for the

small players to survive in the market. The mortality rate in Indian e-commerce is rising

day by day as the small retailers are choking to attract investors or customers alike.

Some of the e-commerce portals like Babyoye, Zipdial, Tastykhana, Indiaplaza have failed

in making it big and have made a tragic exit whereas sta r players like Flipkart,

Bookmyshow, Zomato, Makemytrip are becoming household names as they could instill

confidence in the investors and took risks from the inception and have gained popularity.

2. Succumb to hurdle in Indian e-commerce value chainReminiscing from one of my experiences, I was trying to send a gift to my friend studying

in Raebareli (a small district in UP), but was shocked to see that it declined to send the

item and it surely made me believe that what e-commerce retailers boasts holds untrue.

Big players are facing issues in delivery, personalisation, cyber security and payment issues

which has made their chain of command weak and fragile. It is seen that the plethora of e-

commerce value chain is posing as counterproductive for free-flow of e-commerce delivery.

The delivery boys are pricey and there is reliability issues during COD which undermines

the profit. Also, many companies in online marketplaces rely on fees from sellers and not

own sales.

They do not hold inventory and rely on the distributors for it and which leads to fall in

standards.

3.Digital Literacy and C onsumer Connect

With Narendra Modi’s digital india campaign,ecommerce market is showing signs of boom but when we compare it with the digital literacy of the consumers it fails to show the same

sign.

There is a major chunk of population i.e 147 million who are still using feature phones. The

stalwarts of online marketplace should try and tap this sector by bringing out easy access

to websites and helping in digital literacy.

Also try to fix the loopholes like fast customer service, return policies, pa yment security and

to lure more customers for the website

4. No profits in sight

Flipkart, Snapdeal and others have infused immense capital from investors and are

burning them with customer acquisition and heavy discounts.

As projected in the picture the amount of loss incurred by top players and the gap between

the valuation and the funds raised in the market. So the profits which are not in sight will

pose threat to the overall business model if the break even is not met.

Ankita Bhatta, Client Experience Manager at LetsAlign.com

5.2k Views

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Related Questions

More Answers Below

What are the challenges and competition I face if i plan to create a site that teaches

engineering concepts in a different,fun way?

What is the eCommerce potential in India?

What is the potential of eCommerce in India in the coming years?

Do you know about india's ecommerce? Who is the frontier of ecommerce in India?

What are the biggest challenges face by education in India ?

So to rise above all the shortcomings in the Indian e-commerce sector the retailers and

government need to join hands for working on increasing penetration of internet. Also the

credit card diffusion should be emphasized so that the perilous cash on delivery mode can

be restricted.

You can read the detailed article here Current challenges encountered by E- commerce

retailers in India

Written Jul 15, 2015 • View Upvotes

Speculation

Without a doubt, India has been a profitable eCommerce region in the last 7 years. Thus

many venture capitalists, angel investors, private companies and high net-worth

individuals are pouring money in eCommerce, no matter how small or big the company.

But there are challenges that will test sustainability of this growth.

Logistics, the big one

With a population of more than 1.28 billion, Indian is a goldmine waiting to be explored.

But logistics has been and still is a major issue because of which eCommerce companies

haven’t been able to reach all pockets.

Experts believe that in the next decade organized retail will grow from 0.1% to 5.3%. Tier 1

cities are nearly exhausted. The next decade would belong to infiltrating Tier 2 & 3 cities

and reaching out further down. This would require strengthening the logistics & delivery

arm, which would also include building ample warehouses, good tracking systems and

hiring trained & trustworthy workers.

Reasonable investments

The future demands market leaders in eCommerce to raise funds in order to sustain the

growth. An ETRetail news report stated ‘Indian online retailers such as Flipkart and

Snapdeal must collectively raise $20 billion (Rs 1.27 lakh crore) in the next five years to be

able to sustain growth, investment bank Goldman Sachs has estimated.’ Is this why

Flipkart is looking to raise debt for the first time with Rs 3,000-crore rupee bonds and

Snapdeal revived talks with Alibaba ?

Building customer loyalty

As far as top etailers are concerned, none of them are competing on a ny product/service

differentiating factor. All are fighting on discounts. This won’t help in building customer

loyalty as buyers would go where the discounts take them. And delivery blunders and

moves such as going ‘app-only’ don’t help either. So maybe it’s time to work on building

a distinct identity if etailers wish to survive well.

Reformed policies

The threat of restrictive FDI policy is hanging as the government contemplates whether or

not to allow foreign investments in the e-commerce sector. And it will take at least a couple

of months to get a clearer picture. Tax and regulation issues crop up too every now and

then. If favourable ecommerce policies with regards to FDI don’t become a reality, then

it is going to be a huge challenge.

Pooja Vishant, Ecommerce expert in India

6k Views

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Written Sep 7, 2015 • View Upvotes

Guess already well documented challenges like logistics and payments above. Rest is here:

The biggest and the only problem faced by ecommerce sites in India is

measuring how long term the game would be. How large the market is, how

fast it will grow. And how to remain profitable.

I firmly believe that any business works by delivering value. You deliver value, you charge

for it. A site needs to sell on the basis of THIS:

explains how difficult it is to deliver value in a sustainable and profitable manner in India.

Offline has been inherently cheaper and for most things would remain. Even if not, do not

expect a shift like online ticketing in online shopping.

Given that you now understand how to deliver value, the biggest opportunity is to find the right product set. One cannot be profitable selling the regular

stuff like mobile phones online. It is far too competitive of a market offline as

well as online. Accessories onthe other hand is a much more lucrative market and while

it isn't sexy as a mobile phone, it gives value to the consumer and gives margins to the

retailer. I will end that there.

Some quick points on other issues

Logistics:

Is good in India with companies like Aramex, TNT and Bluedart. Isn't good for COD

though. Thats why I believe most players backed it up with their own service.

Though I wish the postal service in India was as good.

Banking and Gateway

The sheer amount of effort taken to get a gateway and the failing transactions. This is an

issue, but since it is all online and I trust RBI a lot with their efficiency, I expect this to

improve very fast. In the long run, I DO NOT believe that COD is the way to go.

Trust:

The reason new players have to burn so much on COD is that the old players have spoilt

the name badly. People don't trust service and quality of good they will receive. Go and

read the online complaint boards you will get what I am saying. The original

Annkur P Agarwal, Online retailer in India since the time no payment gateways were

around, full...

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Baazee / eBay has spent tons training the consumers to buy online and merchants to sell

online, but the bulk of Indian internet biggies have spoilt the market ('Sagla ghaan karun

thevle ahe') by giving horribly poor service. You can order something and forget it for 30

days or get a poor / broken product and wait for email replies to help you. Far too many

people have burnt their hands

shopping online to trust the medium again. Thats the reason COD is so big in India, it is

not that people dont have credit cards or netbanking access, it is that they do not see the

value in trusting. If payment was such a big issue, ticketing wouldn't have been so big.

Written Feb 17, 2012 • View Upvotes • Answer requested by Mehul Ved

Here are my observations from references gathered from primary and secondary research

on the subject

References

Logistics to be the game changer for e-commerce in 2016

Written Jan 25 • View Upvotes

Sonesh Prakash, I am a marketing consultant for tech startups

1.3k Views

E-commerce has seen an unprecedented rise in business in the past year, with Paytm

joining Flipkart and Snapdeal in the eight-member unicorn club. A report by Bank of

America Merrill Lynch in 2015 stated that the e-commerce market in India will be

worth $220 billion by 2025.

Yet, e-commerce is beyond just sales and GMV numbers. Speed of delivery is as

important as the product quality for a customer. I wouldn't be wrong in saying that

logistics could be the defining factor for success of e-commerce companies in retainingtheir customers.

Last mile deliveries account for 30% of all logistics costs & there is still no effective

resource utilization by logistics service providers. Hence logistics companies are now

relying on tech companies to provide the solutions, which can actually improve the

overall efficiency and support the entire ecosystem.

Technology companies can answer the following questions for Ecommerce companies

which give them logistical nightmares.

How do I locate the shipments in real-time across line haul and last mile?

How do I measure my service levels for same day/next day deliveries?

How long my shipments remain unscanned even after arriving at the hub?

Is there a trend in the delivery delays?

There aren't too many companies in India who have been lauded for answering the

above questions in entirety and accuracy. LogiNext is one of those few who has been

successful in this space and answers these questions for more than 50 of its customers

in India. It has been voted for and recognized as the best Logistics and Supply Chain

Cloud solution provider by the 400+ strong CIO Community & ICT Business leaders

of India. They are the only start-up to win this honor and recognition within two year

of beginning its operations.

The eCommerce trend in India has been on the upswing particularly among the urban

households. But there are challenges

Ramesh M, eCommerce Analyst

2.8k Views

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Establishing Trust and outwitting Competition

Indian people tend to stay loyal to a brand their convenient with. Once they trust someone

they just cannot think of changing. So winning over their trust is something very tough.

Currently sites like flipkart, amazon, snapdeal have penetrated the Indian household and

it will be really tough to find a place among these big three.

Payment delivery

Once again if you see in majority people opt for Cash on Delivery. Because the very

thought of paying for a product virtually even before receiving it would shudder them. Of

course this is the case of the previous generation. But since younger generation is

dependent on the previous generation COD is the most preferred payment mode. However

sometimes miscreants use this wrongly.

Offering Discounts

This is one of the biggest challenges an eCommerce site faces. The prime reason nowadays

why every Indian household adopts for eCommerce is because of the throwaway price at

which products are being sold. They get the most coveted brands for a paltry sum. So

offering discounts is essential to survey.

These are some of the external challenges. Internal challenges will be to make you site

superior in terms of functionality like site speed, secure payment gateway, appealing

design, whale of product and diverse collections. These challenges can be mitigated by

hiring the services of professional eCommerce development firms .


Challenges in Indian eCommerce Market

1. High Customer Acquisition Cost

2. High Churn/ Low Loyalty

3. Cash on Delivery

4. High Cash Burn Rate

5. High Inventory/ Poor Supply Chains

If you are looking for eCommerce solution provider firm , then go for MMF Infotech as

they are offering the best eCommerce, product uploading and bulk listing services in a very

afforda ble packages. For more information visit: http://www.mmfinfotech.com/servi...

Written Feb 19, 2015 • View Upvotes

Marine Li, Social Worker

2.3k Views

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Major challenges, which is indian e-commerce industry facing today:

Poor Knowledge and Awareness: once it involves magnitude relation of net

customers, situation isn't thusadmirable one. Majority of Indian rural population ar

unaware of net and it uses. amazingly, most of net savvies or urban population are littered

with poor information on on-line business and its functionalities.

Online Transaction: Most of Indian customers don't possess plastic cash,mastercard, charge account credit andinternet banking industry, that is one

in every of the prime reasons to curtail the expansion of ecommerce.

Cash On Delivery: Cash on Delivery (COD) has evolved out of less penetration of

mastercard in Republic of India. Most of Indian E-commerce corporations are giving COD

united of mode of payment for the patrons. 30%-50% of patrons are taking advantage

of this mode of payment whereas creating purchase of any product and repair over net.

COD has been introduced to counter the payment security problems with on-line

dealings,however this mode has been proving to be loss and valuable to the businesses

Online Security : Such pirated computer code leaves space for virus, malwares and

Trojan attacks and it'sextremely risky task to create on-line transactions within the

systems, which can disclose or leak sensitive details of credit cards and on-line banking of

the users. These varieties of droopiness ought to be illegal in Indian ecommerce sectors

Logistics and Shipment Services: In Republic of india, supply and traveller services

needed several improvement. While, excellent and robust supply service is one in every of

the key reasons behind the success of any on-linecompany, Republic of India is insulant so

much behind during this sector as most of the city and little villagesar still not coated

underneath serviceable space of the many of the traveller and supplying corporations.

Fear factor: concern of constructing on-line payment may be a universal psychological

factor of Indian customers. With the unfold of information on on-line transactions and its

reliableness, some percentages of consumers have unmarked this concern and that they ar

dauntlessly participating themselves in on-linesearching

Tax Structure: charge per unit system of Republic of Indian market is another issue for

lesser rate of eCommerce in India as compared to different developed countries like USA and GB. In those countries, charge per unit is uniform for all sectors whereas tax structure

of Republic of India varies from sector to sector.

‘Touch and Feel’ factors: Indian customers are easier in shopping for merchandise

physically. they have an inclination to settle on the merchandise by touching the

merchandise directly. Thereby, Indian patrons aradditional inclined to try and do ticketing

and booking on-line in Travel sectors, books and physics.

Written Mar 1, 2014 • View Upvotes

Manoj Mishra

3.4k Views

Puja Singh, Team Lead - Enterprise Sales at KAPSYSTEM-Bulk SMS Service

Provider

4k Views

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Hello,

After evaluating options to take a plunge in the e Commerce space and hence have

analyzed the sector very closely. I believe that the opportunity is large but there are

issues that require urgent attention. The top five concerns of the e Commerce market

in India are as follows:

1. HIGH CUSTOMER ACQUISITION COST :

One area that most of the entrepreneurs consistently underestimate in their business plans

is the cost of acquiring a customer. Most business plan assumes heavy reliance on

social media and internet advertising. The general myth is that the cost of acquisition oninternet is very low. Overtime, when the customers start coming directly to the site, the cost

of customer acquisition falls significantly but till that time, the business owners need to

cover the cost.

2. HIGH CHURN / LOW LOYALTY:

I have heard multiple times that the Indian market is very large and we have just hit the

tip of the iceberg in terms of customer adoption. I have no doubts on the size of Indian

market but the problem is low loyalty. The big brands are yet to be created on the internet

and hence the brand loyalty is very low.

In the high acquisition cost scenario, it is important to retain the customers for a long time.

Currently this is not happening. Most of the sites are getting high number of new

customers every month camouflaging the high churn. The e Commerce companies aremeasuring the gross profitability and not the customer lifetime value. The

moment the new customer addition drops, the profitability goes for a toss. This is not

limited to group buying sites and other e Commerce formats are also witnessing the high

churn and low loyalty problems.

3. CASH ON DELIVERY :

Cash on Delivery (COD) has been touted as the innovation to counter the low credit card

penetration and payment security issues on the internet. Given the low profitability

and small ticket size on e Commerce sites, the entire gross margin gets

erased by COD. On top of this the problem is that of high returns as the consumers often

change their mind by the time the goods arrive. What amazes me is the fact that

there is no incentive for the customers to use electronic payment on sites like Flipkart. Why

would I take any risk with electronic payment if I can get cash on delivery at the same

price?

4. HIGH CASH BURN RATE:

The capital requirement for any e Commerce venture is very high contrary to the popular

belief that it is easy to set up an electronic shop. Leaders in the e-commerce space (ones

that have raised money, have large teams and are aggressively pursuing growth) are

spending $1-2 million (Rs 5-10 crore) a month, including on marketing, overheads and

salaries. At this rate of burn, smaller firms with scant capital are unable to cope. Therefore

it is important to raise money early in the game.

5. HIGH INVENTORY/ POOR SUPP LY CHAINS:

Most of the e Commerce venture is complaining of the excess inventory and absence

of liquidation market in India. The poor supply chain compounds inventory

problems due to unpredictability of the supply. The cost of carrying the inventory is very


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high and successful ventures would need to tackle the supply chain issues if they really

want to run a scale business.

SUMMARY:

I do not think any of the above mentioned issues are unbeatable. The opportunity is huge

to let it go. Entrepreneurs need to be disciplined sticking to the basics of business without

getting carried away by the rush of capturing the opportunity.

For more details & any other business solutions kindly keep in touch with us at Bulk SMS

India Company

Written Aug 5, 2015 • View Upvotes

I feel India is still in developing phase when you consider eCommerce. Other then few big

players like Flipkart, Myntra, Yepme, Jabong, Snapdeal, Amazon you might have not

heard of any other players.

This is primarily because they are funded and can advertise. But others either have low

traffic or die over the years.

As per my understanding, please find below the real challenges for eCommerce in India.

Budget

We have come across people who have very low budget for an eCommerce, while planning

for an eCommerce store they have either forgotten about marking budget or are not aware

about it. So my question is you can build an eCommerce in Rs 5000 ( Start an eCommerce

Store at Rs 5000 ) but how about marketing. Since if you don't market, it will die.

Marketing

As mentioned above, due to big players like Flipkart, Myntra etc digital marketing is not so

cheap anymore. Hence if you are looking for a huge traffic for recently launched

eCommerce store, you need to market it well using well know mediums like PPC, SEO,

Social Media, Display Advertising & Email Marketing. All these need money, so you

technically need good financial back up. A basic math that I use, if you need to open retail

outlet in GK, Delhi and it would cost you approx Rs 50 Lac, then you should at least have

a budget between Rs 5 to 15 Lac for an eCommerce to start with. Anything below this is not

worth trying.

Poor Mapping by leaders like Google

Google still have to mapped 100% of India, hence if you are looking for targeted traffic for

specific location etc at times its not available. You can still not set age group in Google

Adwords. Say if I am launching a eCommerce Store for age g roup 50 to 60, I don't have an

option to choose my target age group. Hence it will take some time to come up with what

USA etc have.

Goodwill & Trust

Due to increase in number of fake eCommerce store, people usually don't feel safe

transacting on a new website, hence you really need to put in effort to build a goodwill and

trust for your brand. Yes if you already have a retail chain and plan to go online, this could

help you. But for a new player its a challenge. Hence you need to be patient, keep making

your presence feel and ensure you share your complete details like office address, phone,

email, VAT No etc. It takes year to build goodwill hence don't expect that you will start

getting thousands of orders within few weeks of launch.

Logistic

Logistic is a huge issue in India, specially if you are a new startup. Each logistic partner

you will speak to, will ask about volume, packet size, etc, difficult to answer these since you

don't have an answer for most of these questions, you don't know what kind of traffic and

Amit Shroff , an expert in eCommerce with 12yrs of exp in eCommerce

5.5k Views

https://www.quora.com/profile/Amit-Shroff-4https://www.quora.com/profile/Amit-Shroff-4http://www.72interactive.in/packages/affordable-ecommerce-store.htmlhttps://www.quora.com/api/mobile_expanded_voter_list?type=answer&key=m4HEyP1k1Qmhttps://www.quora.com/What-are-the-biggest-challenges-facing-eCommerce-sites-in-India/answer/Puja-Singh-69http://kapsystem.com/freedemo2.php


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business your eCommerce store will receive. Then there are issue like price calculated on

weight and volumetric, players like firstlight etc have their api but if you have included

shipping in your cost how do you bring in the best is a challenge. Also in India not all

logistic company covers 100% India, so its a big challenge, where as if you considered USA,

UK etc they are well connected and everything is streamlined with complete API support to

help you with price calculation etc

COD

COD plays are very important role in India, since majority of transaction are cash

transaction and people feel more comfortable making a cash transaction then online.

There are multiple reason for it like comfort, trust factor, non existence of payment optionetc. Like a house wife or a student who don't have a online banking/debit card facility.

Hence to attract these kinds of customer COD is mandatory option. But then it has cost. If

the product is returned you have unwanted cost, hence you need to ensure you have min

COD returns. You also have customer support expense like you will have to make

confirmation calls to COD customer ensure that the order is delivered to right person and

so on.

Product & Quality

Just because its India you cannot sell shit online, you need to maintain quality and need to

offer good quality product. Hence you need to ensure that what ever you sell is of good

quality and there is a syn between the website and product. Like showing real pictures of

RayBan sunglasses and selling a fake. Be a genuine seller, sell what you say. This would

also help you build goodwill & trust.

Sales & After Sales Support

To be successful you need to have excellent sales and after sales support. You need to

ensure you are in touch with your customer after the order is placed till it is delivered.

Additionally you need to handle return, exchange efficiently.

Online & Offline Completion

If you have a retail chain and selling a product online and offline make sure you sell it at

lesser price because you have lower overhead cost compare to offline store, hence you need

to part with your profit margin.

I hope I was able to answer your question - if you need additional information please feel

free to speak to me - 72interactive - Digital Agency Delhi


Breaking-even!

The most basic requirement of any business is to make money. If you are running a

business which gives you a return that's as good as Government bonds, then you are in a

bad position.

Alternatively, if you a re running a business where your spending is significantly higher

than your profits over a long period, then you are in the worst position.

AbdulMajed Raja, A worried Indian

1.4k Views

https://www.quora.com/profile/AbdulMajed-Rajahttps://www.quora.com/profile/AbdulMajed-Rajahttps://www.quora.com/api/mobile_expanded_voter_list?type=answer&key=qHvyY8BkcqShttps://www.quora.com/What-are-the-biggest-challenges-facing-eCommerce-sites-in-India/answer/Amit-Shroff-4http://www.72interactive.in/


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https://www.quora.com/W hat-are-the-biggest-challenges-facing-eCommerce-sites-in-India 10

Almost all Indian eCommerce sites are in this worst position. Even India's R BI Governor

Rajan says, 'I would like to see when they (ecommerce companies in India) become

money-making company from money-spending company'.

Paytm founder Vijay proudly sets a vision of becoming the first Indian ecommerce

company to break-even as so on as by 2017 which clearly shows how the so-called

biggies Flipkart and Snapdeal are much worse position.

Losses:

Unlike the US, In India, Loyalty to a specific e-commerce site is almost non-existent across

the landscape. Despite knowing this, Most of the Indian ecommerce companies are just

trying to emulate the Amazon-model which by itself is a highly non-repeatable magic.

Good Luck entrepreneurs!

Written Oct 18 • View Upvotes

Snapdeal's loss rises to nearly Rs 1,350 crore in March 2015

Flipkart reported a loss of Rs 400 crore in FY-14

Amazon in India incurred a net loss of about Rs 320 crore after its first year of

operation (2013-14)

The biggest challenges for ecommerce sites in India are:

1. In India, Cash on delivery is the preferred payment mode- Because of low trust in

internet payment options many customers believe to pay through COD only.

2. Internet Penetration is Low- In India, Internet penetration is quite low as compare to

several western countries like USA, UK, France and more. Still, the country is a small

fraction of what other countries are getting.

3. Indian Customers Return Much of Their Products They Buy Online- The first time

buyers are still not sure about wha t to expect from eCommerce websites in India ; thus,

purchasers fall prey to hard sell. Finally, when the product is delivered, they started feeling

regret and return the goods.

4. Many Times, Postal Addresses are not consistent- Because of the inconvenience faced by

many of the online shoppers due to not receiving their orders at their prescribed address it

created a low trust on them

Neha Singh

2.3k Views

https://www.quora.com/profile/Neha-Singh-429https://www.quora.com/profile/Neha-Singh-429http://www.nationkart.com/https://www.quora.com/api/mobile_expanded_voter_list?type=answer&key=YlyNsUqhpsjhttps://www.quora.com/What-are-the-biggest-challenges-facing-eCommerce-sites-in-India/answer/AbdulMajed-Raja


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https://www.quora.com/W hat-are-the-biggest-challenges-facing-eCommerce-sites-in-India 1

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Francisco, Berlin or London?

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Sitemap # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

About - Careers - Privacy - Terms - Contact

Written Mar 5, 2015 • View Upvotes

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