E-Commerce: E-Commerce is not just about performing Internet-based business transactions. Its impact is going to have far and more influential than we currently understand.

This is because, at the same period as other trends, particularly the globalization of business, the revolution in information technology is actually occurring.

Purchasing & sale of goods and services over the internet is e-commerce. E-commerce may be a replacement for brick & mortar stores, but some companies prefer to retain both.

Almost all can be obtained today via E-Commerce. The new era of global e-commerce is producing a whole new economy that will change our lives immensely, reshape competition in different sectors, and change the economy globally.

As companies earn high profits, more and more other businesses are building their websites in order to maximize their profits.

Since more companies are kept online, high-economy growth and the advent of more innovative and advanced technology are the results.

Advantages of E-commerce

Saves a customer’s time:

 

• Shopping online enhances the receipt of the desired item and saves time and effort for customers. Imagine that you need a specific item.
• You don’t spend any time in the brick-and-mortar store if you choose to buy it online, using just a laptop and a credit card.
• In addition, you can immediately check whether it is available at the store or not, instead of walking from store to store looking for an item.

Detailed about the product:

• Customers evaluate whether or not to purchase a product based on the packaging given by the retailer and a brief overview.
• But when shopping online, you get a more detailed overview of the product with macro images, tutorials, and videos for unboxing and a list of several similar items.
• In addition, online shopping is a great opportunity to read reviews of items posted by other customers.
• All this data makes a great contribution to a more deliberate decision “to buy or not to buy”. It is one of the best benefits of online e-commerce and business.

Personalize the experience of shopping:

• You cannot make all your products or stores pleasing to every eye by running a brick-and-mortar store.
• However, a digital store has even more comprehensive customization capabilities, a great e-commerce value for creative marketing specialists.
• can gather information about the customers with the help of cookies and then get a clear understanding of who they are: gender, age, interests, what kindomers the products they are most likely to be interested in by using this information.
• The product would be identics of advertisements they respond to best and much more. You can customize the store to automatically offer custal to those they have previously bought or from their shopping list. The store concept and a welcoming message can also be personalized.

Customers can be retargeted:

• At brick-and-mortars, it sometimes happens that even those consumers who are truly interested in the product leave the shop without buying it.
• Especially if there is a high price. It happens because it takes time for many individuals to think about the purchase and only then make a decision.
• But by the end of the day, a lot of them may forget about it. There is no chance, sadly, that you will remind them of this item. You can do it online.
• Retargeting is a marketing technology that displays product advertising on web pages previously visited by the consumer at your online store.
• It helps to remind consumers unobtrusively of the product they used to like and maybe still like, urging them to come back to your store and reconsider. There is no question that this is one of the main advantages of e-commerce.

No geography and time limits: While in e-commerce, which countries to sell, you have no restrictions, everything relies on your intentions and resources.

Running an online store, without leasing an extra office elsewhere, you can broaden your business and customer base. And, thanks to enhanced logistics and distribution technologies, shipping worldwide would be a feasible task.

The payment may, in turn, be made without a credit card. A modern alternative for international online shopping is online payment gateways, such as Apple Pay, PayPal and others.

Yes, we can’t deny that online payments have their own advantages and drawbacks, but they are a matter for a separate article.

More read  for related blogs are:

• New revise TDS/TCS due date for filing Return and Payment for the year 2020
• key features of TCS on goods sale section-206c

Lower costs: It is a very costly operation to operate a brick-and-mortar shop. Only think about the costs you’re going to have to bear:

leasing of the facility, utility bills, insurance, repair of the warehouse and wages for the employees. In addition, a high number of operating expenses, such as maintenance service bills, employee training, advertisement costs, and so on, should be taken into account.

You may not have to pay for a physical location with an e-commerce website. You would also need less staff members; you can even run it yourself if your store is small.

Affordable and effective marketing: They are using a collection of traditional marketing practices to support a physical shop.

Mass communication tools such as print, radio, TV advertisements, direct mail and telephone are included.

In a time when there were no advanced digital innovations, conventional marketing techniques and tactics used to be effective.

These forms of product marketing currently provide little interaction with the audience and generate lower conversion ratios.

Ecommerce deals with digital marketing, the more advanced phase of marketing technology.

Scope of activity and a larger number of operations include the advantages of digital marketing: content marketing, SEO, online advertising, email marketing, pay-per-click and social media marketing.

The Internet is used by both of them as the media, which makes these practices less costly and offers great global marketing advantages. In addition, it directly communicates with numerous groups who non-stop use social networks.

Multiple Purchases: How many customers at the same time will a store serve? The number of orders that can be placed, processed and paid for simultaneously at an online store is not limited.

Customers don’t have to wait for their order in a queue, which is a great e-commerce value for impatient individuals.

Disadvantages of E-commerce

Uncertainty regarding the quality of goods:

 Online stores offer a comprehensive overview of the product, but before buying, consumers cannot see or feel the item in any way.

As a consequence, they cannot be sure whether or not the description is false. Here, the key role in the decision of customers is the credibility of the store and good feedback.

Many consumers, however, can remain unconvinced and opt against making a purchase “risky.” If a consumer receives a product that does not meet the expectation, it fully kills the experience of shopping and tends to be one of the e-business’s top disadvantages.

Waiting for the delivery of a product:

For both store owners and consumers, shipping is a headache.

You need to devise the delivery logistics, find the carriers, and ensure that the products are delivered correctly and on time, and deal with all sorts of delays and complications when you decide to run an e-commerce business.

But you only receive payment for a product when it is delivered, which is a discouraging factor. The purchase might never be delivered in the worst scenario, either lost in the mail or sent to the wrong address.

A significant disadvantage of e-commerce is these complications.

Some items are difficult to buy online:

You can’t ignore that online sales of almost all kinds of products are possible.

There are, however, certain limits on E-Commerce capabilities, products that are difficult to correctly select or ensure that they suit you.

High heels, prom dresses, some other clothing types, luxury items, and others are among such products. The most advanced retailers are successfully introducing Augmented Reality technologies to their web stores.

This is still a very rare practice, however. Another type of products that are unpopular in online retail are those that need a related service, such as a roof luggage rack for a car, to accompany their purchase.

Complex guidance on taxation: You may be most willing to sell your goods worldwide, as a store owner. However, it implies that you need to comply with the tax rules implemented in each country where you plan to deliver.

You will need to deal with the issue of cost-effectiveness for your business, apart from the effort to study them all and make sure you can comply with them.

Mandatory registration: To complete an order, a customer often needs to register on the website. And the issue here is that a lot of individuals do not want to register.

It is understandable that some customers are hesitant to send their name, last name, address, email address and other private data to an online store due to the frequency of hacker attacks.

There are also those who make transactions in a rush and do not want to waste time registering for a very long process.

GUIDELINES FOR FOREIGN INVESTMENT IN THE E-COMMERCE SECTOR:

E-commerce in recent times has been growing rapidly in India. By 2020, the e-commerce market size is expected to reach USD80 billion1, showing year on year growth in the range of 30 to 35 percent.

This growth is likely to sustain for the next few years as e-commerce continues to reach new geographies, encompass new markets and provide greater benefits to e-retailers, consumers in terms of providing a large number of traders an additional source of sales, providing consumer greater convenience and access to a large number of products, etc.

The Foreign Direct Investment policy in India allows e-commerce activities under automatic route with 100% equity, subject to the following main conditions:

Dept of Industrial Policy and Promotion (DIPP) updated Press Note 2 to provide clarification on the ability to function of the e-commerce market as follows:

• E-commerce marketplace could provide support services to sellers in the areas of warehousing, logistics, order fulfillment, call center, payment collection, and other service providers.
• An e-commerce entity giving a marketplace cannot exercise ownership over an e-inventory. Goods were supposed to be sold. Such ownership of the inventory will turn the business into an inventory-based model.
• An e-commerce entity shall not, on a financial yearly basis, allow more than 25% of the sales value of one vendor or group of companies directly impacted by its marketplace.
• In the marketplace model, the goods/services made available for sale electronically on the website should make clear the name, address, and other contact information of the seller. Post-sales, delivery of goods to customer’s satisfaction responsibility of the seller.
• A corporation having an equity stake in an e-commerce open market entity or its group of companies, or having control over its inventory by an e-commerce marketplace entity or its group of companies, is not permitted to sell its products on an interface run by such a marketplace entity.
• Payments for sale may be made easier by an e-commerce entity in accordance with the guidelines of the Reserve Bank of India.
• Any warranty/guarantee of goods and services sold the responsibility of the seller.
• E-commerce entities will not require any seller to sell any product solely on their portal.
• E-commerce operators providing the marketplace will not directly/indirectly influence the sale price of goods/services and will maintain a level playing field.
• Services are provided by an e-commerce entity or other entities in which an e-commerce marketplace entity has a direct/indirect shareholding or common control, on a platform-wide basis and in a fair and non-discriminatory manner.
• An E-commerce entity will be required to submit a certificate along with a statutory auditor’s report to RBI, in compliance with the above recommendations, by 30 September of each year for the preceding FY.

Pursuant to the provisions of the FDI policy on the services sector and the applicable laws/regulations, security, and other requirements, the sale of services via e-commerce will be carried out on a fully automated basis.

In order to emphasize this point, the new standards for cashback or services offered by e-tailers, such as fast delivery, must apply to all sellers on their platforms.

It also stated that if a vendor sells more than 25% of its goods through an e-commerce marketplace, the latter will be considered to have an inventory model in which FDI is not permitted.

Furthermore, it is the duty to ensure that it is firmly on the e-commerce platform so that it does not find itself on the wrong side of the law.

The key features of the press note issued by the Department of Industrial Policy and Promotion in this regard are enumerated below:

• Foreign investment will not be allowed in the inventory based model of e-commerce.
• 100 percent foreign investment will be allowed under the automatic route in an entity undertaking sale of service through e-commerce.
• 100 percent foreign investment will be allowed under the automatic route in market place-based model subject to the following conditions :
• Permission to marketplace e-commerce entity to enter into B2B transactions with sellers registered on its platform.
• The marketplace may provide support services to a seller in respect of warehousing, logistics, order fulfillment, call center, payment collection, and other services.
• Sales from one vendor or its group companies should not exceed 25 percent of the sales affected through the marketplace.
• The website should clearly provide the name, address, and other contact details of the seller.
• Post sale, delivery of goods to the customer, customer satisfaction, warranty/guarantee of goods and services sold will be the responsibility of the seller.
• The marketplace will not exercise ownership over the inventory for sale may be facilitated in conformity with the guidelines of the Reserve Bank of India.
• E-commerce entities will not directly/indirectly influence the sale price of goods or services and shall maintain a level playing field.

About the Author

The writer is Swatantra Kumar Singh, FCA helping foreign companies to set up and close business in India and comply with various tax laws applicable to foreign companies while setting up a business in India. He is the founder of Rajput Jain and Associates.