E Commerce and Entrepreneurship: Business Growth

Discover how e commerce and entrepreneurship are reshaping business. Explore key trends, strategies, and tips to succeed in the digital marketplace.

E Commerce and Entrepreneurship: Transforming Business

Learning Outcomes: Upon completion of this module, students will be able to:

• Define and understand the concept of E-Commerce.
• Identify and explain various approaches to E-Commerce.
• Discuss the advantages and disadvantages of E-Commerce.
• Analyze successful E-Commerce case studies.

Introduction

The rapid adoption of technology in recent years has fueled the exponential growth of e commerce and entrepreneurship companies. Technological innovation continuously creates new opportunities for businesses to offer value-added services. The combination of technology deployment, improved customer service, and innovative products has intensified competition. Today’s customers are more informed and demanding, pressuring e commerce and entrepreneurship companies to continually find new ways to create and deliver value.

E-commerce encompasses all types of business transactions conducted via computer networks. Advances in information technology (IT) have globally reshaped the e-commerce landscape and revolutionized various aspects of modern life. Constant changes in technology and lifestyles, coupled with competition, have transformed e-business. In the context of the liberalized Indian economy and the government’s push for privatization, competition is set to become even tougher.

Recent progress in telecommunications and computer technologies has made computer networks essential to daily life. The number of companies facilitating online transactions is growing daily. Online commerce provides consumers with multiple benefits, including doorstep delivery, lower costs, a wider selection, and time savings. Purchases can be made with a click, eliminating the need to leave home or the office.

Meaning and Concept of E-Commerce

Technology is fundamentally changing the face of entrepreneurship, making Electronic Commerce a modern business essential. E commerce and entrepreneurship is the process of conducting business electronically, primarily over the internet, to boost operational efficiency. This, in turn, enhances customer value and provides a competitive edge. It includes transactions between businesses (B2B), businesses and consumers (B2C), and consumers and consumers (C2C) involving the buying and selling of goods and services. If entrepreneurship is defined by innovation, e-commerce significantly accelerates it.

E commerce and entrepreneurship is a contemporary strategy that addresses the needs of entrepreneurs by reducing costs and increasing service delivery speed. While it offers new business establishment opportunities, existing entrepreneurs must also prioritize increasing their online presence, which positively impacts marketing and sales efforts. Entrepreneurs should leverage these channels to discover how the Internet can transform and expand their operations. For instance, a local grocery vendor primarily serving a neighborhood could establish a website to expand its customer base city-wide.

Approaches to E-Commerce

Business-to-Business (B2B) E-Commerce:

This involves e-commerce conducted between companies. B2B focuses on relationships between businesses, including e-procurement, supply chain management, and negotiating purchase transactions over the internet.

Its two main components are e-frastructure (logistics like transportation, warehousing, distribution, and application service providers) and e-markets (websites for buyer-seller interaction and transactions). Examples include IBM, HP, Cisco, and Dell. B2B e-commerce reduces transaction costs and saves time and effort.

Business-to-Consumer (B2C) E-Commerce:

This was one of the earliest and remains the second-largest form of e-commerce. It involves businesses presenting products and services to consumers via internet technology. B2C includes customers gathering information and purchasing physical or information goods over an electronic network.

Online retailers like Flipkart.com, Snapdeal.com, and Firstcry.com are B2C examples. A key benefit is the entrepreneur’s ability to expand the consumer base with minimal transaction costs, and it allows consumers to easily find the most competitive prices.

Consumer-to-Consumer (C2C) E-Commerce:

This approach concerns individuals using e-commerce to trade and exchange information with other individuals. C2C is characterized by the growth of electronic marketplaces and online auctions, especially in niche industries where businesses can bid for products from multiple suppliers.

Business-to-Government (B2G) E-Commerce:

This is defined as online commerce between companies and the public sector. B2G focuses on the need for businesses to sell goods or services to governments or government agencies, such as supplying products to the army, police, hospitals, and schools.

Mobile Commerce (M-commerce):

This involves the buying and selling of goods and services using wireless technology, such as mobile phones. M-commerce is a faster, more secure method for digital commerce transactions and includes financial services (mobile banking, brokerage), telecommunications, and bill payment.

Advantages of E-Commerce

E commerce and entrepreneurship offers numerous benefits:

1. Global Reach: E-commerce eliminates geographical limitations, making the entire world the entrepreneur’s market.
2. Enhanced Customer Base: E-entrepreneurs can expand their customer reach through various search engines.
3. Lowered Costs: A significant advantage is reduced operational costs. E-commerce businesses don’t need large inventories or expensive retail showrooms and often have smaller marketing and sales teams than physical stores. Part of this cost saving can be passed to customers as discounts.
4. 24/7/365 Shopping Access: E-commerce websites operate continuously, increasing the number of orders a merchant receives. From the customer’s perspective, an “always open” store is more convenient.
5. Wider Choice for Consumers: The cyber market offers a much broader selection. Customers can use intuitive navigation or a search box to quickly narrow down their product search. Some sites enhance repeat purchases by remembering customer preferences and shopping lists.
6. Facilitated Comparison Shopping: E-commerce makes comparison shopping easy. Various online services allow customers to browse multiple merchants to find the best prices. Widespread information dissemination enables consumers to compare products, features, and prices, and read reviews before making a selection.
7. Easier Access to Assistance and Advice: Unlike physical stores with limited display space, e-commerce websites make extensive product information, expert advice, and peer reviews readily available to customers.
8. Fast Service and Delivery: Consumers benefit from fast services and the convenience of having their orders delivered directly to their doorsteps.
9. Global Market Access for Small Businesses: By minimizing costs, e-commerce allows companies, especially small ones, to make information about their products and services accessible to potential customers worldwide.

Disadvantages of E-Commerce

Despite its widespread acceptance, e commerce and entrepreneurship has certain drawbacks:

1. Difficulty in Calculating Return on Investment (ROI): Determining ROI can be complex in e-commerce.
2. Recruitment and Retention Challenges: Many firms struggle to recruit and retain employees with the necessary technological design and business process skills to establish an effective e-commerce presence.
3. Integration Difficulty: Integrating existing databases and transaction processing software designed for traditional commerce with e-commerce enabling software is often challenging.
4. Cultural and Legal Obstacles: Many businesses encounter cultural and legal hurdles when conducting e-commerce.

Difference between Traditional Commerce and E-Commerce

The rise of IT has made e-commerce an attractive and profitable sales channel for many small businesses. However, traditional commerce, e commerce and entrepreneurship differ in several key aspects:

• Direct Customer Interaction: Traditional commerce is largely based on face-to-face interaction, allowing the customer to ask questions and sales staff to encourage upselling or suggest related items, thereby boosting profits. E-commerce lacks this direct relationship, unless features like live chat or related item suggestions are implemented.
• Lower Costs: E-commerce eliminates the need for a physical store in a prime location, avoiding fixed costs like commercial rent and high electricity charges. Starting an online store is significantly cheaper, encouraging small business owners with limited start-up capital to launch their ventures.
• Reach: Online shopping allows businesses to operate globally, unlike traditional commerce, which is limited to walk-in customers. This global reach opens doors to various online marketing forms, often leading to a much larger sales volume and even increased physical store traffic. An online store has unlimited capacity for clients, constrained only by stock.
• Goods Return: In traditional commerce, customers can physically inspect items before purchase, reducing the number of returns or complaints due to discrepancies. Conversely, online businesses face a higher return rate as customers often order items to try them at home and return them easily via post without direct interaction with the seller.
• Credit Card Fraud: E-commerce is vulnerable to ‘credit card fraud,’ also known as ‘Identity Theft,’ where a person uses another’s identity to commit deception. This problem arises from the theft of card information during transaction delivery. Traditional commerce is more secure, as sellers can easily verify the buyer’s identity with photographic ID. However, the banking sector is continuously introducing sophisticated innovations to combat counterfeiting and fraud in online transactions.

Selling online necessitates adapting to new methods for customer engagement, marketing, and order fulfillment, but the rewards are substantial. Businesses can lower costs, reach a wider audience, operate 24/7, and focus on improving products, services, and the customer experience instead of waiting for clients on the store floor.

While some products (like jewelry for cash) sell better online than others (like houses or cars), having an online store can also increase traffic and sales for the traditional commerce aspect of a business, as people can find the offerings online.

Success Stories of Entrepreneurs using E commerce and entrepreneurship

Snapdeal

Snapdeal carved a niche for itself in the Indian e-commerce space. Started in 2010 by Kunal Bahl and Rohit Bansal as an offline couponing business named ‘Money Saver,’ it sold 15,000 coupons in three months. The venture’s trajectory changed significantly after meeting investor Vani Kola, whose venture capital firm ultimately decided to invest in the company. Snapdeal officially went online in 2010.

The initial period was challenging, marked by mistakes and lessons learned, but this diligent effort to offer the best to customers drove Snapdeal’s early success. A pivotal decision came in November 2011. Inspired by Alibaba’s success, Rohit and Kunal decided to shut down the highly successful deals business and transform Snapdeal into an online marketplace. This was a high-risk move, surprising even the investors, as eBay was the only other marketplace in India at the time.

This strategic decision was focused on long-term growth. Once the board approved, the current form of Snapdeal took shape. Its valuation at a billion dollars today is a testament to the founders’ vision. Currently, Snapdeal features over 50,000 sellers and approximately 5 million products. The company’s phenomenal growth in a short period is remarkable, driven by a focus on building scale and improving speed. The investment from eBay brought immense experience to the table.

Today, Snapdeal is one of India’s fastest-growing e-commerce companies, with the largest online marketplace. In just two years, it transitioned from scrapping its group coupon business to becoming a billion-dollar company, boasting a year-on-year growth of nearly 600%. The average age of the workforce is 25. Their core values—Innovation, Change, Openness, Honesty, and Ownership—fuel their pursuit of greater success. Their phenomenal growth is sustained by a continuous effort to bring the best to the market and a zealous commitment to being the best B2C (Business-to-Consumer) marketplace. Great ideas are important, but confident implementation and dedicated effort are paramount; results are driven by action, not mere thought.

Flipkart

A successful path always begins with a groundbreaking idea, and Flipkart is no exception. However, true success is defined not just by the idea but by the conviction to translate ideas into action and action into results. By this measure, Flipkart has been hugely successful. Launched in 2007 by Sachin Bansal and Binny Bansal, both former Amazon employees, Flipkart entered the nascent Indian e-commerce industry.

Starting an e-commerce company in a diverse country like India, where people historically prefer to shop in person and inspect goods, was a risky move with enormous inherent challenges. Today, largely thanks to Flipkart, e-commerce is one of the fastest-growing sectors in India. Flipkart initially began by selling books and quickly expanded its offerings. It has pioneered several features defining Indian e-commerce, notably being the first to implement the popular ‘Cash On Delivery’ (COD) facility, which is now a standard option across all Indian online shopping websites.

In its early years, Flipkart secured funding through venture capital. As its stature grew, more funding followed, and Flipkart consistently justified investor faith with outstanding performance. Sales rose from 40 million Indian rupees in the financial year 2008-09 to 200 million the following year, with a target to hit the one billion mark by 2015—a goal that seemed highly achievable given its growing popularity.

When Flipkart launched, the e-commerce sector faced two major difficulties. The first was the issue of online payment gateways, which few people trusted and which were difficult to set up. Flipkart addressed this by introducing COD and card-on-delivery options alongside other payment methods. The second challenge was the entire supply chain system, as timely delivery is crucial for an e-commerce company’s success. Flipkart solved this by launching its own supply chain management system to ensure prompt order fulfillment.

Flipkart’s evolution from a small online book retailer to India’s largest e-commerce platform continues to inspire a generation of start-ups.

Summary

E commerce and entrepreneurship is a contemporary business model that effectively meets the needs of entrepreneurs by reducing operational costs and accelerating service delivery. It offers a vital opportunity for new business creation and necessitates that established businesses enhance their online presence, which in turn boosts marketing and sales performance. Entrepreneurs must leverage these digital channels to transform and grow their businesses.

For example, a local grocer could establish a website to expand beyond its immediate community and serve customers across the entire city. E commerce and entrepreneurship encompasses all business activities conducted over computer networks. Advances in information technology have globally reshaped its structure, revolutionizing various aspects of life. The constant flux of technology, changing lifestyles, and heightened competition continue to drive the evolution of e-Commerce.