Problem Faced By e-Commerce In Developing Countries

eCommerce in a lay man term can be explained as the process of purchasing and selling of products and services by companies to their consumers around the world via Internet. In straightforward words eCommerce only means doing business through email in person or on the phone thereby using web portal as an tool. The sales through the Internet is raising at an exponential speed and this trend is set to increase over next few decades. The eCommerce websites provides address privacy and reduces the worries of consumer about product security. Since last decade the popularity of eCommerce industry has extremely raised due to fast and suitable manner in which the goods and products are serviced both internationally and regionally. Today the eCommerce industry has expanded into an enormous industry and the complete market share of eCommerce Industry is worth billions of US Dollars. eCommerce Industry in India alone has achieved some great heights and now it plays a major role in most of the metro cities of India. In addition to this the eCommerce industry can be broadly classified as any type of business activities that is conducted from the other side of the Web. This broad classification includes E-tailing, B2B, intranets, online Marketing and many more. The eCommerce has reduced the Web Browsing Prices and with high speed bandwidth and cheap data plans dependency on eCommerce websites has grown drastically. Till now we were discussing about the growth of eCommerce Industry but there are many challenges that are faced by this industry from the day its inception. In this article we would be discussing about the problems faced  by eCommerce Industry mostly in the developing countries. What are the factors that are hindering the growth of eCommerce in these factors and how to overcome these hindrances.

Share of Countries in the eCommerce Market

Share of Countries in the eCommerce Market

Incorporating eCommerce with ERP

The biggest problem faced by eCommerce industry is incorporating their business with ERP i.e. Enterprise Resource Planning.  According to data published in May 2013 by the Hybris Applications Focus Group, it stated that “Information is the king within the eCommerce system. It is an area where the companies never concentrated or spend any resource”.  Above lines are enough to explain where eCommerce companies are lacking and if they identify and work on this platform and include the necessary procedures required for running the company then they can generate huge margin. Most of the incorporated business companies use the platform provided by ERP to translate between the order fulfillment process and customer expectations. If a business platform is proper it would ensure that customers interact successfully using the ERP solution that is available globally and through various routes, including websites content,  offline catalogues and mobile programs. By opening an ERP system together with the business platform, staff and customers develop a real-time insight into order status, stocks availability along with other useful information and advice. A correctly incorporated eCommerce system will additionally enhance its wholesaler’s ERP operation by ensuring that the identical or similar things from several producers carry other identifiers to distinguish as well as have exactly the same descriptions. This method becomes especially precious in organizations which have grown through acquisition and merger.

eCommerce Distribution across the World.

eCommerce Distribution across the World.

Challenges Faced By eCommerce In Developing Countries

Although there are many challenges that eCommerce companies face while operating their business  but there are five key challenges that eCommerce companies running in Asian markets face. The problem is faced by both the running and the one which are emerging. One advantage of these challenges is that these challenges are additionally supplying range for innovation and thereby driving the market.

  • Logistics: logistics is a vital component in eCommerce sector and it supplies vital customer products. Logistics is an important component but remains a significant challenge for all e-business players. China’s Alibaba which possesses China’s Taobao (biggest consumer eCommerce company) has invested in delivery companies and local logistics. China’s second biggest online retailer 360buy created its own express delivery operation to offer next-day or same deliveries to its customers. Flipkart also tried to began an Amazon like logistics service but soon recognized that it will have to construct its logistics infrastructure and it would require huge investment and man power. Constructing these logistics systems calls for tremendous time plus cost investment and the best example can be drawn from the Russian eCommerce. In Russia more than 60 eCommerce companies already use online retailer Ozon.ru’s 97-city powerful courier network. In December 2010 flipkart also incorporated the same system by the name Flipkart Logistics.

    A Courier Boy Shipping eCommerce Products in India

    A Courier Boy Shipping eCommerce Products in India

  • Online Payment Methods: While logistics is one problem the online payment is another big issue faced by these companies. Online Payment is a huge issue in emerging Asian markets and they add more challenges to already overburdened physical infrastructure. Asian Nations are mostly in the category of developing nation and they have limited access to internet. The metro cities in Asian countries have internet connection but the rural population is still miles away form internet connection. Nevertheless linking companies to make systems that are focused for eCommerce can bring its own challenges. Book My Show which began as a clone of Ticketmaster in India also ran into the same problem. BookMyShow had to construct a GDS-like system from scratch for movie theaters. It took Several years for convincing the local theaters to permit access to their inventory and assembling applications could sell its first ticket online. Having constructed this system the organization loves tremendous competitive advantage in India which makes it hard for global players like Ticketmaster to get customer in the marketplace now.
  • Problems Faced With COD: While the above problem can be handled by creating infrastructure initial online payment issue can be solved by COD. But the problem with COD delivery is that many times people order the product and at the time of payment they simply deny that they have even ordered this product. This is big problem for eCommerce companies as they have invested money in moving product form one place to another and now the buyer has refused to purchase. Because of this new payment gateways like Gudang Voucher in Indonesia, Cherry Credits in Singapore and Gash Plus in Taiwan enable youthful consumers to get prepaid cards at retail outlets that could afterwards be used to purchase products that are available online. Such prepaid cards are expanding in range to include online payment for services and other on-line goods thus cutting down the dependence on COD. These cards are boosting market in those inferior area where banking infrastructure is yet to arrive. Utilizing the advanced model of Kenya-based M Pesa, India started Eko-up which empowers bank accounts to open and remit cash via their mobile phones. These systems hold the possibility to expand to payment of services and products purchased at online or retail stores.
  • Ethnic Differences: After four years of operation in India, in June 2012 Expedia announced its plans to start physical retail stores all over the country thereby starting an offline business for the very first time. The reason behind this move was the lousy broadband speed and other challenges and penetration with payments that are online only partially explain this capital-intensive move. The ability of Indian online travel agents including Yatra and MakeMyTrip reveals that Indian consumers could be comfortable with internet searches for traveling, however they nevertheless need to speak with somebody in person to talk about the information on their travel plans, and particularly vacation packages, before booking their tickets. As a result MakeMyTrip and Yatra made a decision to put money into offline shops several years back. Indian matrimonial website Shaadi.com had a similar encounter. According to Shaadi.com marketing team “It is sad to see that most of the eCommerce companies running globally outsource data entry services in India but at the same time the Indian consumers lacks the enthussiasn to purchase the product online.
  • Cost Sensitive Consumers: The mindset of almost all Asian County buyer is “to get product as cheap as possible ” and the Asian buyers topped the list of most cost sensitive consumers on earth. This attitude continues to be compounded by eCommerce offers cost-sensitive shoppers ease of having the ability to compare costs online. Online retailers in Asia face cost pressure not only from competing sites, but in addition from offline shops run by local vendors. To compete with local retailers Indian eCommerce companies like Snapdeal and Flipkart offer free transportation and adaptable return policies in the hope of earning their online services more palatable to the cost conscious consumer base they would like to bring.

    B2B eCommerce Industry Data

    B2B eCommerce Industry Data

Other Problems Faced by e-Commerce Industry Excluding Above

  1. Infrastructure and e-support impediments to eCommerce: Till now the study focused on identifying special infrastructure and problems associated with eCommerce industry but there are other factors that indirectly affect the eCommerce industry. There are other limits and barriers with which eCommerce industry has to compete for its sustain growth. As users of eCommerce the main challenges were “Internet security”, “lack of feel-and-touch related to online purchases”, “issues in returning products”, and “choice” (merchandise availability and width). One of the companies operating from India mentioned that the Amazon Product upload Services  is an important aspect of Amazon services and it too get affected by the infrastructure support and labor issues. Cultural and Sociological impediments to eCommerce is  not withstanding the concerns mentioned above. Although the users give positive feedback regarding the access to products and business but it becomes difficult for the operation team to handle all the requests spontaneously.
  2. Transaction Trust: The study also demonstrate that the relevant problems and transaction trust are  important concerns for Chinese/Asian consumers. Users lodge complain about the existence of un-trustworthy merchants that were online and affected the Internet security and card security. The Chinese consumers are also prone to counterfeit products and many times the product delivered was not original. As one Chinese gentleman get it “ reality and History told us to not trust the folks’s honor or the system! “. eCommerce is an extreme behavior which goes contrary to culture as well as expertise. Features of the value system that preaches “debt as well as a cash society just isn’t ” that is great.

These were some problems faced by the companies which were operating their business in Asian countries. Although we have mostly covered the nature and behavior of Eastern-Asian countries the nature of users is same in the Western-Asian countries. The companies operating in west may have different names but at the end they too deal the customer which as same mindset as that of a user in India or China. We hope our this article brings a better insight to our readers and let them know the exact scenario of inner market.

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