There are myriad problem as to why e-commerce is not taking off in India and we have discussed this issue numerous times below including the contrast with the thriving e-retailing business in US.
Some of the issues, for the disenchantment with e-commerce in India, discussed in comments as well as blog posts, are related to lackadaisical shipping and non-delivery of goods at promised time.
One reason for delays in shipment may be the fact that many merchants start processing the order and shipping it only when they get money credited from the intermediaries involved in Credit card /online banking payment. This delay can be as long as 7 days from the date of transaction.
Typically, the online payments proceeds are credited to the intermediary, the payment gateway , involved in the transaction and it is the intermediaries who transfer the amount to the merchants account after deducting their commission.
As per a latest news report, RBI has now issued new norms as per which the payments would be directly credited to the merchants and not to intermediaries like CCAvenue and paypal. this means that within 3 days of transaction the merchant will have the money with it and would be ready to ship the product to the consumer.
This RBI guideline is definitely a step in the right direction and should reduce the scope for excuses on the part of merchants for poor or delayed shipments.
But we know deep on our hearts that the problem is more the attitude of the online retailers and commerce sites – that anything goes and they are not accountable- so unless that attitude is taken care of wither by litigation or more competition in the market, the consumer woos are not going to go away.
What do you think? do we need more reforms or is the underlying issues for the e-commerce not taking off in India more related to our meek consumers who do not litigate and are satisfied by substandard/delayed delivery/shipments too?
Transition of E-Commerce should take place in coherently with traditional business associates. For Example Textiles Infomediary process uniform cloth delivery to end customers through there local textile dealer.
Great insight on the Indian payment gateway system… which is really not good… i have spoken to Payseal and CC avenue…and other banks too… the commission and the set up fee is way too up, they are just not supporting the upcoming indian online sites… but they are just interested in making their own money :|
RBI should reduce the fees on every online transaction
can you please suggest a good payment gateway which i could integrate to an online t shirt selling store ?
but which charges very less amount of commission
Just found another post on Alootechie today that refers to this subject – http://alootechie.com/content/conference-digital-commerce-ecommerce-sites-not-capitalising-opportunity
A positive step. However one of the prime reasons why ecommerce is not taking off is because of few people being able to get online payment gateway and the huge associated transaction fee. I have first hand experience of dealing with payment gateways and the horrors of the painfully long, silly process. Need something quick & simple. While this is the case existing payment gateways are minting money.
Yes Prakash, the payment GWs transaction and setup fees are enormous and a deterrent to many a startups. there is tremendous scope for improvement (and maybe scope for a startup or two) here. That again is a part of the ecosystem that needs to be addressed before the e-retailing can really take off!
Sandy, when I use Paypal the transaction happens in seconds, so why is their a delay of 3 days for money transfer? What is the point then?
In India, is there a concept of “payment on delivery” where the courier chap can collect the cash at the customer’s door upon delivery of the good?
Madhav, I don’t know the intricacies and the details, but I believe that even though for eg., the transfer from online bank accounts to another online account, happens immediately, the payment/settlement between banks happens only much later. Another analogy could be stock sales (immediate) and settlements (later). I guess there would be good operational reasons as to why the proceeds are not credited by CC/online banking to the merchant immediately.
It is definitely a step in the right direction. I am not however sure of the operational implementation – without the intermediary, clearing becomes a major hassle. Long way off though.
That said, I am not really sure we have reached the e-retailing mentality yet. Sure, desis in the US send gifts to India all the time but the percentage is very small. Otherwise, we feel the need to ‘touch and feel’ the product before buying it.
It’ll take us some time to get there – but eventually, yes. Litigation is not really an issue in my opinion, unless its a very high value product simply because one serious case of litigation in media spotlight will just kill the company (trust, security and all that!)
Kiran, intermediaries (payment GWs) will still be there-the money in its entirety will not flow through them under the new scheme- so the hassle of managing your own payments by bypassing intermediaries is not there actually.
I agree that Indians still have reservations about online buying ; but I disagree on the litigation aspect. I know that costly litigation can kill a startup, but maybe that is collateral damage one has to pay to ensure that the other startups/retailers are kept on their toes.
the bottom line is INDIAN E-Commerce is built upon sheer necessity to avoid discomfort felt while doing the off line transactions in different scenarios !
Also it is the matter of TRUST !
For example : Railway E Ticketing !
IRCTC is the most successful and top most revenue generating e-commerce website ind India which eases the experience of buyer and it has greater trustworthiness !
Rightly said Rakesh, trust and ease for the consumer are the two building blocks of e-commerce, but I believe that making the process easy for retailers is also likely to give the sector a boost. New RBI norms, I guess are the steps in the right direction.