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LITERATURE REVIEW

Submitted to
Jiwaji University, Gwalior

DOCTOR OF PHILOSOPHY
In
MANAGEMENT
Under the Faculty of Management

Supervisor
Dr. DILIP SINGH RANA
Assistant Professor
M.L.B Govt.College Of
Excellence Gwalior (M.P.)

Submitted by
Sazid Khan
Research Scholar

Purpose of the Study

Today the trend E-commerce has attracted increasing interest at the beginning of the 21st
century, in both academia and practice. Today, the Internet is commonly used by both
consumers and businesses as a means of purchasing goods. The study focuses on e-commerce
logistics, focusing on the physical delivery of goods sold over the Internet. Based on a
systematic review of articles will summarize and analyze the main findings of academic
literature and highlight certain research issues recognized on this topic. The main objective is
to study the state-of-the-art of e-commerce logistics research and future research needs. The
largest categories discuss e-commerce logistics in relation to retail strategies, logistics
strategies and structures, and buyer preferences. Although logistics is a critical part of ecommerce, it seems based on the review that not many e-commerce logistics solutions have
been developed or studied in current research, and logistics has often been treated as only a
minor issue among other issues in e-commerce. In order to gain an appreciation of these and
related issues, it is essential for me to have a strong grounding in Economics, Supply Chain
Management, and issues connected with Information Technology, as well as gain a General
Management perspective.

Electronic commerce, commonly known as E-commerce or eCommerce, is trading in


products or services using computer networks, such as the Internet. Electronic commerce
draws on technologies such as mobile commerce, electronic funds transfer,supply chain
management, Internet
marketing, online
transaction
processing, electronic
data
interchange (EDI), inventory management systems, and automated data collection systems.
Modern electronic commerce typically uses the World Wide Web for at least one part of the
transaction's life cycle, although it may also use other technologies such as e-mail.
The study Electronic commerce and main purpose of the study is to identify the
problems facing by the consumer online product and services , investigate the how to
solve it and justify the problems of online shopping or online serivces in India.

Evolution of e-commerce in India


Over the last two decades, rising internet and mobile phone penetration has changed the way
we communicate and do business. E-commerce is relatively a novel concept. It is, at present,
heavily leaning on the internet and mobile phone revolution to fundamentally alter the way
businesses reach their customers. While in countries such as the US and China, e-commerce
has taken significant strides to achieve sales of over 150 billion USD in revenue, the industry
in India is, still at its infancy. However over the past few years, the sector has grown by
almost 35% CAGR from 3.8 billion USD in 2009 to an estimated 12.6 billion USD in 2013.
Industry studies by IAMA I indicate that online travel dominates the e-commerce industry
with an estimated 70% of the market share. However, e-retail in both its forms; online retail
and market place, has become the fastest-growing segment, increasing its share from 10% in
2009 to an estimated 18% in 2013. Calculations based on industry benchmarks estimate that
the number of parcel check-outs in e-commerce portals exceeded 100 million in 2013.
However, this share represents a miniscule proportion (less than 1%) of Indias total retail
market, but is poised for continued growth in the coming years. If this robust growth
continues over the next few years, the size of the e-retail industry is poised to be 10 to 20
billion USD by 2017-2020. This growth is expected to be led by increased consumer-led
purchases in durables and electronics, apparels and accessories, besides traditional products
such as books and audio-visuals.
E-commerce logistics models: A radical shift from regular logistics
The strong emergence of e-commerce will place an enormous pressure on the supporting
logistics functions. The proposition of e-commerce to the customer is in offering an almost
infinite variety of choices spread over an enormous geographical area. Firms cannot compete
solely based on sheer volumes in todays ever-evolving, information symmetric and
globalised world of e-commerce. Instead, the realm of competition has shifted to delivering
to ever-shortening delivery timeliness, both consistently and predictably. Negligible or zero
delivery prices, doorstep delivery, traceability solutions and convenient reverse logistics have
become the most important elements of differentiation for providers. While the current
logistics challenges relating to manufacturing and distribution of consumer products and
organised retail are well-known, the demands of e-commerce raise the associated
complexities to a different level. E-commerce retailers are wellaware of these challenges and
are cognizant of the need to invest in capital and operational assets.
Reaching the customer:Going beyond the traditional definition
The essence of e-retailing is in its ability to transcend physical boundaries and reach
customers in a manner different from the traditional brick-and- mortar stores, to their very
doorstep. However, the base of the e-retailing model is technology and logistical solutions
that facilitates the customer acquisition and the final reach process. E-commerce further
brings to the table vagaries in customer orders accompanied with difficult scenarios such as
free delivery, order rescheduling, cancellation, returns and cash-on-delivery. Additionally, an
expected minimized turn-around-time (TAT) which will potentially lead to word-of-mouth
publicity, feedback and customer retention to the e-portal or website. An information network
which shares updated information with respect to inventory status, demand schedule sand
forecasts, shipment schedules and promotion plans among all the stakeholders of the supply
chain will form the backbone of an e-retailer.

Need for different management of physical infrastructure


The business model of the conventional retailers and e-commerce providers differ
significantly. The conventional infrastructure model relies on increasing depth and breadth of
coverage through several inventory nodes, warehouses and stocking points connected by
based on various other factors ranging from production cycles, nature and variety of the
SKUs to even local taxation laws. The conventional order point occurs at retail stores and
static customer fronts located at the end of the chain, and inventory requirements are
predicted empirically based on several months or years of past data. In fact, competing sales
channels may also duplicate infrastructure, an indication of the typical sub-ordination of the
logistics function within the overall sales and distribution process.
On the other hand, e-commerce providers operating either through inventory-le or
marketplace models, are entering an entirely different paradigm of operations, where
management of the supply chain is core to the business of creating more business. With realtime demand and tight delivery expectations, the supply chain needs to be built from the
customer-end, with the fundamental difference being the proliferation of delivery points and
the need to move large number of orders of small parcels (one or two goods) across the
length and breadth of the country at an affordable cost In India, foreign direct investment
(FDI) within the business-to-consumer (B2C) e-commerce segment is not allowed where as
foreign investment in the business-to-business (B2B) e-commerce segment is allowed. This
means that inventory led e-retailing model cannot attract FDI whereas market-place based eretailing model can still attract FDI. Most e-retailers have started practicing the market-place
business model with suppliers storing on their behalf and delivering as per the requirement
and thus falling under the B2B category.
The need to build infrastructure for increased agility
The key to success in e-commerce is an efficient last-mile network to ensure timebound
delivery while maintaining agility in the logistics chain. The fundamental SKU at the delivery
point is a parcel, of varying shapes and sizes, while the pin-codes of the operation become
the determinant of the last-mile network model. The up-stream infrastructure will then need
to be built as a layer over this last-mile network with strategic location choices of fulfillment
centers proximal to delivery modes. The operations will need to be tightly controlled in such
a way that the inventory stocks are converted to parcels and pushed down the chain
efficiently, as well as that the fulfillment centers are replenished. The balance between
inventory and supply chain costs is therefore a dynamic decision to be taken, considering
both cost and service level considerations. While the conventional logistics models have
evolved in a way to expand reach for businesses at the lowest cost in a push model, ecommerce businesses will feel the need for greater agility in their supply chain that will be
more responsive to customer demands that are variable and less predictable. The sheer variety
of the product and destination choices and fulfillment modes will mean that the provider
cannot afford to stock the entire supply chain with sufficient inventory to fulfill customer
needs. The customer order point will need to be pushed further upstream, from where pull
from the customer is recognized, tracked and met through rapid fulfillment methods.

The implications of product choices on networks infrastructure


The network design and the agility of the supply chain will also be influenced by the products
carried. E-retailers have been able to attract significant customers to online buying but these
are still limited to very exclusive categories such as consumer electronics, apparels and
lifestyle, books, music and video. In the future, other categories such as food and beverages,
departmental store, home furnishings, auto parts, healthcare and office equipment will also
see increased e-commerce activity. It is important to note that each product category will
have its own customized logistics requirements which can alter the balance between
inventory and supply chain costs. Within the apparel and lifestyle category, for example,
localized suppliers or warehouses can be used to good effect in tune with the buying patterns
and ensuring seasonal inventory replenishment. For books, music and video, a large
centralized inventory for a large region may be better suited. For consumer electronics and
durables, which have lesser SKU proliferation, higher product value and higher security and
handling needs, a JIT and direct fulfillment model may need to be put in place. For hot and
cold merchandising, localized sourcing and continuous availability of temperature controlled
infrastructure throughout the supply chain becomes the critical need. The challenge is to
ensure that the supply chain needs of the specific product segments are married with
customer propositions that offer better customer value than traditional retail models.
Logistics infrastructure to be the weakest link in the Indian e-commerce story
Logistics in developing economies such as India may act as the biggest barrier to the growth
of the e-commerce industry. Till date, logistics models developed in India target the
metropolitan and the Tier-1 cities where there is a mix of affluent and middle classes and the
internet penetration is adequate. In India, about 90% of the goods being ordered online are
moved by air, which increases the delivery costs for the e-retailers. Most e-retailers were
initially dependent on third party delivery firms. However as the market evolves and
customer expectations increase, city or geography centric service levels are becoming the
need of the hour. Moreover, issues specific to e-retailing such as the problems associated with
fake addresses, cash-on-delivery and higher expected return rates have made e-retailers
consider setting up their captive capital intensive logistic businesses. For instance, Flipkart
has set up several regional warehouses and is constantly increasing the supplier base across
the country to achieve low transportation cost by ensuring delivery from the nearest supplier
or regional warehouse. Flipkart is growing its logistics arm E-Kart whereas Amazon India is
building capacities with its logistic arm Amazon Logistics. While establishing the captive
logistics infrastructure was a consequence of need for better service delivery by actively
controlling the logistics chain, it has pushed up the delivery costs. According to industry
benchmarks, the delivery cost in the captive logistics models are 10 to 20% expensive than
the 3PLs whose expertise lies in quick delivery at an affordable cost. Further, the logistics
set-up and requirements in developing countries are also dependent on the purchasing
behaviour of the customers
These factors will call for strengthening the logistics infrastructure and increased number of
failing which the e-retailers will have to start up or strengthening their own logistics
counterparts. Higher delivery costs can result in withdrawal of free delivery by e-retailers on
the back of high delivery costs and complex business models threatening already wafer-thin
business margins.

Infrastructure will demand a large proportion of investment in e-commerce


Active management of logistics, infrastructure and service levels is core to the e-commerce
business in any market. E-retailers need to have a hybrid model of their own captive logistics
arm which takes care of their specific business model needs and strictly monitored service
leve agreements with 3PLs to rationalise the delivery costs.
The future competitors and winners in the e-retailing space will be the ones which will use
both bricks and clicks and not bricks or clicks alone. This is evident from the evolving
logistics and storage strategy of Amazon in the US. Amazon has changed its logistics network
from the sell all, carry few, model to the sell all, carry more model and increased the
number of warehouses across the US. This eventually proved beneficial for Amazon as the
increased number of warehouses led to both better reach and range for the suppliers and
customers which eventually resulted in faster service delivery and increased customer
retention. Amazon is further investing 14 billion USD in increasing its warehouses base by
50 in the US.
Strictly monitored service level agreements with 3PLs which have developed the expertise
and skills to handle the vagaries of the customers in the e-commerce space has proven
beneficial for e-retailers as they are able to outsource the skills best suited to the 3PLs. A
successful example in terms of usage of SLAs with 3PLs is of eBay which has partnered with
couriers and allied service providers for the logistics with closely controlled SLA
Recent years have seen a remarkable transformation in
Firms across the globe have adopted e-commerce (EC) in their operations and have reaped
benefits thereof. While firms in technologically developed countries like US and UK has
deployed EC to its advantage, whereas firms in developing countries like India failed to
follow the suit. Though it has been widely acknowledged by the researchers that the adoption
of EC by businesses in developing countries is an important economic indicator of growth;
many firms in India still have not realized the potential benefits of EC. This study examines
the existing status of EC in India and reviews the available literature on E-commerce
adoption in India and puts forth opportunities for future research. The study might serve as a
starting point for further research in e-commerce in India.

Introduction
E-commerce (electronic commerce or EC) is the buying and selling of goods and services,
or the transmitting of funds or data, over an electronic network, primarily the Internet. These
business transactions occur either business-to-business, business-to-consumer, consumer-toconsumer or consumer-to-business. The terms e-commerce and e-business are often used
interchangeably. The term e-tail is also sometimes used in reference to transactional
processes around online retail.
Electronic commerce, commonly known as E-commerce or eCommerce, is trading in
products or services using computer networks, such as the Internet. Electronic commerce
draws on technologies such as mobile commerce, electronic funds transfer, supply chain
management, Internet
marketing, online
transaction
processing, electronic
data
interchange (EDI), inventory management systems, and automated data collection systems.
Modern electronic commerce typically uses the World Wide Web for at least one part of the
transaction's life cycle, although it may also use other technologies such as e-mail.
Firms across the globe have adopted e-commerce (EC) in their operations and have reaped
benefits thereof. While firms in technologically developed countries like US and UK has
deployed EC to its advantage, whereas firms in developing countries like India failed to
follow the suit. Though it has been widely acknowledged by the researchers that the adoption
of EC by businesses in developing countries is an important economic indicator of growth;
many firms in India still have not realized the potential benefits of EC. This study examines
the existing status of EC in India and reviews the available literature on E-commerce
adoption in India and puts forth opportunities for future research. The study might serve as a
starting point for further research in e-commerce in India.

E-commerce is conducted using a variety of applications, such asemail, fax, online catalogs
and shopping carts, Electronic Data Interchange (EDI), File Transfer Protocol, and Web
services. Most of this is business-to-business, with some companies attempting to use email
and fax for unsolicited ads (usually viewed as spam) to consumers and other business
prospects, as well as to send out e-newsletters to subscribers.
The benefits of e-commerce include its around-the-clock availability, the speed of access, a
wider selection of goods and services, accessibility, and international reach. Its perceived
downsides include sometimes-limited customer service, not being able to see or touch a
product prior to purchase, and the necessitated wait time for product shipping.
Economists have theorized that e-commerce ought to lead to intensified price competition, as
it increases consumers' ability to gather information about products and prices. Research by
four economists at the University of Chicago has found that the growth of online shopping
has also affected industry structure in two areas that have seen significant growth in e-

commerce, bookshops and travel agencies. Generally, larger firms are able to use economies
of scale and offer lower prices. The lone exception to this pattern has been the very smallest
category of bookseller, shops with between one and four employees, which appear to have
withstood the trend.
Individual or business involved in e-commerce whether buyers or sellers rely on Internetbased technology in order to accomplish their transactions. E-commerce is recognized for its
ability to allow business to communicate and to form transaction anytime and anyplace.
Whether an individual is in the US or overseas, business can be conducted through the
internet. The power of e-commerce allows geophysical barriers to disappear, making all
consumers and businesses on earth potential customers and suppliers. eBay is a good example
of e-commerce business individuals and businesses are able to post their items and sell them
around the Globe.

To ensure the security, privacy and effectiveness of e-commerce, businesses should


authenticate business transactions, control access to resources such as webpages for
registered or selected users, encrypt communications and implement security technologies
such as the Secure Sockets Layer.

E-commerce businesses may employ some or all of the following:

Online shopping web sites for retail sales direct to consumers


Providing or participating in online marketplaces, which process third-party businessto-consumer or consumer-to-consumer sales

Business-to-business buying and selling

Gathering and using demographic data through web contacts and social media

Business-to-business electronic data interchange

Marketing to prospective and established customers by e-mail or fax (for example,


with newsletters)Engaging in pretail for launching new products and services

GLOBLE TRENDS
In 2010, the United Kingdom had the biggest e-commerce market in the world when
measured by the amount spent per capita. The Czech Republic is the European country
where ecommerce delivers the biggest contribution to the enterprises total revenue.
Almost a quarter (24%) of the countrys total turnover is generated via the online channel.

Among emerging economies, China's e-commerce presence continues to expand every


year. With 384 million internet users, China's online shopping sales rose to $36.6 billion
in 2009 and one of the reasons behind the huge growth has been the improved trust level
for shoppers. The Chinese retailers have been able to help consumers feel more
comfortable shopping online. China's cross-border e-commerce is also growing rapidly.
E-commerce transactions between China and other countries increased 32% to 2.3 trillion
yuan ($375.8 billion) in 2012 and accounted for 9.6% of China's total international
trade In 2013, Alibaba had an e-commerce market share of 80% in China.

Other BRIC countries are witnessing the accelerated growth of eCommerce as well.
Brazil's eCommerce is growing quickly with retail eCommerce sales expected to grow at
a healthy double-digit pace through 2014. By 2016, eMarketer expects retail ecommerce
sales in Brazil to reach $17.3 billion. India has an internet user base of about 243.2
million as of January 2014. Despite being third largest user base in world, the penetration
of Internet is low compared to markets like the United States, United Kingdom or France
but is growing at a much faster rate, adding around 6 million new entrants every month.
The industry consensus is that growth is at an inflection point. In India, cash on delivery
is the most preferred payment method, accumulating 75% of the e-retail activities.
E-Commerce has become an important tool for small and large businesses worldwide, not
only to sell to customers, but also to engage them. In 2012, ecommerce sales topped $1
trillion for the first time in history.

Mobile devices are playing an increasing role in the mix of eCommerce. Some estimates
show that purchases made on mobile devices will make up 25% of the market by 2017.
According to Cisco Visual Networking Index, in 2014 the amount of mobile devices will
outnumber the number of world population.

Review of Literature
The work contributes to e-Commerce research by advocating the study of emergent
problems relevant to both theory [Benbasat and Zmud 2003, DeSanctis 2003, Ives et al.
2004, Robey 2003] and practice [Gray 2001, Jennex 2001, Khazanchi and Munkvold
2001]. Specifically, we provide evidence that little scientific work in electronic
commerce has investigated the role of suppliers, investors, regulators, and indirect
stakeholders such as the media.
The customer class refers to any organization or individual for which the NEO provides
goods or services. These include individual consumers in B2C e-Commerce and
purchasing organizations in B2B e-Commerce who obtain the NEOs good or service in
exchange for money. Communities can also be considered customers, especially when
the communitys purpose is to facilitate a commercial relationship with a NEO.
Customer communities include strategic communities formed by the NEO [Storck and
Hill 2000, Ward 2000] or communities that employ extra-NEO resources to
communicate such as the UseNet newsgroup alt.marketing.online.ebay [Chua and
Wareham 2004].
According to Significant Success factors for E-Commerce companies which recognized
by Sung, there are customer relationship and privacy of information, low cost operation,
ease of use, E-Commerce strategy, methodological E-Commerce expertise, immovability
of systems, security of systems, prosperity of information, variety of goods/services,
speed of systems, payment process, services, delivery of goods/services, low price of
goods and services, and assessment of E-Commerce operations.
To ascertain which stakeholders have been investigated by e-Commerce researchers, we
reviewed abstracts of all publications in seven journals for the period January 1990 to
June 2003. The journal basket chosen included: MIS Quarterly (MISQ), Information
Systems Research (ISR), International Journal of Electronic Commerce (IJEC),
Electronic Commerce Research and Applications (ECRA), Electronic Markets (EM),
Journal of Management Information Systems (JMIS), and Journal of Electronic
Commerce Research (JECR). These journals included seven of the nine top e-Commerce
journals as identified by Bharati and Tarasewich [Bharati and Tarasewich 2002]. Two
other journals identified in this top nine, Communications of the ACM and Harvard
Business Review, were excluded for two reasons. First, both journals publish a large
number of articles per issue, and thus coding and analysis of these journals presents a
serious challenge. Second, most of these articles were not directly relevant to eCommerce, e.g., articles dealing with implementation prototypes or doing business in

Some research themes identified here are arguably not relevant to IS researchers, but would
be relevant to the broader community of e-Commerce researchers. However, some of these
themes could become relevant when instantiated as specific research questions. The practice
of studying a non-disciplinary research theme from a disciplinary perspective is commonly
accepted in the multidisciplinary IS field. For example, customer acceptance of a product is
traditionally considered to be of high relevance to marketing. However, through the
Technology Acceptance Model (TAM) [Davis 1993], the theme has also been favored in IS
studies of customer acceptance of technologies. Conversely, IS and e-Commerce researchers
are also comfortable in applying methodologies and theories from other disciplines to IS
problems. For example, much of the IS trust literature relies on psychometric principles to
determine whether a particular IS stakeholder group trusts another [Gefen et al. 2003,
Shankar et al. 2002].
Increasingly saturated e-Commerce markets provide an ideal natural laboratory to test
how organizations adapt to hostile environments. IS researchers confident in their theories
should be able to predict how emerging e-Commerce markets will evolve. As but one
example, a useful test would compare the explanatory and predictive power of institution
theory and population ecology theory [Baum and Singh 1994, Hatch 1997]. Institution
theory predicts that NEOs will become more alike for three reasons. First, competitive
NEOs will begin to duplicate successful IT practices, and strategies in their industry.
Furthermore, once the legal foundations for e-Commerce have been established, NEOs
will be required by law to comply, making them more like each other. Finally, NEOs will
mimic their competitors in order to steal valuable customers [Hatch 1997]. On the other
hand, the population ecology literature predicts that as markets become saturated, there
will be more heterogeneity as individual NEOs specialize and adapt to their own
ecological niche [Baum and Singh 1994]. By segmenting the market, each NEO is thus
able to obtain monopoly rents.
One proposition suggested by both institution theory and population ecology is that
innovation in hypercompetitive e-Commerce markets will be unprofitable. A competitor will
engage in some form of negative interaction (e.g., mimic the innovation) that negates the
advantage of innovation [Barnett and Hansen 1996]. Thus:
The Schumpeterian hypothesis suggests that innovation only occurs when
the innovating organization can expect to obtain some monopoly benefit
[Quirmbach 1993, Schumpeter 1942, Segerstrom and Zolnierek 1999]. As
a market becomes more competitive, competitors are better able to mimic
each other and copy innovations. The Schumpeterian hypothesis therefore
suggests the following proposition:

The research question is also challenging, given that it can be approached from multiple
perspectives. For example, a network externality perspective would suggest that e-Commerce
markets do not become more competitive over time. Instead, network externalities, or other
factors give particular companies monopoly power [Basu et al. 2003]. Late entrants are
unable to compete, and the first-movers have an incentive to innovate. However, not all e-

Commerce markets have such network externalities. Indeed, the first-mover/late-mover


literature would argue that in many cases, it is preferable for a company to be a late mover,
rather than an early mover [Boulding and Christen 2001, Makadok 1998, VanderWerf and
Mahon 1997]. That so many theories can be applied to explain the contradiction between the
Schumpeterian hypothesis and reality suggests the complexity of the problem.
The Culture is always viewed as a collective experience. People learn patterns of thinking,
feeling, and the potential acting from living within a defined the social environment,
normally typified by country. In India, people use the Internet as a social communication
device. On the other hand, in the U.S, they tend to use the Internet more for product
information and many more search purpose. E-Commerce is using the Internet to develop
more market and enhance more customers with a low cost of investment. However, the
purposes of using the Internet are different because of cultural differences. In addition, its
compare to other country likes Chinese like to have face-to-face communication when they
do the shopping as to get the best deal from the shop but most of Japanese do not ask for any
discount and have little conversation when they go shopping. This leads to the following
hypothesis:
The problem is also highly relevant to IS and e-Commerce researchers. First, e-Commerce
markets are clearly within the purview of e-Commerce research. Second, one strength of IS
and e-Commerce research is the plurality of theories from the multitudinous reference
disciplines we are comfortable with.
One key emerging problem in Internet regulation is how governments can enforce regulations
on the Internet, especially given that individuals on the Internet are often anonymous
[Akdeniz 2002], and Internet commerce spans multiple nations and states [Jarvenpaa et al.
2003]. For example, the US CAN-SPAM act has been ineffectual in reducing SPAM [Rainee
and Fallows 2004] primarily because enforcement of the act has been thorny.
The aims to review the studies of Significant Success factors of the E-Commerce, and to
identify Significant Success factors, which are out of the framework of business management.
These factors cannot control or managed by the company. Here we propose to five factors,
which are culture, religion, personal characteristic, language, and government are supports.
Keywords: E-Commerce, Significant Success factor, corporate management

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