An Analysis on Factors Affecting the Competitiveness of Ecommerce Retailers

(Impact of external factors on determining E-commerce benefits among SMEs in Malaysia) (2018), empirical findings show that when SMEs adopt E-Commerce to better serve the customer online, it enables these businesses to retain customers while on the same time improves their linkages with business partners and suppliers; however, providing a better service to customer may not necessary lead to cost reductions. Perhaps this is due to the fact that in this research, the cost reductions benefit was not only associated with transactional cost.


3
Introduction 3-4 I am highly indebted to Prof. Ashok K. Sharma for his guidance and constant supervision as well as for providing necessary information regarding the research & also for his support in completing the report.
I would like to express my gratitude towards Prof. Awdhesh Kumar for his kind cooperation and encouragement which help me in completion of this report.

Introduction
This project report tries to explore all possible factors that are affecting the competitiveness of e commerce retailers. Competitiveness is one of the popular and yet controversial concepts in the literature. Not only its definition, but also its measurement is on debate. Because the concept has a multifaceted nature, there are some methodological challenges that make measurements difficult. Here, is an exploratory study & in-depth analysis by using an integrated approach to study competitiveness such as resources, abilities, processes, etc.
The availability and continued growth of Internet technologies have created great opportunities for users all over the globe to benefit from IT services and use them in a variety of different ways. The use of IT to conduct business online is known as E Commerce (Electronic Commerce). According to me globalization is one of the biggest reasons for the rise of E commerce industry due to globalisation now our reach is extended. E commerce simply refers to buying & selling of products, services & information via computer network including internet. E commerce is a very vast industry in which there are different types of e commerce business exists i.e., B2B, B2C, C2B, C2C, G2B, G2C, C2G, B2G. they all the working or can be worked on an e commerce business model. And with the help of an e commerce their operations are so smooth & effective. There are many big players exists when it comes to an e commerce industry for example, Amazon, Flipkart, Udaan, Zomato, etc.
E commerce industry is an emerging industry which is growing every day by some percentage, but with the growth percentage the competition, problems & challenges is also increasing. For that the analysis of the industry as well as the competitor is very crucial thing to do. We have to observe the industry very closely to understand the factors that are affecting the competitiveness of e commerce retailers.
There are some major driving force which I would like to mention here are;

1-Global customers:
Presence of customer of product worldwide.

2-Global products:
Demand for foreign products by customers.

4-Global resources:
Use of foreign raw material, labour, machines for production.

6-Global competition:
There are certain features of E commerce which I would like to discuss here are: 1-Universal Standards: E commerce make use of internet & World Wide Web to reach customer which has the same technical standards.

2-Personalization & Customization:
We can customize & personalize our products & services according to the customer preference.

3-Global Reach:
It is possible to conduct a business transaction at any place in the world.

4-Interactive:
A two-way communication between business & end customer is possible.

Literature Review
Factors affecting the competitiveness of e-commerce retailers depend upon several inter related factors. As we discussed above, competitiveness could be seen either as a process of affecting the retailer output or as an output of a retailer process. Defining the concept as a process requires a well-defined e commerce concept. According to Cigdem Dahin Assistant Professor at Okan University (2012), factors affecting competitiveness of e commerce companies is a study of an integrated approach which is undertaken to illuminate the multidimensional construct of competitiveness. He also proposed that competitiveness is something which can't measured on single factor, we have to analyse the quantitative as well as qualitative data.
Eid, Trueman, and Ahmed (2002) pointed out the importance of marketing strategy related factors for the success of e-commerce retailers. Retailers who can offer competitive price and appealing promotional programs would be ahead of competition. According to Christian Mbayo Kabango, Asa Romeo Asa (School of Management, Wuhan University of Technology, Wuhan, China) (2015), the most important factors that need to be considered in order to support the proliferation and advancement of ecommerce. Countries need to encourage and improve the e-commerce developments.
According to Sam Kirshner (UNSW Business School, University of New South Wales, Sydney, Australia) Yuri Levin and Mikhail Nediak Smith (School of Business, Queen's University, Kingston, Canada) (2013), there is a quantity competition in e commerce B2C, & C2C market but a lack of quality competition. They proposed that the retailer who have quality product or services has a leverage over others in the e commerce market place.
Inma Rodríguez-Ardura, Antoni Meseguer-Artola, and Jordi Vilaseca-Requena (Internet Interdisciplinary Institute, Open University of Catalonia, University Oberta de Catalunya, UOC), they evaluated the contribution of the size of the potential market represented by the community of Internet users to the development of electronic commerce, as well as of other determinant factors. The validation carried out, for the whole Spanish market and over a period of seven years, reveals the existence of a critical threshold of online consumers that, once surpassed, supposes a change in the growth trend of electronic commerce.
Por: Kathia Michalczewsky (2017), he concluded that Internet access has grown significantly in recent years in Latin America but this has not been fully reflected in the evolution of e-commerce. A deeper analysis of some of the factors that the indexes considered in his article identify as being weak in the region (infrastructure, regulation, security, etc.) would contribute to defining e-commerce promotion policies.
Mira Kartiwi, Husnayati Hussin, Mohd Adam Suhaimi, Mohamed Razi Mohamed Jalaldeen & Mohammad Ruhul Amin (Impact of external factors on determining Ecommerce benefits among SMEs in Malaysia) (2018), empirical findings show that when SMEs adopt E-Commerce to better serve the customer online, it enables these businesses to retain customers while on the same time improves their linkages with business partners and suppliers; however, providing a better service to customer may not necessary lead to cost reductions. Perhaps this is due to the fact that in this research, the cost reductions benefit was not only associated with transactional cost.
Samira Sahel, Tasmia Anwar, Barnali Nandi (Department of Business Administration, University of Asia Pacific, Dhaka, Bangladesh, School of Business Administration, East Delta University, Chittagong, Bangladesh, Department of Business Administration, University of Asia Pacific, Dhaka, Bangladesh)(2018), they find out limitation of the study which was that the different operation scopes of online retailerswholesalers and retailers were not considered having different optimal strategies. The same thing has been said by Eid, Trueman, and Ahmed (2002), that all the e commerce retailers are following the same strategies when it comes to offer services or sell their product.  (2013), the major findings of their study are purchasing experience of e-service quality, reliability and responsiveness of service quality drives Chinese customer satisfaction. To be competitive E-retailers should have good connections with top logistics service providers. Selections of logistics providers have a significant impact on competitiveness along with quality factors such as purchasing experience and reliability. The study is more focused towards electronics products and the results may vary if we consider different products By going through all the literature I can say one thing that there is one common thing which I found in all the reviews is that all the retailers were following same strategy they are not doing anything unique, & second thing which I find common is that they all agree with the point that e commerce is an emerging & growing industry in which someone who have certain knowledge & have creative mind can survive easily. They all also agree with the fact that different approaches are required for different industries i.e., B2B, B2C, etc.

Industry Overview
E-commerce has changed the method of doing business in India. The Indian Ecommerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. Much of the growth for the industry has been triggered by an increase in internet and smartphone penetration. The ongoing digital transformation in the country is expected to increase India's total internet user base to 829 million by 2021 from 636.73 million in FY19. India's internet economy is expected to double from US$ 125 billion as of April 2017 to US$ 250 billion by 2020, backed primarily by E-commerce. India's E-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51 per cent, the highest in the world. Globalization is also playing a major role in this hike of e commerce industry, & in light of the fact that it is also good for the retailers. Asia is the region with the greatest number of online internet users and online shoppers, which makes sense considering that it is also the continent with the largest population. Nevertheless, its penetration rate is just 46%; penetration rates are only lower in Africa. North America, Europe, and Oceania have the highest shares of internet users within their total populations (89%, 74%, and 73%, respectively). Latin America and the Caribbean have a penetration rate of 62%, although there is some disparity within the region: South America has the highest rates (67%), inline by Central America (53%), and finally the Caribbean (44%).
Ecommerce (Electronic commerce), refers to transactions generated via the internet. Each time individuals and companies are buying or selling products and services or information online they're engaging in ecommerce. The term ecommerce also includes other activities including online auctions, internet banking, payment gateways, and online ticketing, so on & so forth.
On February 2019, the Government released the Draft National E-Commerce Policy, which encourages FDI in the marketplace model of E-commerce. Moreover, it states that the FDI policy for E-commerce industry has been developed to ensure a level playing field for all retailers & other participants. According to the draft, a registered entity is needed for E-commerce websites and apps to operate in India. Government also proposed the National E-commerce Policy to set up the lawful agenda on crossborder data flowno data will be shared with foreign Governments without any prior authorisation from the Indian Government.
The Ecommerce Industry is comprised of companies that manufacture and sell software to businesses and corporations of all sizes. The wide range of products and services offered work to improve and expand customers' information technology capabilities, by enhancing such internal tasks as inventory management, tracking purchases, and operations management. Although the Value Line page for an e-Commerce stock appears in our standard format, it is important to focus on certain key factors to gain a better understanding of the company and its shares. The current and future prospects of the economy also play a prominent role when analysing these equities. In addition, new product releases are continuous, with many companies providing similar offerings and services. Thus, stiff competition, enhanced by merger and acquisition activities, is present.
The Ecommerce industry has been directly impacting micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well. Indian E-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest Ecommerce market in the world by 2034. Technology enabled innovations like digital payments, hyper-local logistics, analytics driven customer engagement and digital advertisements will likely support the growth in the sector. The growth in E-commerce sector will also boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term. Rise in smartphone usage is expected to rise 84 per cent to reach 859 million by 2022. E-retail market is expected to continue its strong growth -it registered a CAGR of over 35 per cent to reach Rs 1.8 trillion (US$ 25.75 billion) in FY20.
A brief on about Types of Ecommerce business according to the bodies involved: 1-Business to consumer (B2C): As the name suggests, the B2C ecommerce model reflects a transaction between businesses and individuals. B2C ecommerce is the most common business model among all.

2-Business to business (B2B):
In the B2B ecommerce model both parties involved are businesses. In this type of a transaction, one business provides the other with products or services.

3-Consumer to business (C2B):
The C2B business model represents a transaction in which individuals create value for businesses, unlike the traditional B2C model where companies are the ones that deliver value.

4-Consumer to consumer (C2C):
C2C ecommerce happens when the two parties involved are consumer they do transaction with one another.

5-Government to business (G2B):
The G2B ecommerce models takes place when the government provides companies with goods and services. Government procurement, data centres, and e-learning are all examples of G2B ecommerce.

6-Business to government (B2G):
The B2G model refers to companies and businesses that provide goods and services for the government.

7-Consumer to government (C2G):
Every time consumers pay taxes, health insurance, electronic bills, or request information concerning the public sector, they're engaging in C2G.

Factors Affecting the Competitiveness of E-commerce Retailer
After going through so many case studies, articles, journals & research papers I came to know that there are various factors that are affecting the competitiveness of e commerce retailer. So, let's discuss the factors which according to me are the most crucial one. Here my problem statement is to find out the major factors that are affecting the competitiveness of e commerce retailers. First of all we have to analyse & observe that why do people buy online?
Let's see the answer to the above question: 1-Lower Prices: Managing an online storefront is far cheaper than an offline, brick and mortar store. With the rise in price comparison websites, consumers have more transparency with regard to prices and are able to shop around, typically purchasing from online outlets instead.
2-Accessibility and Convenience: Unlike many offline stores, consumers can access e-commerce websites 24 hours a day. Customers can read about services, browse products and place orders whenever they wish. In that sense, online shopping is extremely convenient and gives the consumer more control.
3-Wider Choice: The growth of online shopping has to a large extent been based around increased choice. With an almost endless choice of brands and products to choose from, consumers are not limited by the availability of specific products in their local town, city or country. Items can be sourced and shipped globally.
Now, let's see why do people sell online?
1-Higher Margins: Setup costs and ongoing operational costs such as rent, heating, electricity, warehousing (if operating a drop-ship model) and inventory management are often significantly reduced or otherwise eliminated.
2-Scalability: With a brick and mortar business, the owner is often limited by the amount of people who can physically be in the store at any one time. There is no limit when trading online. Running an e-commerce business means tapping into a truly global market.
3-Consumer Insight / Technology: E-commerce businesses typically collate a tremendous amount of customer data. With every element of consumer behaviour being tracked, e-commerce business owners are able to understand, tweak and improve the customer shopping experience for customers. Now let's look at the factors that are affecting the competitiveness of e commerce retailer: Here are some common questions which can also become factors that can affect the competitiveness of e commerce retailer, if the retailer makes mistakes in any of the given set of question it will definitely become one of the factors, so lets see what are those questions: Now the other factors which comes under consideration are:

1.Lack of Awareness
When it comes to the ratio of people who are aware of the internet and online shopping, the scenario isn't quite flattering. The majority of the population is still not aware of the internet's existence and its uses. Even when you talk about the internet savvy urban population that are having smartphones, awareness of online shopping and its functionality is still a far cry. Most of them are not aware of the online fraud and corruption while making online transactions and thus the darkness prevails.

Inadequate Plastic Money Holders
While all major e-commerce platforms require a debit card, credit card, net banking, and mobile wallets to operate; there are not enough plastic money holders in India. This is one of the biggest challenges in the growth of the e-commerce industry in India.

Cash on Delivery
In order to tackle the problem of security of online transactions, all e-commerce portals started this option of Cash-on-Delivery (COD) wherein an online shopper can skip paying online while placing an order and choose to pay at the time of delivery instead.
Many of the customers refused to pay money at the time of product delivery which resulted in heavy losses incurred in product transit and eventually losing out on sales and revenue. It is one big challenge faced by the e-commerce industry in India that has both its pros and cons.

Online Security
While big e-commerce players can afford to have security software that offers better security for its customers while transacting online, many small e-commerce startups and small business owners ignore the importance of authentic security software. Transacting at such platforms can be extremely risky and is prone to the Trojan and malware attacks comprising a user's financial details' insecurity.

Touch & Feel Constraint
India buyer's demographics are such that they want to touch and feel the product before buying it to be assured of its looks and quality. However, online booking and ticketing business in India grew as it didn't suffer from these constraints but ecommerce platforms selling apparels, cosmetics, and accessories are still facing these challenges.

Security, Fraud and Hacking
It is widely acknowledged by both government and industrial organizations that, from a consumer point of view, issues of information security are a major barrier to the growth of Ecommerce. The perception of risk related Internet security has also been recognized as a concern for both experienced and inexperienced users of Ecommerce products & services.

Order Fulfilment
Not everything has to fall on the back of the small business owner. You could be inundated with more orders than you are prepared to handle on your own.

Refund/Return Policies
Having a good return/refund policy could be the difference between success and failure. There would never be an issue with the product you're selling, but that's not always the case. Sometimes the purchaser has buyer's remorse, or it wasn't what they thought it would be.
According to Hasan (Digital Mkt Manager at Film Jackets), "Be transparent and create a smooth, fast and easy return policy. Make it easy to understand and not too strict so the customer won't have to go through hassles [to return an item"

PESTEL Analysis
PESTEL Analysis is majorly can be done in any sort of project & if I talk about this project it is the best analysis method to do. In this we focus on Political, Economic, Social, Technological, Environmental & Legal Factors:

Political factors:
While the threats may not be the same before the e-retailers as the physical retailers, still there are several political hurdles before them. There are several risk factors affecting the e-businesses, for example, for the global leaders like Amazon and E-bay growth in Asia pacific region can be made difficult by the Red tape. Many news reports highlight how Red Tape in India can become major difficulty in the way of new businesses trying to extend their presence there. Political stability in most regions of the world leads to economic stability. Political chaos can lead .to disruption of business both online and physical. Overall, political issues can have a major impact on ecommerce and its growth.

Economic factors:
Economic factors are very important in terms of business. Whether it is an online business or physical, economic factors can have a significant effect on it. It is because economic factors are directly related to business and their effect is also direct on business revenue and profits. While the period of recession, spending had decreased. People had adopted cost cutting measures as the level of economic activity and employment had gone down. While such periods when economic activity has gone down, the profits and revenue of businesses can go down. E-businesses too cannot remain unaffected. Economic fluctuations since the recession have also kept affecting businesses from time to time since the recession. In this way, economic factors can have a direct and deep impact in the ecommerce industry.

Social factors:
Socio cultural factors too have a deep impact in ecommerce industry. Most importantly e-retail brands find it the easiest to flourish locally. Growth in foreign markets can be full of challenges. Changing trends may also put an impact on businesses. The increase in use of mobile technology has affected ecommerce. In most societies the mobile technology has been very popular and a larger number of people worldwide are now using mobile gadgets for shopping and other purposes. Socio cultural factors affect businesses in other ways too. Cultural factors have an impact on how these ecommerce businesses market themselves.

Technological:
Technological factors are very crucial in the context of the ecommerce industry. It is because of the fact that industry relies heavily on technology. Everything is based on technology in e-retail from sales to customer service. All the ecommerce brands are in a race to be technologically ahead of their competitors. From Amazon to E-bay and Flipkart, every brand is investing a lot in technology to find faster growth. The reason that Amazon & Flipkart is ahead of the others is because it is technologically ahead of the others. It has managed its customer experience so well that its popularity is very high. By this way, technology is a major influence on businesses and in case of ecommerce technological factors acquire a very special importance.

Environmental:
Environmental factors too have a special importance in the context of Ecommerce industry. While the direct environmental impact of this industry is very low and nearly zero, it still focuses heavily on sustainability. Brands like Amazon have invested heavily in technology. Even in Ecommerce there are several areas where investing in sustainability can be highly productive. From sustainable packaging to waste reduction and renewable energy there are several areas where the e-retailers can invest in sustainability. Amazon has invested in renewable energy to gain freedom from the use of non-renewable energy resources.

Legal:
Legal compliance is just as crucial for the businesses globally. Any tussle with the law can be a costly affair and even the e-retail brands can become a target unless and until they take care of compliance. It is why the big E-retail brands have separate teams to take care of the legal issues. Non-compliance can result in financial losses as well as loss of image and reputation. Moreover, these laws differ from nation to nation and market to market and compliance in every area is important. So, in case of the companies operating internationally law can lead to major pressures and an increase in operational costs. The e-retail brands also have to be careful about the applicable laws and compliance.

Metrics
For deeper understanding of the factors affecting the competitiveness of E commerce retailers I would like to show you a metrics which will provide some useful insights related to the project: In the following metrics I tried to answer the following questions; 1. What are the basic-must requirements that e-commerce companies must have in order to enter the business?

Findings
It is analysed that the resource related factors; especially tangible ones are mostly seen as basic-must requirements while others listed as capabilities and knowledge related factors are seen as performance enhancing factors that are necessary to be competitive. In other words, an e-commerce firm might rely on its capabilities and knowledge to be competitive, but first it has to build the fundamental resources necessary to satisfy the consumers. Specifically, strong financial structure and control, human resources including strong customer team, client team and sales team, technological resources that enable e-commerce transaction, convenient web site, strategic business plan, valuable business idea and domain knowledge about the industry are evaluated as basic-must requirements to run an e-business. Although they are not seen as important as others, offering training and development programs for employees, monitoring firm performance, industry developments and competitors' activities could be classified under this category.
Going to the second question of the study, it seems that the most important factors affecting the competitiveness of e-commerce companies are intangible resources; reputation and trust, and capability and knowledge related factors. Specifically, customer relationship management, innovativeness, database management, management commitment to business, technological issues like internet speed, security and flexibility, strategic alliances and partners, and all marketing and sales related factors are seen as sources of factors affecting competitiveness of ecommerce companies. There are only two possible sources left uncategorized; market position, and information flow. First mover advantage is only seen as an advantage if it is supported by organizational and managerial capabilities and other resources. Thus, it is stated that an e-commerce firm's competitiveness depends on its capabilities to use the resources timely and valuably.

Conclusion
After analysing & observing all the factors & issues which are affecting the competitiveness of e commerce retailer, I come to a conclusion that there are some factors which can be controlled by the retailers but on the other hand there are also some factors which really can't be managed or handled by the retailers. I have also seen one common thing that most of the retailers were doing is that they all are following the same strategies no one is unique or different in the e commerce industry. After finding problem statement & doing PESTEL analysis when I have tried to find the root cause then I came to know that there are certain things due to which these factors are generating, such as; lack of trust, physical availability, so on and so forth. So, I think that the factors which are affecting the competitiveness of e commerce retailers is not something with which we can't cope up in light of the fact that these all problems & factors can be solved if we do some critical thinking & take calculated risks. We also have to win the trust of the people who are our customers as well as end consumers so that they can buy anything without any doubt.
With the help of the metric analysis we can easily infer the fact that if we use our available resources which are tangible properly then we are half way there & the 50% of the problem which are affecting the e commerce retailers are already solved. Although it has limitations of generalization and country specific characteristics, this study offers a useful framework to academicians for studying competitiveness of ecommerce firms and provides important insights to business people.
Because competitiveness is a multidimensional concept, this collective framework allow us to get a deeper understanding about the phenomenon under the study. Not only the resources, but also capabilities and knowledge of a firm could be studied at the same time if they are properly defined. Managerial skills and management commitment to the business are seen crucial factors to maximize competitiveness of an e commerce company. Most e commerce companies are founded by entrepreneurs who already have passion for competitiveness. Because the e commerce process involves different challenging stages and aspects, effective management capabilities are necessary. So, according to my findings I can say that we can control the factors which are affecting the competitiveness of e commerce retailer by taking every step carefully & also by using the right use of available resources whether it is tangible or intangible, and also sometimes we have to rely on other factors as per the PESTEL Analysis. After all these study I came to a conclusion that the factors that are affecting the competitiveness of e commerce retailers can be managed effectively by optimum use of available resources & at the same time for external factors we have to rely or depend on other things as well.