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E-Commerce: A Distant Reality

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DQC Bureau
New Update

The Internet has changed the world and is continuing to do so. Also various reports about the immense potential lying in e-commerce are unquestionable. And one wouldn't even deny the figures showing large number of businesses getting web-enabled. 

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However, all these facts, figures, claims and reports, seem to give rise to a paradoxical situation when taken in the context of Indian IT-channel business. What is more intriguing is that e-commerce is yet to happen in an industry which itself fuels the Internet economy and acts as the backbone for all kinds of e-businesses.

Figures show it all

The graph presented here is based on a survey done among the majority members of the Silver Club and the Next 25. It illustrates the degree of presence of four integral elements required to enable e-commerce. These are: 

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  1. Web-presence
  2. Availability of pricing information
  3. Online ordering facility
  4. Online payment facility

And, as is quite obvious, the graph hardly supports claims made by various agencies on the growth of e-commerce. At least, in channel business today, e-commerce has very little relevance.

Everyone @ the Web

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Nearly 92 percent of the channel partners we spoke to have a web site of their own. The remaining eight percent who did not have one, said that they were planning for the same. 

However, this by itself is not something to feel good about. It's a known fact that today the cost of putting up a normal web site has become affordable. And considering that these companies have revenue figures running into crores of rupees, their web-absence only makes you seek a more plausible explanation. 

Yet another issue that is related to web-presence is the effectiveness of the web site. It came as a huge surprise to find quite a few web sites, including those belonging to some of the major channel partners, lying dormant. 

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This fact cannot be discounted as a momentary technical snag as these sites maintained the status quo for almost a week. Again here we failed to get satisfactory explanations. 

A secret called price

Giving out the pricing information openly is surely not something that channel partners are comfortable with. At least, thats what the graph indicates. Only a miniscule 12 percent of partners who had a web site gave away the pricing information online. 

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Others were of the opinion that making prices transparent may only give competitors undue advantage, rather than working out to their benefit. Some also pointed out that once the prices are mentioned, no room is left for negotiation. 

However, in providing these reasons, partners essentially seem to forget that a healthy competition is all about level-play and transparency. As far as negotiations are concerned, there probably won't be much need for it if the product is justifiably priced. 

Instead of worrying about negotiations, partners can ensure an edge by clubbing attractive schemes and discounts with the sale of products. 

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Wanna buy...? Talk to me

Blame it on the Indian mentality or lack of personalized interaction or even the high costs involved in running a B2B engine. Whatever may be the reason, the concept of online ordering just doesn't go well with channel partners. 

According to the graph only eight percent of web sites allow online ordering. What this translates to is that only four out of over 50 web sites offer online ordering facility. 

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Ask channel partners for an explanation and they give varied reasons. "Relationships play a very important role. And with buying happening over the Internet, the relationship aspect is bypassed. This is something difficult to imagine in the Indian market context," opined Aditya Khemka, CEO, Aditya Infotech. He believes that the market is not mature enough and it would take few more years for e-commerce to really take off. 

Atul Mehta, CMD, Compuage says, "Even though few distributors have set up B2B sites, almost all the business is done either through phone or personal interactions." Agrees Nitin Shah, MD, Allied Digital Services, "Though we have a very functional B2B site, the volume sales is so negligible that it's worthless to talk about." 

Also, the Indian buying mentality emerged as a strong deterrent to online ordering. Prakash Mody, Partner, Sejutronics, says,"Even if we take the trouble of putting up all the information on the Web and allow online ordering, we would still have our customers calling us up to negotiate and place orders." 

He believes that we Indians still have a very conventional mindset. This viewpoint was reinforced by another distributor who drew a parallel with the failure of catalog-shopping in India, in terms of volume sales.

However, many partners expressed their willingness to facilitate online ordering on their web sites. For some it is just a matter

of time. Others are withholding their plans in view of sluggish market conditions and lukewarm responses from buyers. 

Pay, but not here

Online payment facility is perhaps the most crucial aspect required to impart totality to an e-commerce setup. However, one look at web sites of most channel partners, and the feeling is all but encouraging. 

Of the eight percent of companies, which have a web site offering online ordering facility, not even one accepts online payment. Among the reasons cited are: high transaction costs, security, payment defaults and delay in the enforcement of cyber laws. 

Shailendra Gupta, CEO, Tech Pacific, Asia-Pac, says, "We do receive large number of online orders everyday. But the high cost of online transaction prevents us to accept online payment." Shailendra believes that the culture of online trading is yet to develop among the Indian channel. 

Aditya Bhuwania, Director, Priya Limited, says, "There are no effective cyber laws in place to take quick action against defaulters." He however speculates that once these laws are in place, Priya may go ahead with a B2B web site. 

Some other partners also feel that paying online involves higher risks when compared to its advantages. They insist that they would anyday prefer clients paying them by cheque, DD or cash on demand.

It is also a common feeling among partners that the rate of Internet penetration is very small and that their community at best is just email-savvy. All these factors according to them, has denied prominence to e-commerce.

An either or situation?

A Gartner report puts India as the fastest growing Internet-user market in Asia. And NASSCOM in its study projects a total e-commerce transaction of Rs 20,000 crore in 2002-03. However, going by the current scenario, the contribution from channels is likely to be negligibly small. 

This of course, is very unfortunate. Blame can be put on inadequate awareness, absence of a firm regulatory framework and gloomy market conditions. However, it should be understood that e-commerce is a mere extension of the usual brick-and-mortar setup and should not be perceived as an either or situation. 

It is imperative that partners become aware and get convinced about the efficiency an e-commerce setup would instill into their present supply-chain management. Only then can one expect those numerous figures and reports pertaining to the growth of e-commerce to be justifiable in the channel context.

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