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09 Nov2021
  • By Authored by CA Rahul Pareva
  • Category Miscellaneous
  • Views 608
Covid-19 was a challenging phase for the entire economy. But at the same time, it proved to be a boon for the e-commerce industry. The pandemic has forced consumers to switch from shops, supermarkets, and shopping malls to online portals to purchase products, ranging from essential commodities to branded goods.

Before we jump on to the central aspect of this article, let us first revise the definition of e-commerce. E-Commerce means a business model that allows companies and individuals to buy and sell goods and services over the internet. The e-commerce transactions can be of different types such as business to business (B2B) (Eg. Alibaba), Business to Consumer (B2C) (Eg. Walmart) and Consumer to Consumer (C2C) (Eg. eBay).

Hence, e-commerce does not require any brick-and-mortar buildings to sell goods or services, which is why this was the only option left for people during the pandemic.

The pandemic brought about a notable shift in shopping behaviour, with more and more customers and businesses relying on e-commerce. The necessity for social distancing and prioritising safety throughout the pandemic led to millions of people adapting to e-commerce platforms.


According to NASSCOM, India's US$14 billion Indian e-commerce market, which began as a niche industry a few years ago, is accelerating and shows more than 25 per cent growth.

India's e-commerce market is projected to cross US$200 billion by 2030 due to increased analytics, transactions, and internet penetration.

*  India is viewed as the fastest expanding and most attractive e-commerce economy in the world. According to an IBEF report, India's retail sector is estimated at over US$ 883 Billion, ranked 5th largest globally and expected to cross US$ 1.3 Trillion in 2024. Of this, e-commerce is anticipated to reach US$ 111 Billion by 2024.

*  As per Grant Thornton, e-commerce in India is foreseen to be worth US$188 billion by 2025.

Social media – A boon for E-Commerce

E-commerce is extending its reach to the general public on the back of social media, which provides a mechanism for advertising and receiving feedback, building brand image, and promoting new launches.

Retailers also use social media to trace the first-time and repeat buyers of a product.

Social media plays an essential role in studying consumer lifestyles and spending patterns.

Consequences of Increased Reliance on E-commerce

* Opportunities for consumers

E-commerce, driven by digitisation and internet penetration in the rural market, creates enormous options for consumers. Competitive prices, deals, and efficient delivery, along with the convenience of avoiding long queues, have entirely altered the buying experience.

* Moment for Start-ups

The continuous change in the buying patterns of Indian consumers led to the growth of start-ups in the e-commerce market. Online retailers have maintained and grown their base of online consumers by granting options for payment on delivery and return policies with attractive deals and discounts.

* Increased Competitiveness

E-commerce in India is booming because of increased access to the internet. This generates diverse business opportunities that will encourage organisations to become more up-to-date and enable increased competitiveness.

Government Initiatives to Promote E-commerce

Many initiatives/schemes have been announced by the Government of India, namely Digital India, Make in India, Start-up India, Skill India, etc., to promote e-commerce. The proper implementation of such programs will likely support the growth of e-commerce in the nation. Some of such initiatives taken by the government to support e-commerce in India are as follows –

* National Retail Policy

The government had recognised five areas in its national retail policy: ease of doing business, rationalisation of the licensing process, digitisation of retail, focus on reforms, and an open network for digital commerce, stating that offline retail and e-commerce need to be administered integrally.

* MoU for cashless and transparent payment

Government e-Marketplace signed a Memorandum of Understanding with the Union Bank of India to facilitate a cashless, paperless, transparent payment system for various services in October 2019.

* Digital India Movement

Under the Digital India movement, the Government of India launched various initiatives like Umang, Start-up India Portal, Bharat Interface for Money (BHIM), etc., to boost digitisation.

* Hike in Limit of FDI

To enhance the participation of foreign businesses in E-commerce, the Indian government hiked the limit of FDI in the E-commerce marketplace model to up to 100% (in B2B models).

* Imposition of tax on foreign e-commerce operators

In October 2020, the government amended the equalisation levy rules of 2016 and mandated foreign companies running e-commerce platforms in India to have permanent account numbers (PAN). It levied a 2% tax in the Financial Year 2021 budget on the sale of goods or delivery of services by a non-resident e-commerce operator.

Strategies for the E-commerce Boom in India

E-commerce in India has undergone rapid growth driven by the Covid-19 outbreak. However, there are some factors that form the base for the expansion of e-commerce. Some of such elements are as follows–

* Ease of access

Growing internet usage at affordable rates and the rise of smartphones lead to easier access to e-commerce. This connectivity enables services like booking train/hotel/cab/movie tickets, mobile and electric bill payments, placing online orders, etc.

* Logistics

Logistics is one of the significant challenges confronting e-commerce players. Local logistics firms in India are usually not up to satisfying the requirements of e-tailers; hence e-commerce firms have to make substantial investments to build their own logistics.

* Infrastructure

E-commerce players also need to upgrade the infrastructure to overcome payment difficulties, create offline presence, execute more push-marketing, manage price-sensitive consumers, and compete globally.

* Competitive Analysis

E-commerce companies have to focus on matters pertaining to rapid additions of customer segments and product portfolios. Information should be gathered related to market intelligence on growth, size and share, and managing multiple customer engagement platforms to expand into new geographies, brands & products; while simultaneously controlling a very competitive pricing environment.

* Mode of Transactions

Concerns about security, privacy, and tracking fraudulent purchases are some outside forces that affect a business. Other factors like back-end service tax, cross-border tax, and regulatory issues can have severe implications for e-commerce companies.

Other concerns e-commerce businesses must address include the incompetence of the organisational structure to keep pace with the speedy changes, cybersecurity for curbing fraudulent transactions and insider threats, tax restructuring, and legal compliance.

The expansion in the number of people buying online suggests that e-commerce companies should concentrate on customer experience and technological advancements to accelerate growth.Apart from this, to provide a range of goods & services and extend reach, companies should ensure faster speed for their websites and devise easier-to-use mobile apps to improve user experience.


E-commerce is a combination of convenient shopping, competitive pricing, discounts, flexible and speedy purchasing, etc.

The E-commerce industry has been directly influencing micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training.

The Indian e-commerce sector has been on track with upward growth. It is anticipated to surpass the US to become the second-largest E-commerce market in the world by 2034. Technology-enabled innovations like digital payments, hyper-local logistics, analytics-driven customer engagement and online advertisements will apparently promote growth in the sector.

The expansion of the e-commerce industry will also raise employment, increase revenues from export, raise tax collection by ex-chequers, and render better products and services to customers in the long term.

A richer user experience will substitute traditional foundations based on price and quality through guidance on selecting the right product, personalisation, etc. The growth of online retailers in India is making brick-and-mortar stores revamp their operations across regions.

Looking at the customers' preference in the new normal, it can be inferred that e-commerce has now come to stay, well beyond Covid-19.

Disclaimer-The information given in this article is for general guidance to the readers. This information should not be sought as a substitute for legal opinion.

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