Likeliness of SME’s in adopting E-

commerce
Chapter 1: Industry profile and Company profile

Introduction to the internship:

Internship is the practical knowledge gained by us in the organization; an attempt for
simulation-based learning, the project has been useful to me in understanding the working of
corporate sector. In a span of 8 weeks, I have gained a deep understanding of sales, distribution
and learning of E-commerce sector in a larger view point from my internship at Magento
Commerce. I was also able to experience the real-life working environment that we would be
facing in the future. In parallel, a research-oriented study was done to understand the Likeliness
of Sme’s in adopting E-commerce. The survey and findings have been enclosed in this report
entitled, “Likeliness of SME’s in adopting E-commerce”. This study is aimed at
understanding the importance of E-commerce in the small and medium scale enterprises. E-
commerce is the future; and the survival of the companies will depend on the adaption or
updating of the methods of doing the existing businesses.

Industry Profile:
SME’S:
Small and Medium Enterprises (SME) sector has emerged as a highly vibrant and dynamic
sector of the Indian economy over the last five decades. SMEs not only play crucial role in
providing large employment opportunities at comparatively lower capital cost than large
industries but also help in industrialization of rural & backward areas, thereby, reducing
regional imbalances, assuring more equitable distribution of national income and wealth. SMEs
are complementary to large industries as ancillary units and this sector contributes enormously
to the socio-economic development of the country.

SMEs also play a significant role in Nation’s development through its high contribution in
domestic production, significant export earnings, low investment requirements, operational
flexibility, location wise mobility, low intensive imports, capacities to develop appropriate
indigenous technology, import substitution, contribution towards defence production,

pg. 1
technology–oriented industries, competitiveness in domestic and export markets thereby
generating new entrepreneurs by providing knowledge, training and skill development .

Government of India was notified by its MSMED Act in 2006 to address policy issues affecting
SMEs as well as the coverage and investment ceiling of the sector. The Act seeks to facilitate
the development of these enterprises as also enhancing their competitiveness. It provides the
first-ever legal framework for recognition of the concept of "enterprise" which comprises both
manufacturing and service entities. It defines medium enterprises for the first time and seeks
to integrate the three tiers of these enterprises, namely, micro, small and medium. The Act also
provides for a statutory consultative mechanism at the national level with balanced
representation of all sections of stakeholders, particularly the three classes of enterprises; and
with a wide range of advisory functions.

Definition of MSME’s in India

(As Per Micro, Small & Medium Enterprises Development (MSMED) Act, 2006)

Manufacturing Enterprises - Investment in Plant & Machinery

Description INR USD ($)

Micro Enterprises up to Rs. 25 Lakh Up to $ 62,500

above Rs. 25 Lakh & up to Rs. 5

Small Enterprises above $ 62,500 & Up to $ 1.25 million
Crore

Medium above Rs. 5 Crore & up to Rs. 10 above $ 1.25 million & Up to $ 2.5
Enterprises Crore million

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Service Enterprises – Investment in Equipment

Description INR USD ($)

Micro Enterprises up to Rs. 10 Lakh up to $ 25,000

above Rs. 10 Lakh & up to Rs. 2

Small Enterprises above $ 25,000 & up to $ 0.5 million
Crore

Medium above $ 0.5 million & up to $ 1.5

above Rs. 2 Crore & up to Rs. 5 Crore
Enterprises million

Under section 7 of the Micro, Small and Medium Enterprises Development (MSMED) Act,
2006, the Indian government defined the size of micro, small, and medium enterprises as:

(a) in the case of the enterprises engaged in the manufacture of goods pertaining to any industry
specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, as—

• a micro enterprise, where the investment in plant and machinery does not exceed
twenty-five lakh rupees
• a small enterprise, where the investment in plant and machinery is more than twenty-
five lakh rupees but does not exceed five crore rupees; or
• a medium enterprise, where the investment in plant and machinery is more than five
crore rupees but does not exceed ten crore rupees;

(b) in the case of the enterprises engaged in providing or rendering of services, as—

• a micro enterprise, where the investment in equipment does not exceed ten lakh rupees;
• a small enterprise, where the investment in equipment is more than ten lakh rupees but
does not exceed two crore rupees; or
• a medium enterprise, where the investment in equipment is more than two crore rupees
but does not exceed five crore rupees.

Ever since the onset of the financial crisis, the global economy has been struggling to revive
itself and achieve a healthy growth rate. The global growth rate for last year and this year are

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projected at 3.40% and 3.80%. But compared to this, India’s GDP continues to grow at a fast
pace, outstripping major world economies. According to IMF, India is projected to grow at
7.80% for this fiscal year. (Source: Department of Commerce, Govt. of India).

Without any dispute, SMEs are one of the key drivers behind this growth story. This sector,
comprising of manufacturing, infrastructure, service industry, food processing, packaging,
chemicals, and IT, has emerged as the most vibrant and dynamic engine of growth of Indian
economy over the past few decades.

These self-funded proprietary firms, private co-operatives, private self-help groups, Khadi, and
Village and Coir industries, not only provide huge employment opportunities but also ensure
regional balance by taking industrialisation to rural and backward areas (about 20% of MSMEs
operate out of rural & backward areas)

To communicate the importance of the SME sector, let us look at some key SME statistics,
trends and reports:

• Number of SMEs in India: The number is estimated to be at 42.50 million, registered

& unregistered together. A staggering 95% of the total industrial units in the country.

• SME & Employment opportunity: Employs about 106 million, 40% of India’s
workforce. Next only to the agricultural sector.

• Products: produces more than 6000 products.

• GDP Contribution: Currently around 6.11% of the manufacturing GDP and 24.63%
of Service sector GDP.

• SME Output: 45% of the total Indian manufacturing output.

• SME Exports: 40% of the total exports.

• Bank Lending: Accounts for 16% of bank lending.

• Fixed Assets: Current fixed assets at INR 1,471,912.94 crore.

• SME Growth Rate: Has maintained an average growth rate of over 10%.

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Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE).

• Objective: To make available collateral free credit facility to new and existing Micro &
small businesses subject to a limit of Rs.100 lakh per unit.

• Performance during 2015-16 (up to 31/12/2015): 350056 Application approved with

guarantee coverage of Rs.14,673 crore.

• Performance since inception: 2160975 Application approved with coverage of

Rs.103,864 crore.

Export Promotion of Capital Goods (EPCG).

• Objective: To allow import of capital goods on zero duty subject to meeting export
obligations.

• Performance during 2015-16: Number of authorisations 22544 with FOB value of

Rs.78,860 crore and duty savings of Rs.12619 crore.

• Performance during 2016-17 (up to October 2016): Number of authorisations 13,585

with FOB value of Rs.50,359 crore and duty savings of Rs.8,668 crore.

Credit Linked Capital Subsidy Scheme (CLCSS).

• Objective: To facilitate technology up-gradation. To enable beneficiary enterprises to

avail institutional credit towards the purchase of machinery and technologies.

• Performance during 2015-16 (up to 31/12/2015): 3,142 benefited units with an

expenditure of Rs.203.76 crore.

• Performance since inception: 22,380 benefited units with an expenditure of Rs. 1349.63
crore.

Lean Manufacturing (National Manufacturing Competitiveness Programme).

• Objective: To make accessible the use of various Lean Manufacturing techniques to

SMEs and thus improve their manufacturing competitiveness.

• Performance during 2015-16 (up to 31/12/2015): Benefits to 670 units with an

expenditure of Rs.11.26 crore.

• Performance since inception: Benefits to 3041 units with an expenditure of Rs.45.26

crore.

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Intellectual Property Rights.

• Objective: To enhance competitiveness through increased awareness of IPR.

• Performance during 2015-16 (up to 31/12/2015): Awareness programs held-26,

Workshops-05, and IPR Facilitation Centre-03. Expenditure Rs.1.73 crore.

• Performance since inception: Awareness programs held-308, Workshops-95, and IPR

Facilitation Centre-31. Expenditure Rs.13.69 crore.

Marketing Development Assistance (MDA) Scheme.

• Objective: To help & encourage SMEs to tap & develop overseas market.

• Performance during 2015-16 (up to 31/12/2015): Units participated 233. Expenditure

Rs.4.77crore.

• Performance since inception: Units participated 1476. Expenditure Rs.28.76 crore.

Future Trends:

The future outlook looks very bullish for Indian SMEs, which are far more optimistic than their
Asian counterparts in China, Japan and other dynamic and large economies. The survey result
from American Express Global SME Pulse 2017 has conveyed that “71% of the SME
respondents hold an optimistic view about their domestic economy, followed by Japan with
62%”

The implementation of GST is generally expected to bring good tidings to this sector. Some
key points in favour of SMEs are:

• Market Base: Set to grow as interstate sales complexities are a thing of the past. Since
there is no longer any tax burden on interstate sales, big corporates and manufacturers
can procure materials & components from small players from across any state borders.

• Increased Competitiveness: Low-cost imports are no longer a cause for worry since tax
levied on imports goods and local manufacturers will be the same.

• Freight Cost: Expected to come down by 1 to 2%, thus bringing down the cost of raw
material and finished products.

• Cost of Raw Materials: Expected to come down with the disappearance of 2% CST on
interstate sales.

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 • Sales & Service: Treatment of sales & services will be the same under GST means no
additional tax burden on SMEs with a business model of sales and service.

• Transparency and Ease of Doing Business: The new indirect tax regime replaces
multiple tax rules. Physical interface of bureaucracy expected to be non-existent or
minimal since registration, tax payment, input tax credit & tax liability adjustment, tax
returns, and refunds will all happen online electronically.

American Express Global SME Pulse 2017 stated that 37% of Indian SMEs considered flexible
lending and repayment and 49% high-interest rates as important factors affecting business.
Addressing these pain points will definitely make the road ahead much smoother.

E-commerce
Ecommerce, also known as electronic commerce or internet commerce, refers to the buying
and selling of goods or services using the internet, and the transfer of money and data to execute
these transactions. Ecommerce is often used to refer to the sale of physical products online, but
it can also describe any kind of commercial transaction that is facilitated through the internet.

Whereas e-business refers to all aspects of operating an online business, ecommerce refers
specifically to the transaction of goods and services.

The history of ecommerce begins with the first ever online sale: on the August 11, 1994 a man
sold a CD by the band Sting to his friend through his website NetMarket, an American retail
platform. This is the first example of a consumer purchasing a product from a business through
the World Wide Web—or “ecommerce” as we commonly know it today.

Since then, ecommerce has evolved to make products easier to discover and purchase through
online retailers and marketplaces. Independent freelancers, small businesses, and large
corporations have all benefited from ecommerce, which enables them to sell their goods and
services at a scale that was not possible with traditional offline retail.

Global retail ecommerce sales are projected to reach $27 trillion by 2020.

Types of Ecommerce Models:

There are four main types of ecommerce models that can describe almost every transaction that
takes place between consumers and businesses.

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1. Business to Consumer (B2C):
When a business sells a good or service to an individual consumer (e.g. You buy a pair of
shoes from an online retailer).
2. Business to Business (B2B):
When a business sells a good or service to another business (e.g. A business sells software-
as-a-service for other businesses to use)

3. Consumer to Consumer (C2C):

When a consumer sells a good or service to another consumer (e.g. You sell your old
furniture on eBay to another consumer).

4. Consumer to Business (C2B):

When a consumer sells their own products or services to a business or organization (e.g. An
influencer offers exposure to their online audience in exchange for a fee, or a photographer
licenses their photo for a business to use).

Examples of Ecommerce:

Ecommerce can take on a variety of forms involving different transactional relationships

between businesses and consumers, as well as different objects being exchanged as part of
these transactions.
1. Retail:
The sale of a product by a business directly to a customer without any intermediary.

2. Wholesale:
The sale of products in bulk, often to a retailer that then sells them directly to consumers.

3. Drop shipping:
The sale of a product, which is manufactured and shipped to the consumer by a third party.

4. Crowdfunding:
The collection of money from consumers in advance of a product being available in order to
raise the start-up capital necessary to bring it to market.

5. Subscription:
The automatic recurring purchase of a product or service on a regular basis until the
subscriber chooses to cancel.

6. Physical products:
Any tangible good that requires inventory to be replenished and orders to be physically
shipped to customers as sales are made.

7. Digital products:
Downloadable digital goods, templates, and courses, or media that must be purchased for
consumption or licensed for use.

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8. Services:
A skill or set of skills provided in exchange for compensation. The service provider’s time
can be purchased for a fee.

The e-Commerce Industry is comprised of companies that produce 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 (IT) 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.

Key Factors:

When analysing an e-Commerce company, one needs to focus on a few key metrics. First, since
members of this industry are constantly introducing new products and services, research &
development plays a prominent role. Accordingly, heavy investment in R&D, ranging from
10%-15% of revenue, is a characteristic of note. If a company scrimps on R&D, it will likely
rapidly lose customers and market share. Second, a company’s financial position should be
closely monitored. Debt can often help fund operations and R&D, but if it is used too liberally,
interest and repayment requirements may hamper operations and profits instead. The strength
of a company’s balance sheet should be given careful attention before taking a position in an
e-Commerce stock; an average debt to total capital ratio for the industry is 30%. Lastly, most
e-Commerce companies incur large stock-based compensation expenses, which can often
cause steep share losses from one quarter to the next. It is important to factor in share-based
compensation in an investment analysis, since those companies that post related losses may
prove more risky than profitable competitors.

The Economy

Although many industries struggle during weak economic periods, e-Commerce companies,
overall, fare relatively well. Typically, during lacklustre economic times, most corporations

pg. 9
aggressively seek cost-cutting strategies. As such, they are often eager to upgrade their IT
capabilities, which usually leads to improved operations and expense reduction. Thus, e-
Commerce companies can receive large orders during lean economic times, and a few may
even post record revenue and profits. In addition, several companies within this group derive a
good percentage of their profits from outside the U.S., which can help them weather domestic
challenges.

Competition

Industry players often offer similar products and services, leading to an aggressive fight for
customers and market share. In addition, most in the e-Commerce space must directly compete
with IBM, Microsoft, Magento Commerce, Cisco, and other IT giants, who can often offer
customers more services at lower prices. Thus, it is difficult to determine which e-Commerce
corporations will become, and remain, successful from one quarter to the next. This
competitive dynamic can lead to inconsistent revenue and profit streams from year to year. Not
surprisingly, then, a number of stocks within this group carry low scores for Earnings
Predictability. To repeat, e-Commerce companies should invest heavily in R&D, targeting new
software offerings at customers’ needs in order to better compete with larger competitors.
This industry also possesses low barriers to entry. Indeed, new companies offering a quality
suite that is well received can take a sizable bite out of another firm’s existing business. This
industry continues to grow at a rapid rate. With more and more corporations focused on
improving their IT capabilities and bolstering their presence on the Internet, this group should
continue to achieve record revenue and profits over the next several years. However,
discovering which companies will perform well over that time frame has become very difficult.

Mergers & Acquisitions

M&A activities play a major role in the e-Commerce space. Microsoft, IBM, Magento and
other large players are constantly seeking new technologies that can bolster their product
offerings and market reach. In many cases, it is cheaper for them to purchase smaller firms,
rather than internally fund the development of software suites. For instance, this appears a part
of Microsoft’s current strategy. Thus, e-Commerce companies are constantly getting picked up
by the larger players. Indeed, during weak economic periods, their stock prices are usually
down from previous highs, and the IT giants are likely to be active on the acquisition front
searching for bargains. In turn, when the economy is performing well, financing can usually be

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procured under favourable terms, which can also fuel purchases despite higher valuations. In
sum, e-Commerce companies are often acquisition targets, and rumours of a purchase can lead
to wide swings in stock prices.

Investment Considerations

A great number of factors can impact an e-Commerce company and its corresponding stock.
In our view, investors will be best served if they focus on e-Commerce corporations that have
a strong commitment to R&D, a healthy balance sheet, and a history of successful products.
However, the majority of these equities are risky, so conservative investors may want to remain
on the side-lines

Indian E-commerce scenario

The e-commerce has transformed the way business is done in India. The Indian e-commerce
market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017Much
growth of the industry has been triggered by increasing 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 445.96 million in2017. India’s internet economy is
expected to double from US$125 billion as of April 2017 to US$ 250 billion by 2020, majorly
backed by ecommerce. 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.

Market Size

Propelled by rising smartphone penetration, the launch of 4G networks and increasing

consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by
2026 from US$ 38.5 billion in 2017. India's ecommerce industry's sales rose 40 per cent year-
on-year to reach Rs 9,000 crore (US$ 1.5 billion) during the five-day sale period ending
September 24, 2017, backed by huge deals and discounts offered by the major ecommerce
companies. India's e-commerce market was worth about $3.9 billion in 2009, it went up to

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$12.6 billion in 2013. In 2013, the e-retail segment was worth US$2.3 billion. About 79% of
India's e-commerce market is travel related.

Online retail sales in India are expected to grow by 31 per cent to touch US$ 32.70 billion, led
by Flipkart, Amazon India and Paytm Mall.

Ecommerce Trends

Showrooming and Webrooming:

Although showrooming and webrooming are on the opposite sides of the shopper behaviour
spectrum, they're both activities that have evolved from the growing accessibility of technology
(i.e. those smartphones we carry with us everywhere). Essentially, they're two sides of the same
coin.

"Showrooming is when a shopper visits a store to check out a product but then purchases the
product online... This occurs because, while many people still prefer seeing and touching the
merchandise they buy, many items are available at lower prices through online vendors. As
such, local stores essentially become showrooms for online shoppers."

"Webrooming is the opposite behaviour to 'showrooming.' With showrooming, retailers are

faced with the challenge of customers coming into the store to browse and test products, only
to subsequently go home and actually complete their purchase online (often through a
competitor.) Webrooming, on the other hand, is when consumers research products online
before going into the store for a final evaluation and purchase."

1) 2018 – Year of B2B Commerce:

• 41% of B2B retailers expect B2B online sales to grow more than 25% in 2018.
• Reputation matters significantly for B2B retailers at both the awareness and
consideration stage.
• B2B retailers have been online longer than the industry gives them credit for: at
least 2 years and for most, upward of 5 years.
• Payment options are a vital part of the B2B ecommerce sales process, with
checks and POs still heavily used. Mobile wallets are on the rise.

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 • Omni Channel – Best of both worlds:

As consumers move seamlessly between digital and physical channels, even during the same
shopping trip, the lines between online and in-store shopping is getting blurred, and reaching
out to consumers through all possible shopping points is becoming imperative. "These players
already have a trusted brand. An extension of the brand offerings over other channels helps in
creating better customer-centricity." The biggest challenge physical stores face is being able to
showcase all the stock they have under the roof. High real estate and distribution costs also
stand in the way of rapid expansion. Offline retailers in India can use multichannel capabilities
to bring to life the concept of endless aisles, which means they would offer things that are not
necessarily restricted to the physical location or capacity of the store.

Omni-channel is no longer an option for retailers - it has become a must-do. Here are some
tips to get omni-channel right:

1. Ensure brand consistency:

What most retailers and customers want is brand consistency. You are looking for that
ability to take your offerings and provide an experience to the customer that is
consistent across all touch points. You are also looking for a real-time system of
reference. So, it won't help that an inventory lasts only for a few good months and
then you hope the trend doesn't change - when, in fact, as a retailer you have to
change constantly
2. Use open standards:
One needs an open platform because you can't create everything new yourself using
your own technology team. The ideal approach is to have an environment with a
single stack of technologies that can serve all the different touch points. This enables
the marketing, product and sales teams to collaborate and present all of their offerings
to the customers, using any technology or device, all coming from a single source,
from the technology standpoint
3. Implement mobile commerce:
Mobile commerce radically improves your ability to run a more agile and customer-
focused business. With mobile commerce as part of the omni-channel solution, the
ability to deliver exceptional web-based experiences to a constantly connected

pg. 13
 customer base generates streamlined purchase processes, more informed sales force,
improved service delivery and overall efficiency. Mobile commerce will also help
distributors and wholesalers minimise the cost of labour-intensive processes through
the use of self-service technologies
4. Know tomorrow's customer demand:
A robust supply chain will give your business the following benefits: Higher customer
service levels by having products available in stock as customers need them; lower
expediting costs by reducing repositioning and expediting through improved short-
term forecasts, improved collaboration with demand planning across stakeholders -
through embedded analytics, scenario analysis, and collaboration tools. Lastly, an
enhanced production agility - by translating demand signals to short-term supply
requirements
5. Personalisation is key:
Retailers need to embrace moving on to a platform that can seamlessly provide the
connection between manufacturers and customers for all of their products that they
want to offer, and to personalise it down to the level of an individual customer's
location.

• Enterprise grade technology:

Enterprise software, also known as enterprise application software, is computer software used
to satisfy the needs of an organization rather than individual users. Such organizations include
businesses, schools, interest-based user groups, clubs, charities, and governments. Enterprise
software is an integral part of a (computer-based) information system.

Services provided by enterprise software are typically business-oriented tools, such as online
shopping, and online payment processing, interactive product catalogue, automated billing
systems, security, Business Process Management, enterprise content management, IT service
management, customer relationship management, enterprise resource planning, business
intelligence, project management, collaboration, human resource management,
manufacturing, occupational health and safety, enterprise application integration,
and enterprise forms automation.

As enterprises have similar departments and systems in common, enterprise software is often
available as a suite of customizable programs. Generally, the complexity of these tools requires
specialist capabilities and specific knowledge.

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 • Commerce and Content

Content has now become the biggest slice in the global e-commerce pie, where nearly every
established retailer suddenly has a story to tell, a picture to share, and a video to show. But
despite the fact that content and commerce have been co-existing for quite a while, content
commerce has never, until now, existed as a concept in itself. “Content puts a filter on
advertising. It's a gradual distillation of the truth”. In many ways, content commerce goes
beyond the traditional idea of ecommerce, or the buying and selling of products or services
over the internet. By blending content and commerce, "media companies now have a chance
to monetise their audiences not just through plain ads, but also through transactions." With a
few strategic changes, media companies can now use their content to boost sales.

Apps are the perfect example of content commerce at work. In fact, some point to the
proliferation of apps and tablets as the revenue jumpstart many publishers so desperately need.

Investments/ Developments

Some of the major developments in the Indian e-commerce sector are as follows:

• Flipkart, after getting acquired by Walmart for US$ 16 billion, is expected to launch
more offline retail stores in India to promote private labels in segments such as fashion
and electronics.
• Paytm has launched its bank - Paytm Payment Bank. Paytm bank is India's first bank
with zero charges on online transactions, no minimum balance requirement and free
virtual debit card
• E-commerce industry in India witnessed 21 private equity and venture capital deals
worth US$ 2.1 billion in 2017 and six deals worth US$ 226 million in January-April
2018

Government initiatives

Since 2014, the Government of India has announced various initiatives namely, Digital India,
Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective
implementation of such programs will likely support the e-commerce growth in the country.

pg. 15
Some of the major initiatives taken by the government to promote the e-commerce sector in
India are as follows:

• Reserve Bank of India (RBI) has decided to allow "inter-operability" among Prepaid
Payment Instruments (PPIs) such as digital wallets, prepaid cash coupons and prepaid
telephone top-up cards. RBI has also instructed banks and companies to make all know-
your-customer (KYC)-compliant prepaid payment instruments (PPIs), like mobile
wallets, interoperable amongst themselves via Unified Payments Interface (UPI). The
interoperability is expected by June 2018.
• The Government of India has distributed rewards worth around Rs 153.5 crore (US$
23.8 million) to 1 million customers for embracing digital payments, under the Lucky
Grahak Yojana and Digi-Dhan Vyapar Yojana.
• The Government of India launched an e-commerce portal called TRIFED and an m-
commerce portal called ‘Tribes India’ which will enable 55,000 tribal artisans get
access to international markets.
• In order to increase the participation of foreign players in the e-commerce field, the
Indian Government hiked the limit of foreign direct investment (FDI) in the E-
commerce marketplace model for up to 100 per cent (in B2B models).

Road Ahead

The e-commerce industry been directly impacting the 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. The Indian e-commerce industry has
been on an upward growth trajectory and is expected 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 digital
advertisements will likely support the growth in the sector. With the increase in the number of
electronic payment gateways and mobile wallets, it is expected that by the year 2020, cashless
transaction will constitute 55 per cent of the online sales. 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.

pg. 16
Market studies and Statistics on E-commerce Industry in India

India's e-commerce market was worth about $3.9 billion in 2009, it went up to $12.6 billion in
2013. In 2013, the e-retail segment was worth US$2.3 billion. About 79% of India's e-
commerce market is travel related.

According to Google, there were 35 million online shoppers in India in 2014 and was expected
to cross the 100 million marks by end of year 2016. CAGR vis-à-vis a global growth rate of 8–
10%. Electronics and Apparel are the biggest categories in terms of sales.

According to a study conducted by the Internet and Mobile Association of India, the e-
commerce sector is estimated to reach Rs. 211,005 crores by December 2016. The study also
stated that online travel accounts for 61% of the e-commerce market.

According to study done by Indian Institute of eCommerce, by 2021 India is expected to

generate $100 billion online retail revenue out of which $35 billion will be through fashion e-
commerce. Online apparel sales are set to grow four times in coming years.

India's retail market is estimated at $470 billion in 2011 and is expected to grow to $675 Bn by
2016 and $850 billion by 2020, – estimated CAGR of 10%. According to Forrester, the e-
commerce market in India is set to grow the fastest within the Asia-Pacific Region at a CAGR
of over 57% between 2012–16.

As per "India Goes Digital", a report by Avendus Capital, the Indian e-commerce market is
estimated at Rs 28,500 Crore ($6.3 billion) for the year 2011. Online travel constitutes a sizable
portion (87%) of this market today. Online travel market in India had a growth rate of 22%
over the next 4 years and reach Rs 54,800 crore ($12.2 billion) in size by 2015. Indian e-tailing
industry is estimated at Rs 3,600 crore (US$800 million) in 2011 and estimated to grow to Rs
53,000 crore ($11.8 billion) in 2015.

Overall e-commerce market had reached Rs 1,07,800 crores (US$24 billion) by the year 2015
with both online travel and e-tailing contributing equally. Another big segment in e-commerce
is mobile/DTH recharge with nearly 1 million transactions daily by operator websites.

pg. 17
PESTEL ANALYSIS OF THE E-COMMERCE INDUSTRY

The Ecommerce industry has seen immense growth in the recent years and apart from some
fluctuations in the global economy like demonetization in India, the situation has remained
favourable for its growth. China and US are the largest of the e-markets. However, growth rate
is expected to be even higher than US in the Asia Pacific region this year. The US e-retail
market is among the largest ones in the world. Apart from Amazon, eBay and Alibaba, there
are a number of important players in the market like Fipkart, Walmart, Coles and Best Buy.
The technological factors have also supported the growth of the Ecommerce industry. Growth
in the use of mobile gadgets has also pushed the ecommerce sales high. A larger number of
people are now shopping using their mobile phones. There are several factors apart from
economic and political that affect the global ecommerce industry. This is a PESTEL analysis
of the ecommerce industry that analyses how these various forces can affect the ecommerce
industry and how deep can their impact be on it.

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. Several news reports highlight how Red Tape in
India can become major difficulty in the way of new businesses trying to extend their presence
there. The political and regulatory challenges before the e-businesses have kept rising. The
growth of Ecommerce in EU has also been challenged by political factors. EU has kept
targeting technology giants from US. Google and Amazon have already been targeted by EU.
Such issues can be a threat to the growth of ecommerce in Europe and it is why several sources
predict that the growth rate of ecommerce in Europe is going to be low. Political issues are not
limited to just those discussed above but there are many more. Political stability in most regions
of the world leads to economic stability. Political chaos can result .to disruption of business
both online and physical. Overall, political issues can have a significant impact on ecommerce
and its growth.

pg. 18
Economic factors:

Economic factors are very significant in terms of businesses. Whether it is an online business
or in the area of e-retail, economic factors can have a significant effect. It is because economic
factors are directly related to business and their effect is also direct on business revenue and
profits. During the period of recession, spending had decreased people had adopted cost
cutting measures as the level of economic activity and employment gone down. During 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 several economies
like Russia, Brazil and India, these economic fluctuations affected both global and local
businesses. Now that the recession has passed and economic activity has returned on track, the
ecommerce industry has flourished in the recent years. Higher economic activity means faster
growth and higher revenue for the Ecommerce industry whereas lower economic activity
means just its opposite. 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 can also have an impact on businesses. The growing 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. In several societies of the
world ecommerce is still seen as a sign of Westernization due to which it has seen low growth
in these areas.

Technological factors:

Technological factors are very important in the context of the ecommerce industry. It is
because the 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

pg. 19
in technology to find faster growth. Technology decides several things in the ecommerce world
from popularity to profits. The reason that Amazon 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. In this way, technology is a major influence on businesses and in case
of ecommerce technological factors acquire a very special importance.

Environmental factors:

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 factors:

Legal compliance is just as important 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 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. From
labour laws to sustainability laws, there are several areas where the e-retail brands have to be
careful regarding compliance. 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.

pg. 20
Five Forces Analysis of the Ecommerce Industry [PORTERS ANALYSIS]

This is a Porter’s Five Force analysis of the Ecommerce industry. The Porter’s five forces
model deals with the factors that affect an industry’s attractiveness and competitiveness. These
five forces are there in every market and industry and determine its attractiveness.

Bargaining power of suppliers:

In the Ecommerce industry, the bargaining power of the suppliers is generally low to moderate.
The reason is that the rules are set by the brand and the suppliers have to follow the code of
conduct set by them. Most of the ecommerce brands are highly cautious regarding their supplier
relationships and set a code of conduct related to quality, labour and wages as well as
sustainability. Despite the number of players in the industry having grown, the suppliers do not
have too many options and therefore are bound by the rules that the brands have set. It is why
the Ecommerce brands have the upper hand and the bargaining power of the suppliers is low.
Some of the suppliers may have some bargaining power because of their size and quality.

Bargaining power of the buyers:

The bargaining power of the buyers is moderately high in the ecommerce industry. It is because
several small and big brands have cropped up and there is hardly any switching cost for the
customers. Today’s customer is well informed and has every piece of information is available
at a single click. Apart from it some of the physical retail brands have also entered the
ecommerce market and the physical retail market itself adds to pressures. Most of the brands
are trying very hard to retain every customer and for this purpose they make very large
investments in technology and customer service. Due to all these factors the bargaining power
of the buyers is moderately high the factors that can moderate their bargaining power include
brand image, quality of products and service and prices.

Threat of substitute products:

There two main threats in terms of substitutes for the Ecommerce brands. The first are the
competing e-retail businesses and the second are the physical retailers. Brands try to earn a
competitive advantage through low prices, better quality of products or through a better overall
customer experience. For the customers there are no switching costs and they can easily switch
from one e-retailer to another or from ecommerce to physical retail.

pg. 21
Threat of new entrants:

The threat of new entrants is low to moderate in the ecommerce industry. This is because there
is a need for large investment in technology, human resources and marketing. The barriers to
entry are moderately high. One can enter with enough capita. However, the difficulty is in
terms of building brand image and trust with the customers. So, the overall threat from the new
entrants gets moderated.

Rivalry in the industry:

The level of rivalry in the industry is high because of the large number of players. The number
of local and global brands in the ecommerce market has grown and this has also led to higher
competition. Apart from Amazon, eBay, and Alibaba, there are several other local brands like
Flipkart, Coles etc along with some of the retail brands like Walmart and Costco. So, the overall
rivalry between these brands gets to be very high.

pg. 22
Company Profile

Magento is an open-source e-commerce platform written in PHP. The software was originally
developed by Varien, Inc, a US private company headquartered in Culver City, California,
with assistance from volunteers.

Varien published the first general-availability release of the software on March 31, 2008. Roy
Rubin, former CEO of Varien, later sold a substantial share of the company to eBay, which
eventually completely acquired and then sold the company to Permira.

On November 17, 2015, Magento 2.0 was released, with an aim to provide new ways to
heighten user engagement, smoother navigation, improved conversion rates and revenue
generation for store owners. It has business user tools that enhance the user experience of the
software. Among the improved features of V2 over V1 are the following: reduced table locking
issues, improved page caching, enterprise-grade scalability, inbuilt rich snippets for structured
data, new file structure with easier customization, CSS Pre-processing using LESS & CSS
URL resolver, improved performance and a more structured code base. Magento employs
the MySQL or MariaDB relational database management system, the PHP programming
language, and elements of the Zend Framework. It applies the conventions of object-oriented
programming and model–view–controller architecture. Magento also uses the entity–
attribute–value model to store data. On top of that, Magento 2 introduced the Model-View-
View Model pattern to its front-end code using the JavaScript library Knockout.js

History

Magento officially started development in early 2007. Seven months later, on August 31, 2007,
the first public beta version was released. Varien, the company owning Magento, formerly
worked with osCommerce. It had originally planned to fork osCommerce but later decided to
rewrite it as Magento. In February 2011, eBay announced it had made an investment in
Magento in 2010, worth a 49% ownership share of the company. On June 6, 2011, eBay
announced that it would be acquiring the rest of Magento, which would join its new X.
Commerce initiative. Yoav Kutner left Magento in April 2012 citing the vision for Magento
having changed since the time of acquisition due to high level staff changes.

pg. 23
As a result of the breakup of eBay following Carl Icahn's raid, Magento was spun out as an
independent company by the new owner Permira private equity fund on 3 November 2015. In
May 2018 it was announced that Magento would be acquired by Adobe for $1.68bn with a
view to integrating it into Adobe Experience Cloud, its Enterprise CMS platform. The
acquisition was finalized on June 19, 2018.

Overview

Magento provides two distinct platforms: Magento Open Source (previously Magento
Community Edition) and Magento Commerce; the latter is available in an on-premises version
(previously Magento Enterprise Edition) or as a platform-as-a-service (previously Magento
Enterprise Cloud Edition). There were also two former platforms, Magento Professional
Edition and Magento Go.

Magento Open Source

Magento Open Source, previously Magento Community Edition, is an open-source

eCommerce platform. Developers can implement the core files and extend its functionality by
adding new plug-in modules provided by other developers. Since the first public beta version
was released in 2007, Magento Open Source has been developed and customized in order to
provide a basic eCommerce platform.
The current release and each of the previous historical release versions of the 1.X and 2.X
version branches of Magento Open Source are available on the Magento Commerce, Inc.
website for download as single-file downloads Development of the 2.X version branch of
Magento CE is coordinated publicly on GitHub

The latest actively supported versions of Magento Open Source are CE 1.9.3 and 2.2.0

Magento will remain Open source after the recent acquisition by Adobe

Magento Commerce

Released April 11, 2016, Magento Commerce is a platform as a service.

Magento 2 has many new and improved features, developer tools, and its architecture is quite
different from all the previous versions. Magento 2 was announced in 2010. It was planned for

pg. 24
release in 2011, and its merchant beta version was released in July 2015. Since then Magento
1 and Magento 2 have existed simultaneously.

Magento Commerce (On-Premises)

Magento Commerce (On-Premises), previously "Magento Enterprise Edition" is derived from
Magento Open Source and has the same core files. Unlike Open Source, this is not free, but
has more features and functionality. This product is designed for large businesses that require
technical support with installation, usage, configuration, and troubleshooting. Although
Magento Commerce has annual maintenance fees, neither Open Source nor Commerce (On-
Premises) include hosting. The Magento team develops Magento Commerce by cooperating
with users and third parties. Development on the 2.X branch of Magento Commerce is
coordinated publicly on GitHub.

The latest actively supported versions of Magento Commerce are EE 1.14.2.4 and EE
2.2.0 released on May 31, 2017.

Security concerns

In 2015 it was reported that outdated or unpatched Magento web stores are susceptible to
a Cross-site scripting attack, which allows attackers to perform online skimming to steal user
credit card information. According to a security expert, more than 4000 Magento web stores
were vulnerable to such an attack in October 2016.

In 2017 security company Défense Code reported that Magento CE web stores are susceptible
to Remote Code Execution attack, which allows attackers to perform online skimming, steal
stored credit card information of future and previous customers, take control of the database,
and in some instances even the complete server - including other Magento instances. It's
suspected that up to 260,000 Magento web stores could be vulnerable to such an attack in April
2017.

Magento Events Worldwide

"Imagine eCommerce" is the annual Magento eCommerce conference that has run since 2011.
The first event was held in February 2011 in Los Angeles with more than 600 Magento

pg. 25
merchants, partners, and developers. The goals of the “Imagine eCommerce” are sharing
ecommerce ideas and providing networking opportunity sessions.

Besides Imagine, Magento also cooperates with local teams to set up a so-called "Magento
Live" event in which the participants will have fantastic opportunities to learn more about the
platform, ecommerce and which news has got in store for Magento merchants. The biggest
event of Magento Live is Magento Live in Australia (Sydney), Magento Live UK or Magento
Live France.

There is one non-profit organization which contributes up to more than 24 Magento events
global per year named "The Meet Magento Association" The association is open to all
companies who are active in any form of commerce or distribution and who are and want using
Magento commerce now or in future. They also run a big project called Localized Magento
Edition where they get supported from the local Magento agency to transform Magento default
to localized edition with native language and business norms. The project has been run on all
developed market of Magento like Germany, Austria, Switzerland, France, Sweden, Denmark,
Italy, Spain, the Netherlands, Poland, Romania and Russia and also Vietnam - a "rising dragon"
for ecommerce trading in Asia

Strengths of the company:

• Growth and service provider network:

Magento has experienced significant growth since becoming an independent company in
2015(it was formerly owned by eBay), enabling development of a robust service provider
network for solution integration and product development.
• Complete solution:
Magento has several offerings in addition to the base commerce platform, including solutions
for OM, data and analytics, social selling, B2B commerce, and CPQ. Its recently released
WCM functionality is available today as an extension, to be integrated to the core product in
2018.
• Marketplace connectivity:
A marketplace module is integrated to Magento Commerce, enabling direct integration to
Amazon and with built-in intelligent pricing. The module is available for any Magento
customer on request and is scheduled to be generally available in the code base in 2018.
Integration to eBay and Walmart/Jet is planned for later in 2018. Prospects that also need a
solution for selling in online marketplaces will find the module beneficial.

pg. 26
 • Streamline Quote Management & Price Negotiation:
Magento Commerce supports customer quoting and price negotiations with a streamlined
request for quote workflow that can be entirely managed within Magento or via external
systems using APIs. Magento’s advanced workflow helps improve quote responsiveness and
ultimately leads to higher conversion rates.
• Ready for Business:
Magento Commerce includes everything. It manages B2B sites for multiple brands, channel
partners, or key accounts. Customers can self-manage their company accounts and set up
multiple tiers of buyers with specific roles and permissions. They can also track quotes, view
detailed order histories, and manage their credit online, reducing the need to call you for
support.
• Friction-free Ordering
Boost sales with fast and convenient purchasing options. Buyers can quickly place orders
online by entering SKUs, uploading CSV files, or choosing items from pre-set requisition lists.
Your sales team can assist customers by creating orders on their behalf and can quickly respond
to online quote requests with tools for tracking quotes, calculating discounts, and
corresponding with customers.
• Custom Catalogues and Pricing
Deliver contract pricing online with the ability to assign custom catalogues and price lists to
customers. Maximize sales by offering payments on account and via credit cards, PayPal, and
other options. Magento tracks available credit and holds sales when limits are exceeded.
• Engaging Experiences on All Devices
Business buyers are consumers too. Create engaging, mobile-optimized experiences to
empower your customers and sales staff to place orders on any device, at any time. And,
increase sales with B2C-tested merchandising, content management, and promotional
capabilities.
• Smart Order and Inventory Management
Improve operations with a single solution for managing orders from all sales channels. Provide
customers with accurate, real-time inventory from across your supply chain and use automated
business rules to optimize your fulfilment costs and delivery times.
• Effortless Management and Integration
As a leader in cloud commerce, Magento delivers reliable, high-performance purchasing
experiences without expensive capital expenses and maintenance fees. Integrating with your
existing backend systems is also easy with robust APIs and off-the-shelf extensions that speed
your time to market.

pg. 27
Competitors:

SAP
SAP is a German-based European multinational software corporation that makes enterprise
software to manage business operations and customer relations.
As of 2016, SAP is the world's third largest software and programming company. The
corporation operates in Europe, Asia, Africa, the Middle East, North America, and South
America. SAP focuses on 25 industries and six industry sectors: process industries, discrete
industries, consumer industries, service industries, financial services and public services. It
offers integrated product sets for large enterprises, mid-sized companies and small businesses.
SAP competitors are primarily in the enterprise resource planning software industry. In this
field, Oracle Corporation and Magento Commerce are SAP's major competitors. SAP also
competes in the customer relationship management, marketing & sales software,
manufacturing, warehousing & industrial software, and supply chain management & logistics
software sectors.

ORACLE
Oracle Corporation is an American multinational computer technology
corporation headquartered in Redwood Shores, California. The company specializes primarily
in developing and marketing database software and technology, cloud engineered
systems, and enterprise software products — particularly its own brands of database
management systems. In 2014, Oracle was the second-largest software maker by revenue,
after Microsoft.
The company also develops and builds tools for database development and systems of middle-
tier software, enterprise resource planning (ERP) software, customer relationship
management (CRM) software, and supply chain management (SCM) software.
There is rivalry between SAP and Oracle over software concerns from a really long time.

SALESFORCE
Salesforce.com, Inc. is an American cloud computing company headquartered in San
Francisco, California. Though its revenue comes from a customer relationship
management (CRM) product, Salesforce also sells commercial applications of social
networking through acquisition and internal development. They are the current pioneers in the
CRM sector.
CRM stands for “customer relationship management” and its software that stores customer
contact information like names, addresses, and phone numbers, as well as keeps track of
customer activity like website visits, phone calls, email, and more.

pg. 28
DIGITAL RIVER
Digital River is a private company that provides global ecommerce, payments and marketing
services. In 2013, Digital River processed more than $30 billion in online transactions. Digital
River is headquartered in Minnetonka, Minnesota. Advanced commerce cloud, flexible
integrations, monetization tools and global services are set up by the company to give the
clients an edge and risk-free entry into markets worldwide.
With nearly 25 years of industry experience and offices on four continents, they've mastered
the ins and outs of global commerce. From taxation and compliance to payment strategies and
E-marketing campaigns.

IBM
International Business Machines Corporation (IBM) is an American multinational technology
company headquartered in Armonk, New York, United States, with operations in over 170
countries. The company began in 1911 as the Computing-Tabulating-Recording Company and
was renamed "International Business Machines" in 1924.
IBM has a large and diverse portfolio of products and services. As of 2016, these offerings fall
into the categories of cloud computing, cognitive
computing, commerce, data and analytics, Internet of Things, IT infrastructure, mobile,
and security.

pg. 29
SWOT Analysis of Magento Commerce

Strengths:

A Huge Magento Community

As the world’s most widely used and fastest growing ecommerce platform, Magento has been
downloaded over 2 million times and with over 200,000 brands using Magento as their
platform of choices it has come a long way from its early days. As the leading open source
platform, Magento has a huge development community providing extended features and
functionality that it doesn’t have out of the box. That means plug-ins for everything from
image hot-spotting to video merchandising. If you want to do something, then someone,
somewhere, will have done it.

Magento’s Capabilities
Magento out of the box has all you’d expect from an ecommerce platform. It’s user friendly
which is a must nowadays for any piece of software. It supports multiple payment gateways
with standards compliant security. It supports multiple languages and multiple currencies so
is ideal for traders with overseas markets to service. If you’ve more than one ecommerce
brand it supports multiple fascia.

Magento and Search

Of course, ecommerce sites are not just about on-site conversion – it’s also about being
found, and Magento is very SEO friendly. Back end components to add tags, descriptions,
meta descriptions, URLs and all the other things Google requires are all there.

Creativity on Magento
Of course, one of the most important points for a creative digital agency like us, is that
Magento is a great creative palette. It allows you to create a look and feel that’s unlike
anybody else. Our clients are fashion, luxury and lifestyle clients; websites that are
destinations are usually a crucial part of the brand experience so that creative freedom is
extremely important.

Open Source = Portable

For those that are unfamiliar with open source and proprietary – open source software is free
to use and is usually developed and supported by a large community as opposed to
proprietary software for which you pay a license.
Magento Community is entirely free (there is a licensed version, Enterprise, for larger
retailers which is supported and gives you the best of both worlds). Furthermore, the fact that
its open source brings particular benefits. You own your code which keeps your developers

pg. 30
on their toes and means if they’re not performing you can just take it to someone else.
And you’re not locked into the platform provider’s development schedule meaning you don’t
have to wait for the next version for improvements – somebody has probably already done
what you want and it tends to be more up to date because of the vibrant community making
money out of extensions and in fact if you want to see some of them, click here to have a
look at Magento Connect.
So Magento is a first-class ecommerce platform, trusted by lots of great brands, such as Paul
Smith, Gant, Mothercare, Paperchase, Fred Perry and Hi-Tec.

Integration
Any serious ecommerce platform needs to integrate with 3rd party payment providers with the
right technical know-how Magento can fit seamlessly with all the leading retail software. From
payment providers and fulfilment to stock management and EPOS systems, we can Magento
talking to whatever infrastructure you use. The common integrations- FEDEX, DHL, Futura,
Bright Pearl, Prima, Pursuit, Esperus, Xero, Trade Gecko, Salesforce, Microsoft Dynamics,
Sage.

Comparing Magento with Other Ecommerce Platforms

We are often asked to compare Magento with others, typically cheap and cheerful options
like Woo Commerce, Shopify and WordPress. In our view these are really starter options that
are neither as feature rich nor have the scalability to grow as you grow. They are free but if
you have serious ecommerce aspirations you should start with something more grown up
otherwise you’ll quickly outgrow them.
At the other end, Magento Enterprise competes with the likes of Hybris (recently bought by
SAP), Demandware, Commerce Server, Oracle’s ATG, IBM’s WebSphere Commerce and
the like. These are top class ecommerce solutions – but they are proprietary therefore
considerably more expensive, and are generally aimed at the enterprise end of the market.

Weakness:

• Like any technology Magento does have downsides, but they can undoubtedly be
overcome if you have the right knowledge and skills.
• Magento was described as overcomplicated, with too much going on and too many bells
and whistles.
• In the early days of Magento there were some high-profile bad implementations and
are still being encountered even now – problematic, buggy sites where all of the
maintenance budget goes into keeping it working rather than incrementally improving
and increasing sales.

pg. 31
 • However, there is no doubt this is down to the developer. Magento nowadays is a
mature platform so a good implementation should be stable and as problem free as any
other ecommerce platform.
• Some agencies struggle to use Magento for easily managed editorial content, a
challenge that their development team is trying to overcome by using an advanced CMS
module with a simple and intuitive back-end interface.
• The other criticism of Magento is speed, which is an implementation issue

Opportunities:

• New emerging technologies to improve user experience.

• Emerging new and untapped markets with their physical presence.
• New market segments and niches.
• More efficient marketing tactics.
• Market growth - The number of internet users is increasing in a rapid way, this will
further increase the customer base for the company.
• Industry growth- Growth is expected to continue in higher rates in the industry.

Threats:
• Appearance of new competitors. The low barriers allow easy entry for the competitors
into the market.
• Competitors imitating the product’s features and ideas.
• Indirect competitors entering the industry to present direct competition.
• Future Legislation- Considering the growth of E-commerce and amount of tax revenue
lost to it, the government could write legislation to impose tax on all online sales. This
would remove one incentive to conduct online business.

pg. 32
Chapter 2: Work done in Company:

Introduction and Orientation:

The initial week of our internship was dedicated to introducing us to the company and the
details and learnings on what we would be doing for the next 8 weeks by our mentor Mr. Anand
Natarajan, who is Enterprise Sales Executive - India/South Asia at Magento Commerce.
The introduction and orientation part initially were focussed on the industry awareness, the
economic conditions that impact the business, their problems in Indian Market, Company
details, their product portfolios and their existing clientele. We were made aware of the
competitors for Magento in the market.
The various Industry learnings in the orientation were:

• “India’s Digital Leap” – outlook and drivers:

Growth Enablers in the E-commerce market in India were:
Jan Dhan Yojana (Digital Bank accounts) (314m till Mar’18):
Pradhan Mantri Jan Dhan Yojana (PMJDY), is financial inclusion program of India, that aims
to expand and make affordable access to financial services such as bank accounts, remittances,
credit, insurance and pensions. The Guinness Book of World Records recognised this
achievement, stating: "The most bank accounts opened in one week as a part of the financial
inclusion campaign is 18,096,130 and was achieved by the Government of India from August
23 to 29, 2014". This is just the beginning and the numbers will further rise, creating more
market for the company to capture.
Some of the benefits created by this yojan are:
Opening of no-frills accounts: The Bank account opened under PMJDY does not require a
minimum balance and has an Overdraft facility up-to ₹.5000. It is also available after six
months. Interest is on deposit. Free RuPay debit card for account.
Relaxation on know your-customer (KYC) norms: Person who don't have valid identification
document can also open bank account. This type of account called "Small Account”, can be
regularised within one year.
Engaging business correspondents (BCs): Account opening and bank transactions are through
business correspondent. Usually, a business correspondent is appointed in remote rural areas
where the bank’s branches are not present.
Use of technology: Bio-metric based account opening and transactions are available through
business correspondent. This helps the illiterate people to be able to have bank accounts and
understand their transactions through the correspondents.

pg. 33
Direct Benefit Transfer: The government subsidies are directly transferred to beneficiary. This
reduces the delay in getting a service.
Insurance: Accidental insurance cover of ₹.1.00 lac. provides life cover of ₹. 30,000/- payable
on death of the beneficiary.

Aadhaar (Biometric identity) – (1.19b digital records with 99% coverage):

Aadhaar project, also known as UID (unique identification), is an initiative rolled out by
Government of India under which a unique number is provided to every Indian citizen for
identification. The number can help citizens to avail several benefits and services. So far, more
than one crore cards have been issued. The main objective to implement this service is that it
offers biometric based validation which eliminates all the extra machines required to record
biometric details of a person.
IDFC bank launched its first biometric enabled transaction method in which the person can pay
the merchants using his/her fingerprint. The idea was implemented for the people who don’t
have smart phone or if owning one, but without banking features. IDFC bank distributes a
biometric enabled device to the merchants to connect it to smart phone for transaction purposes.
Biometric enabled transaction or Aadhaar pay would soon be launched by four more banks that
are Syndicate Bank, Punjab National Bank, Bank of Baroda and Inducing Bank. This was all
made possible because of the Aadhar card being linked to the biometrics. The government has
asked an IT company, Wipro to make a blueprint for Aadhaar based biometric access to flyers
on all airports in India. The Ministry of Civil Aviation is thinking of linking Aadhaar with all
flyers booking tickets. The idea is that when a passenger is booking tickets, he/she must provide
his/her Aadhaar number. Once a passenger reaches the airport, at every touch point he has to
place his thumb. Similar process can be iterated at the time of check-in. However, the major
drawback is for the tourist who doesn’t hold an Aadhaar card. All these various advantages are
giving more business to the E-commerce sector and enabling them to trust their customers
better.

Smartphones - 530m by 2018 (~50%):

Today Mobile ecommerce is bringing the marketplace closer. With over 300,000 mobile apps
and 10.9 billion downloads (in 2010, with 76 billion estimated for 2014), it is evident that most
businesses want to try a hand with Mobile Application Development.
Wider reach:
Mobile apps have the advantage of providing a bigger appeal as consumers carry their
smartphones wherever they go, and hence the opportunity for location-based marketing and
sales.
Convenient Shopping:
With integrated payment solutions, apps make for One Touch Shopping anywhere and at any
time. If support functions are also integrated into apps, then it becomes a one-stop solution for
sales as well as services.

pg. 34
Cost Effective:
Building an App and maintaining it is much easier and cost effective as compared to a website
and other selling points where the customer interacts with a brand or a list of brands.
Competitive edge:
Providing multiple channels for information and sale will provide a definite competitive edge
for your business.

GST: Digital Taxation from Jul’17 - Enterprise B2B business to go online

Under India’s old tax system, it was complicated to sell products across state lines. Each time
you did, you had to deal with a variety of different taxes and the complicated paperwork that
went with them. For small businesses that didn’t have the budget to pay a tax professional, the
possibility of extra sales was simply not worth the hassle. This meant your ability to grow was
limited by where you lived.
The new tax system has eliminated all of the confusing interstate taxes and replaced them with
a single tax. With GST, you can sell to customers in your own state and in other states, all
without worrying about multiple taxes. As a result, you have the opportunity to sell products
to customers across India or around the world. It also gives you the chance to compete with big
corporations. Although that sounds intimidating, it’s great for you and your customers. After
all, as a small business, you may be able to offer more flexible quantities, more personal
service, and other perks that can draw shoppers away from bigger suppliers. As a result, GST
makes it easier to grow your business without taking on an extra tax burden.
When you run an e-commerce business, you can take advantage of the input tax credit to reduce
your tax payments. Imagine that you pay Rs 100 in GST on raw materials. When you turn those
supplies into a product and sell them online, you charge your customers Rs 150 in GST. The
government expects you to pay that Rs 150 to them. However, with the ITC, you can deduct
the original Rs 100 as a credit. This means you only need to pay Rs 50 to the government.
You can claim the ITC for any products and services your company buys to use in the business.
But you must be able to explain exactly how you’re using the things you buy. If you buy T-
shirts in bulk from factories and sell them to a screen-printing company, for example, you can
claim ITC. If you’re buying a computer for personal use, you cannot claim ITC. When used
legally, the ITC can dramatically reduce your tax burden each month.
For many e-commerce business owners, the GST system allows easier reporting and new
opportunities for growth. Because the system is complicated for online companies, it’s
important to stay up-to-date so you can file correctly and make the most of available credits
that can reduce your monthly tax bill.

pg. 35
 • Customer expectations from the E-commerce market:

Omnichannel Culture
It is not uncommon if a person starts browsing through an online store on a tablet or mobile
and ends up ordering via a desktop or a laptop, or vice versa. In order to sustain in the
competition, every eCommerce website must have its presence in multiple channels. Not only
being on all channels helps, but coordinated marketing efforts are needed across all channels
to integrate the customer’s shopping experience. In order to create such seamless shopping
experience, keeping the brand value intact, designing an interactive platform for all mediums
plays a very crucial role in the success of any business.

Everything Connected to Mobile

Mobile phones have become the basic component of everyone’s lives these days. Instead of
notepads and pens, people rely more on apps. Hence, for an eCommerce platform to make a
mark in the market, supporting mobile commerce is an inevitable choice. The requirement of
mobile commerce has increased drastically within the last three years and still is growing at a
very fast pace.
In 2016, solo sales through mobile phones grew by 80%, i.e. more than half of the online orders
were placed via a cell phone. Smartphones are convenient. They are portable and easier to
operate than a computer Leading to an easy online purchase from anywhere and anytime.
Mobile-driven eCommerce is bound to increase at an exponential rate. Retailers need to make
their content and online platforms to be mobile view compatible with a better customer
experience.

Social Commerce
According to a recent US survey of online business owners, it was found that almost 25% of
the purchases are made after a shopper checks the product on Instagram or Facebook.
Moreover, an increasing number of prospects are willing to buy products from Instagram after
seeing their photos and videos.
Social media has rapidly become an imminent part of us now. This can pave the way for social
commerce. Retailers can embrace this new trend and integrate online shopping with social
platforms. This way, they would be ahead of time as compared to their competitors.

Changes in Technology
Different online retailers have varied systems in place that cannot be compared with the other
in terms of features and offers. One cannot change the system immediately to meet the ever-
increasing demands of the customers, especially the millennials, addressing their demands gets
difficult as their buying power and influence on sales is constantly increasing. This is the
consequence of inadequate and late information about technological developments to the

pg. 36
retailers. They invest a lot of time in analysing the data they have to make future decisions. But
this problem can be solved using artificial intelligence in microseconds.
There will be a technology transformation with more business acquiring technology that
supports real-time commerce and capture of detailed, accurate and timely data into the single
system which will support the rapid and strategic decision-making needed to meet customer
demands for instant gratification.

The Personal Touch

With the growing social platforms, an insight into the consumer’s mind is much easily available
to the businessmen. This means that the retailers can now notice shopping patterns of a
customer and engage at a more personal level. Multiple sites these days can suggest products
based on a customer’s search trend in the Google or from the activities on social networking
websites along with the past purchases.
For example, leading eCommerce websites to scrutinize your past purchases and the products
that you check out on social networking sites or even Google. They analyse everything and
then give recommend or suggest products that you have been searching for. This way, you are
more bound to purchase a product that gives you recommendations rather than one that does
not.

Work done

The various aspects that Magento follows to achieve the status of being a market leader are:
• Magento - Leading cloud suite for commerce
• Get to Market Faster with an Agile Solution
• Innovate Continuously for Limitless Possibilities
• Scale for Rapid Growth and Global Expansion
• Engage Customers with Powerful and Omnichannel Experiences

Initially, the data of all the existing clients and the product range was given to us to understand
whom to target. The data gave us an idea about the prospective clients that we had to target.
We were then asked to create a database about the brands and companies that would require
the product range offered by Magento. The company’s nature of dealing is Business to Business
dealings, this requires a careful inspection of the prospects as the communication needs to be
professional and has to involve a lot of details and needs to be perfect.
Considerations to be taken for collection of databases are:

pg. 37
 • Identify the companies which can afford the products. The companies must be in the
market for at least a year. Their balance sheets must be profitable enough to afford the
products.
• The companies having a turnover of more than 10 crores were our target clients.
• The database has to be collected based on the region assigned to us. The interns had to
divide the geographical areas based on their expertise and existing knowledge and then
identify companies operating in those areas.
• The area assigned to me was south India due to the language advantage.
• The details like name of the company, website, turnover, industry, Facebook likes, head
office, current platform and the contact details like email ID of the relevant person must
be noted.
• The platform of the website is being identified through Built With.
• After further collection, the database is shortlisted and the prospective clients are
approached by email, LinkedIn or telephone calls.
• Even if the sale does not occur, the main reason for contact was to communicate the
existence of the product to the clients. It was to develop a relationship with them for
any future prospects.
• The verticals chosen were Apparel, Education, Furniture, Consumer Goods, Luxury
Fashion, etc.
• The top brands from all the said sectors were collected in the database.
• We have to also attended webinars regularly to improve our learnings on Magento’s
order management. Key learnings form that were:
1. what is cloud based platform
2. Foundation of SaaS platform
3. How MOM works
4. Functions of MOM (Magento’s order management)
5. How MOM support omnichannel
6. Existing clients
A demo conference conversation with a client in Dubai was shared with us and the learnings
from that were:
1-Never ask close ended questions
2-Constantly ask if the listener is following up because it becomes more into
technical while explaining.
3-Even if you are not being assigned the right person to talk to, be patient. Maintaining
relationship with them is more important in the long run.

pg. 38
LEARNING OUTCOMES

Customer database - Structured approach learned customer mapping reaching to

right people using LinkedIn and social media to reach to Magento clients.
Magento offerings about tools and services of Magento commerce like-Business
intelligence, Magento order management, B2B/B2C etc.
Business communication draft of emails to potential customers
E-commerce platform various platforms used by online business and their backend
work
Data mining collection of more than 500+ customers
Learned about various E-commerce application software
E-commerce Business barriers to entry and gaps to Magento commerce (2.0)
Consolidated database
B2B article
Introducing Magento enterprise version to new customers in India.

pg. 39
 CHAPTER 3: INTRODUCTION TO VARIABLES, REVIEW OF LITERATURE

Background:

Sl.n Name of the Name of the Source Review link

o author article

1) . Bang Nam Determining Journal of The research suggests that the https://www
Jeon factors for the Applied important determinants of the .tandfonline
. Myung Jin adoption of e- Economics successful adoption of e-business by .com/doi/ab
Lee business: the SMEs in Korea are: the CEO's s/10.1080/0
. Kyeong case of SMEs knowledge of information 003684050
Seok Han in Korea technology (IT)/e-business, relative 0427262
advantages and benefits from
implementing e-business,
governmental support, globalization
strategy and the North Korean
factor. Business size, the cost of e-
business adoption and competitive
pressure of the industry do not seem
to play an important role in the
adoption of e-business by Korean
SMEs.
2) • . Ruby Roy Factors Small The results suggest that specific https://link.
• Dholakia Impacting the Business factors contribute to the SMEs’ springer.co
• . Nir Kshetri Adoption of Economics involvement with the Internet – m/article/10
the Internet prior technology use and the .1023/B:SB
among SMEs customer service subscale of EJ.0000032
perceived competitive pressure 036.90353.
influence both stages of Internet 1f
adoption. Past media use does not
explain SME behaviour – in terms of
adoption or routinization
3) Hong Cheong E- Communicati indicate that the level of ecommerce http://aisel.a
Looi COMMERC ons of the adoption is positively influenced by isnet.org/cg
E Association • relative advantage, i/viewconte
ADOPTION for • IT knowledge, nt.cgi?articl
IN BRUNEI Information • competitive pressure, e=3125&co
DARUSSAL Systems • government support and ntext=cais
AM: A • security.
QUANTITA
TIVE
ANALYSIS
OF

pg. 40
 FACTORS
INFLUENCI
NG ITS
ADOPTION
4) . E-Commerce Journal of The expected advantages of e- https://www
Chalermsak Adoption in Global commerce strategy include .tandfonline
Lertwongsati Thailand: An Information decreasing costs, expanding .com/doi/ref
en Empirical Technology marketplaces, enhancing /10.1080/10
. Study of Management competitiveness, improving 97198X.20
Nitaya Wong Small and business image, and increasing 03.1085635
pinunwatana Medium revenues. 6?scroll=to
Enterprises p
(SMEs)

5) An analysis International In was discovered that EC adoption https://www

. Erdener. of the factors Marketing was significantly influenced by its .emeraldinsi
Kaynak affecting the Review perceived benefits. However, the ght.com/doi
Ekrem adoption of perceived limitations of EC /abs/10.110
Tatoglu electronic applications were found to have no 8/02651330
.Veysel Kula commerce by statistically significant effect on EC 510630258
SMEs: adoption. The analysis also showed
Evidence that company and industry‐specific
from an factors, with the exception of
emerging amount of resources allocated for
market export development, did not appear
to have any significant impact on EC
adoption.
6) Factors International Globalisation and technology https://www
. Ian Fillis impacting on Journal of effects have spurred smaller firms .emeraldinsi
. Ulf e‐business Entrepreneuri around the world to embrace e‐ ght.com/doi
Johannson adoption and al Behaviour business practices. The adoption is /abs/10.110
. Beverly development & Research varying from country to country 8/13552550
Wagner in the smaller based on the research. 410536762
firm

7) . Syed Shah An Empirical Journal of The findings show that relative https://www
Alam Study of Business advantage, compatibility, .tandfonline
. Md. Yunus Factors Economics organizational readiness, manager's .com/doi/ab
Ali Affecting and characteristics, and security have s/10.3846/1
. Mohd Fauzi Electronic Management significant impact on e-commerce 6111699.20
Commerce adoption. The study provides a clear 11.576749
Adoption understanding of manager's
among SMEs perception about e-commerce
in Malaysia adoption in their businesses. This
study is important in a global
context, as SMEs in Malaysia are
going for exporting their product in
the global marketplace.

pg. 41
8) . Patrick A Profile of Australasian Response to technological https://www
McCole Adopters and Marketing environment / opportunities .sciencedire
. Elaine Non-adopters Journal afforded by technology; negative ct.com/scie
Ramsey of (AMJ) attitudes or perceived nce/article/a
eCommerce barriers/impediments to electronic bs/pii/S144
in SME commerce; electronic commerce 135820570
Professional capability; response to new 0665
Service Firms technology/innovation; customer
orientation; and sensitivity to
competitive/customer environments
were found to underpin adoption.
9) INDUSTRIA EC adoption within SMEs is https://www
Morteza Adoption of L affected by perceived relative .emeraldinsi
Ghobakhloo e‐commerce MANAGEM advantage, perceived compatibility, ght.com/doi
applications ENT & CEO's innovativeness, information /abs/10.110
in SMEs DATA intensity, buyer/supplier pressure, 8/02635571
SYSTEM support from technology vendors, 111170785
and competition. Similarly,
description on determinants of
adoption and non‐adoption of
different EC applications has been
provided.
10) Rita Rahayu Determinant Procedia - The adoption of e-commerce by https://www
John Day Factors of E- Social and SMEs in Indonesia is affected by .sciencedire
commerce Behavioural several factors which are perceived ct.com/scie
Adoption by Sciences benefits, technology readiness, nce/article/p
SMEs in owners’ innovativeness, owners’ IT ii/S1877042
Developing experience and owners’ IT ability. 815039026
Country: The result also shows that the
Evidence individual factors play a significant
from role in adopting of e-commerce
Indonesia technology by SMEs in Indonesia

pg. 42
Convenience Sampling:
A convenience sample is a type of non-probability sampling method where the sample is taken
from a group of people easy to contact or to reach. For example, standing at a mall or a grocery
store and asking people to answer questions would be an example of a convenience sample.
This type of sampling is also known as grab sampling or availability sampling. There are no
other criteria to the sampling method except that people be available and willing to participate.
In addition, this type of sampling method does not require that a simple random sample is
generated, since the only criteria is whether the participants agree to participate. Convenience
sampling is not often recommended for research due to the possibility of sampling error and
lack of representation of population. But it can be handy depending on the situation. In some
situations, convenience sampling is the only possible option. For example, a college student
who is doing a term project and wants to know the average consumption of beer in that college
town on Friday night will most probably call some of his friends and ask them how many cans
of beer they drink, or go to a nearby party to do an easy survey. There is always a trade-off
between this method of quick sampling and accuracy. Collected samples may not represent the
population of interest and therefore be a source of bias.

Advantages:
Convenience sampling can be used by almost anyone and has been around for generations. One
of the reasons that it is most often used is due to the numerous advantages it provides. This
method is extremely speedy, easy, readily available, and cost effective, causing it to be an
attractive option to most researchers.
Expedited data collection
When time is of the essence, many researchers turn to convenience sampling for data
collection, as they can swiftly gather data and begin their calculations. It is useful in time
sensitive research because very little preparation is needed to use convenience sampling for
data collection. It is also useful when researchers need to conduct pilot data collection in order
to gain a quick understanding of certain trends or to develop hypotheses for future research. By
rapidly gathering information, researchers and scientists can isolate growing trends, or
extrapolate generalized information from local public opinion.

Ease of research
For researchers who are not looking for an accurate sampling, they can simply collect their
information and move on to other aspects of their study. This type of sampling can be done by
simply creating a questionnaire and distributing it to their targeted group. Through this method,
researchers can easily finish collecting their data in a matter of hours, free from worrying about
whether it is an accurate representation of the population. This allows for a great ease of
research, letting researchers focus on analysing the data rather than interviewing and carefully
selecting participants.

pg. 43
Ready availability
Since most convenience sampling is collected with the populations on hand, the data is readily
available for the researcher to collect. They do not typically have to travel great distances to
collect the data, but simply pull from whatever environment is nearby. Having a sample group
readily available is important for meeting quotas quickly, and allows for the researcher to even
do multiple studies in an expeditious fashion.

Cost effectiveness
One of the most important aspects of convenience sampling is its cost effectiveness. This
method allows for funds to be distributed to other aspects of the project. Oftentimes this method
of sampling is used to gain funding for a larger, more thorough research project. In this
instance, funds are not yet available for a more complete survey, so a quick selection of the
population will be used to demonstrate a need for the completed project.

Disadvantages:
Even though convenience sampling can be easy to obtain, its disadvantages usually outweigh
the advantages. This sampling technique may be more appropriate for one type of study and
less for another.
Bias
The results of the convenience sampling cannot be generalized to the target population because
of the potential bias of the sampling technique due to under-representation of subgroups in the
sample in compare to the population of interest. The bias of the sample cannot be measured.
Therefore, inferences based on the convenience sampling should be made only about the
sample itself.
Power
Convenience sampling is characterized with insufficient power to identify differences of
population subgroups.

pg. 44
CHAPTER 4: RESEARCH METHODOLOGY

Research objectives:
• To develop an understanding of the extent of e-commerce adoption amongst SMEs.
• To establish the factors that affect adoption of e-commerce by SMEs and propose
solutions that would assist the SME’s in taking advantage of e-commerce.
• To explore the potential of E-commerce in existing businesses.

RESEARCH DESIGN:
Need for the study:
There are a large number of SME’s in all the developing countries, reportedly 42.5 million.
They are facing heavy competition from other global companies due to their reach, scalability,
availability and costs. This can be countered to a certain extent by adopting E-commerce.
Hence, the study is being conducted to identify the factors involved in the adoption of E-
commerce by SME’s and how likely they are to evolve with the digital race. The various
barriers or challenges that are preventing the SME’s from adopting E-commerce are also
analysed. It is required to understand the perceptions of SME’s on E-commerce to try and
counter them in the future and ensure better profits for the SME’s.
Methodology:
The research involved is to understand the likeliness of SME’s in adopting E- commerce. The
1st and 2nd objective of my research being to understand the extent of ecommerce adoption and
the factors affecting it, it requires previous study of the existing research along with obtaining
new information through interviews and questionnaires. The 3rd objective is more about
understanding the scope of the future of E-commerce in SME’s, which requires a combination
of the above-mentioned methods.
Hence for the 1st objective exploratory research is being conducted to understand the subject
matter in detail. For the 2nd objective descriptive research is conducted as the problem must be
identified for the issue. The 3rd objective requires a qualitative research.
Method for data collection:
• Using questionnaires
• Existing research on the relevant topics from internet, journals and articles.
• Interviews of the appropriate individuals who are related to SME’s
• Hence, both primary and secondary sources are required to obtain the results for the
research.

pg. 45
Sampling plan:
The population for the study includes all the SME’s operating in the Indian subcontinent.
The SME’s can be defined accordingly based on section 7 of the Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006.
a) In the case of the enterprises engaged in the manufacture of goods pertaining to any industry
specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, as—
• A small enterprise, where the investment in plant and machinery is more than twenty-
five lakh rupees but does not exceed five crore rupees
• A medium enterprise, where the investment in plant and machinery is more than five
crore rupees but does not exceed ten crore rupees;
b) In the case of the enterprises engaged in providing or rendering of services,
• A small enterprise, where the investment in equipment is more than ten lakh rupees but
does not exceed two crore rupees; or
• A medium enterprise, where the investment in equipment is more than two crore rupees
but does not exceed five crore rupees.

Population:
The number is estimated to be at 42.50 million (registered & unregistered) according to
EVOMA. This is the size of the population being considered. Narrowing it down to segments
and geographies and other limitations, the sample size will be lower. There is no single source
from where to obtain the data about the companies falling under SME’s. The data can be
collected through various links online like MSMEMART.COM , Indiamart, Indian
Manufacturers Suppliers Exporters Directory, India Exporter Manufacturer .There is also an
upcoming database MSME Data Bank, run by the government.

pg. 46
DATA COLLECTION METHODS

I) PRIMARY DATA
Primary data is collected through questionnaire. Questionnaires are distributed to the
Owners, employees and managers of the SME’s and data is collected from their responses.
From the collected responses of 77, the responses based on sector division are as follows:
• 31.2% from retail sector
• 26% from service sector
• 13% from wholesale
• 7.8% from catering and
• 22.1% from other sectors.
The split of the positions of the individuals being surveyed is as follows:
• 35.1% were both owner and manager.
• 24.7% were owners
• 18.2% were managers
• 13% were operational staff in SME’s
• 9.1% were in positions other than the ones mentioned above.
II) SECONDARY DATA
Secondary data is collected from various websites, the previous researches, book on “marketing
management”, journals like “journal of marketing management”, “journal of communication
strategies”, catalogues, brochures, etc.
III) POPULATION
The population consists of individuals who are either owners, managers or operational staff of
SME’s.
IV) SAMPLE SIZE
The sample size being considered for the study is 100 from the above-mentioned population.
V) SAMPLING METHOD:
The sampling is done by choosing the individuals on a random basis and non-judgement
method. They are chosen based on the ease of obtaining their details and their existence in the
market.
Simple random sampling
A simple random sample is a subset of a (related to studying numbers) population in which
each member of the subset has an equal chance of being chosen.

pg. 47
TOOLS FOR DATA COLLECTION
QUESTIONNAIRE:
A set of questions with a choice of answer, figured out for the purpose of survey or (related to
studying numbers) study is being created and distributed using Google forms.
Close ended questions are being adopted for this survey.
People who responded are asked to decide where they fit along a scale (something that
continues from one extreme to the other).

STATISTICAL TOOLS FOR ANALYSIS

Sum
Sum is the total amount resulting from the addition of two or more numbers.
Percentage
A number or rate that is expressed as a certain number of parts of something
divided into 100 parts.
Graphs
A diagram showing the relation between (number and thing that changes)
amounts, usually of two (numbers that change/things that change), each measured
along one of a pair of axes at right angles.

pg. 48
CHAPTER 5: ANALYSIS, FINDINGS AND CONCLUSION

Analysis:
From the 100 responses received from the SME sector employees and owners, 76 were
selected. Due to factors like incompletion, the rest of the responses were discarded.

1. What type of business are you in?

TABLE 1:
Retail 25
Service 20
Catering 6
Wholesale 10
Others 17

Graph 1:

Sales

22% Retail
32%
Service
Catering
13%
Wholesale

8% Others
25%

pg. 49
2. What is your occupational level in your company?

Table 2:
Owner 20
Owner and Manager 27
Manager 14
Operational 10
Others (please specify) 7

Graph 2:

9%
26%
13% Owner
Owner and Manager
Manager

18% Operational
Others (please specify)

34%

pg. 50
3. How many employees are there in your company?
Table 3:
1 to 10 14
11 to 20 23
21 to 50 23
51 to 100 4
More than 100 14

Graph 3:

18% 18%
1 to 10
11 to 20
5%
21 to 50
51 to 100

30% More than 100

29%

4. How long have you been an owner or manager with the company?
Table 4:
Less than 1 year 16
1 to 5 years 32
6 to 10 years 15
More than 10 years 12

pg. 51
Graph 4:

16%
21%
Less than 1 year
1 to 5 years
20% 6 to 10 years
More than 10 years

43%

5. What is your gender?

Table 5:
Male 51
Female 18
Prefer not to say 8

Graph 5:

Sales

11%

Male
23% Female
Prefer not to say
66%

pg. 52
6. What is your highest academic qualification?

Table 6:
Matric 7
Diploma 18
Degree 38
Post-Graduate 13
Others (please specify) 2

Graph 6:

2% 9%
17%
Matric

23% Diploma
Degree
Post-Graduate
Others (please specify)

49%

pg. 53
PART B:
Which of the following categories does your business belong to regarding e-commerce
status?
Table 7:
1) We have a Website that allows for advertising, detailed 16
display of company’s products & services, on-line
enquiry, on-line ordering and online transaction
processing (e.g. on-line sales and online payment all
through the Internet) and using emails as well.
2) We have a Website that allows for advertising, detailed 25
display of
company’s products & services, form-filling, on-line
enquiry/
booking/reservation and using email as well.
3) We have a simple Website for advertising purpose and 17
minimum
interaction using emails.
4) We use the emails only for business purpose in our 7
company (No company
Website).
5) We do not have emails and Website in our company 11

Graph 7:

Column1

15%
21% 1
9% 2
3
4
22% 5
33%

pg. 54
PART C:
What is your opinion or perception about doing business using internet and ecommerce?
Table 8:
Attributes Strongly Agree Disagree Strongly
Agree 2 3 Disagree
1 4
Having a website helps 29 43 4 1
us in advertising
products and services
around the world
A business website helps 29 41 5 1
us to provide a
better customer services
by giving quick and
latest information about
our products and
services
Using e-commerce 24 39 13 0
would increase
productivity and
employee performance
Using e-commerce 23 45 5 2
would save the company
time and effort
Many of our business 22 44 9 1
competitors are
already having websites
and internet for
doing business
Our customers/ trading 19 48 7 2
partners expect us to
have website or provide
e-commerce
facilities
Having a website and e- 26 41 7 1
commerce helps us
to compete better with
competitors
Our industry is 26 36 12 2
pressuring us to adopt
ecommerce
There is very little 19 44 10 3
knowledge how Internet
and e-commerce can help
to improve the
business and increase
sales

pg. 55
 The use of Internet and 20 44 9 2
e-commerce would
be more if we know
more about what it can
do for my business
We do not have the 13 46 12 5
technical knowledge and
skills to start using
Internet and electronic
commerce
There is a good 16 52 5 3
understanding about how
Internet and e-commerce
can be used to help
to improve business
profit

Graph 8:

pg. 56
CHAPTER 6: FINDINGS AND RECOMMENDATIONS

Findings:
• Majority of the businesses participated were retail, followed by service, wholesale and
catering.
• 25% of the responses were received from owners, while 35.5% were from owners and
managers from the SME sector.
• 30.3% of the respondents had an employee base of 21-50 employees in their companies,
28.9% had employee base of 11-20. Only a meagre 5.3% had their employees in
between numbers 51- 100 while 17.1% had their employee base more than 100.
• 65% of the respondents were male, 24% were females and the rest preferred not to say.
• 48.7% of the employees were educated with degrees, followed by 23.7% holding
diplomas and 15.8% with postgraduate degrees. Only a mere 9.2% had a matric level
education.
• 21.6% of the respondents have a Website that allows for advertising, detailed display
of company’s products & services, on-line enquiry, on-line ordering and online
transaction processing (e.g. on-line sales and online payment all through the Internet)
and using emails as well.
• 32.5% of the respondents have a Website that allows for advertising, detailed display
of company’s products & services, form-filling, on-line enquiry booking/reservation
and using email as well.
• 23% of the employees have a simple Website for advertising purpose and minimum
interaction using emails.
• A staggering 13.5% do not have emails and Website in their company.
• Except for a mere 4 or 5 respondents, everyone has either strongly agreed or agreed
with “Having a website helps us in advertising products and services around the world”,
“A business website helps us to provide a better customer services by giving quick and
latest information about our products and services”, “using e-commerce would save the
company time and effort”, “There is a good understanding about how Internet and e-
commerce can be used to help to improve business profit”.
• Although most respondents agreed to the following, there were many respondents in
the range of 6-20 who either disagreed or strongly disagreed to them. The views to
which they disagreed are “Using e-commerce would increase productivity and
employee performance”, “Many of our business competitors are already having
websites and internet for doing business”, “Our customers/ trading partners expect us
to have website or provide e-commerce facilities”, “Having a website and e-commerce
helps us to compete better with competitors”, “Our industry is pressuring us to adopt
ecommerce”, “There is very little knowledge how Internet and e-commerce can help to
improve the business and increase sales”, “The use of Internet and e-commerce would
be more if we know more about what it can do for my business”, “We do not have the
technical knowledge and skills to start using Internet and electronic commerce”.

pg. 57
 • 13 respondents disagreed that Using e-commerce would increase productivity and
employee performance. They do not believe that E-commerce has any part to play in
increasing productivity and employee performance.

Recommendations:

My recommendations to the Magento Commerce based on my 2-month internship would be as

follows:
• Magento should increase its marketing budget and have to maintain strong clientele
relationships as their services cost way more than the open source software.
• Magento as is acquired by Adobe now, should try to tap the existing clients of Adobe
and get them to buy the services of Magento Commerce.
• More number of employees must be taken in for marketing the company, as it is
relatively new in India. To keep up with the competitors, Magento must employ a
greater number of people who have good networking capacity and grow from there.
• They must take up interesting approaches to tap the clients by explaining the importance
of the need for going digital and how their services help in creating solutions to them.
• The potential customers must be made aware of the difference between open source
and Magento Commerce. The inefficiencies of open source and the benefits of having
customised and promising service must be the point of focus.
• A new service variety which is in the halfway meet to open source and Magento
Commerce must be created to cater to SME’s. A low cost version with benefits and
services which are sufficient for low scale operations of SME’s must be created to tap
into the Indian market to a wider extent.

pg. 58