E-Commerce started in India in the year 1999, when internet was available only at limited places and to few. Today, however, internet is available almost everywhere in India. Increasing number of internet users has led to increase in e-commerce activities, thus becoming an important part of retailing today. We have seen many key players in e-commerce like indiaplaza.in, flipkart, myntra to name a few and many more are coming up due to low investment & high returns, thus making e-retailing a competitive business today. Like many or most of the business, e-retailing also has to face many challenges and risks.
Sourcing: E-Retailing depends wholly on suppliers, partners and vendors. One of the risks involved is unavailability of suppliers, partners and vendors of the products and services. Any uncertainty, reluctance or concerns from the suppliers can be a risk to the business. Hence, dedicated in-house teams that constantly explores, observes and evaluate suppliers for new and existing products in various regions has become a common practice.
Distribution: When strategic partner fails to deliver service or product in certain areas, this becomes another challenge for the business. Since, delivering the service and products in the desired timeframe cannot be guaranteed; many businesses have opted for in-house courier services or distribution services. However, this includes additional resources and cost is involved. Even a single order needs to be delivered on time, thus flexibility of clubbing multiple orders may not work, as orders comes from different part or regions. Most of the e-retailers don’t have a physical store or warehouse; hence, managing the demand and availability of stocks with the suppliers and distribution channels becomes a major concern for the business. They have to manage this effectively to remain competitive in the market.
Scalability: The potential for a e-retailing business or aspects of a e-retailer to continue to function effectively, as its business increases, can be affected by competition & inability to increase varieties of product and services. Many e-retailers offer same services or products, thus it becomes exceedingly important to differentiate one from the other competitors. E-retailers have to stay ahead of the customers and competitors in bringing change of what all can be bought from web-sites.
Quality: Quality control & delivery of products and services on time are two major challenges the e-retailers face today. Online customers are spread across regions, service levels are promised to each customer are same regardless of the customers location. Since, customers cannot evaluate products or services physically; they trust e-retailers for the authencity and quality, especially in case of branded products. Also, the courier company needs to deliver on time, undamaged products. A lapse in quality controls and delivery can lead customer dissatisfaction. Incase a wrong product is getting delivered, the e-retailer needs to be very professional, as it becomes important to retain the customer, for which flawless return policy becomes critical for sustaining the customer.
Payment: A single failed transaction or incorrect transaction can leave a negative impact on a customer. Therefore, it becomes necessary that all steps are taken to ensure smooth transaction on the web-sites. Further, there are risk of fraud and theft, for which the e-retailer needs to have a complete security system and checks.
IT & Security: The web-site downtimes, maintenance, new technologies, security of customer’s personal information are some of the IT & Information security risk that the e-retailers need to face.
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