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M.com Part 1 (Semester 2) E- COMMERCE Most Important Question Bank for Current Exam   Q.5. Highlight the challenges faced by e-commerce. ANS: A) Challenges for E-Commerce Firms 1) High rate of return of goods: E-commerce in India has many first time buyers. This means that they have not yet made up their mind about what to expect from e-commerce websites. As a result, buyers sometimes fall prey to hard sell (Instant placing order for goods by watching advertisement or offers). But by the time the product is actually delivered, they regret and return the goods. Though consumer regret is a global problem, but it is all the more prevalent in a country like India. Returns are expensive for e-commerce companies, as reverse logistics (returning a product to the manufacturer or distributor) create challenges. This becomes all the more complex in cross border e-commerce. 2) Cash on delivery is the preferred payment mode: Low credit card access and low trust in online transactions has led to cash on delivery being the preferred payment choice in India. Unlike electronic payments, manual cash collection is painstaking (be careful), risky, and expensive. Though considered good from buyer point of view but for e-commerce companies Cash on delivery (COD) mode of payment is regarded as a drawback. COD delays the payment to e-commerce company because buyer will pay when he or she will receive the product. It will then go to the courier companies which after 2-3 weeks give payment to the actual seller. In the meantime the e-commerce companies have to restock inventory. 3) Payment gateways have a high failure rate: Indian payment gateways have an unusually high failure rate by global standards. Ecommerce companies using Indian payment gateways are losing out on business, as several customers do not attempt making payment again after a transaction fails. 4) Problem of Internet Access: E-commerce shopping requires Internet facility to work. Nowadays, availability of internet connection is not a problem in metro cities. However, internet connectivity is very poor in many villages. Hence, these villages can be targeted only if they get better internet connectivity. 5) Technical Problems: E-commerce functions through the Internet due to which technical problems such as slow speed of Internet can occur. Sometimes, transactions are denied due to slow internet connectivity. There may also be chances of double payment due to repetitive clicks by users on the payment button. 6) Competition: Due to a variety of benefits offered by e-commerce industry such as global reach, high profitability, zero initial costs, etc. many firms are encouraged to undertake e-commerce business. This has led to increase in competition among the e-commerce marketers. Competition is leading to decrease in profitability due to reasons such as aggressive pricing strategies, heavy discounts and offers, free delivery, high commissions to affiliates and vendors during sale period etc. These firms are losing billions to attracting customers. 7) Poor logistic & supply chains: Underdeveloped logistics is one of the main hurdles in the development of e-commerce in India. Multinational carriers like DHL and Fed-Ex do operate in India but generally third party services are hired for the delivery in smaller cities. Many a time last mile deliveries are made by bicycle. Some of the large funded firms like Flipkart have established their own logistics departments for the delivery of goods ordered online. But huge investment in logistics is required to be done. 8) Other Challenges The start-up costs of the e-commerce portal are very high. The setup of the hardware and the software, the training cost of employees, the constant maintenance and upkeep are all quite expensive. Although it may seem like a sure thing, the e-commerce industry has a high risk of failure. Many companies riding the dot-com wave of the 2000s have failed miserably. The high risk of failure remains even today. At times, e-commerce can feel impersonal. So it lacks the warmth of an interpersonal relationship which is important for many brands and products. This lack of a personal touch can be a disadvantage for many types of services and products like interior designing or the jewelry business. Sometimes address is not found or buyer does not like the product the it has to send back to the company for restocking.   B) Challenges for Customers 1) Security Issue: E-commerce sites record crucial and sensitive details of customers such as name, phone number, address and bank details. Though many e-commerce firms try to make transactions over their websites secure through SSL (https) that encrypts the transferred information, still many cases of online password hacking has occurred. It has adversely affected the trust and confidence of customers about ecommerce shopping. 2) Inability to See and Feel Products before Purchase: Indian customers prefer to see, touch, smell or taste products before making purchase decisions. However, e-commerce does not facilitate this arrangement due to which its advantages are missing in this shopping option. Customers also have the impression that the products shown in pictures on website can be different from what they actually turn out to be after delivery. However, these days, many firms are adding real images and videos of models using these products on their websites, and also adding all possible information about products such as size, quantity, colours etc. for the convenience of customers. 3) Uncertainty about Quality: One of the biggest problems with buying things online is that customers may have no guarantee of a product’s quality. Reviews provided by other customers are not always helpful. Return policy of e-commerces firm is also not properly implemented, so customers face problems in returning products and getting refund or replacement for it. 4) Delay in Delivery: E-commerce firms can face the problem of shortage of manpower. This may result in delay in delivery of product to customers. In many cases, customers do not get delivery of products on promised date or time, which results in customer dissatisfaction.   If you want exam most important question bank pdf then you have to pay per subject 100/- rupees only .  Contact 8652719712