B2B TRADE BARRIER IN ELECTRONIC MARKET IN INDIA AND OPPORTUNITY FOR THE ORGANIZATIONAL BUYER AND RETAILERS.
This research article study Business to Business (B2B) trade barrier that the electronic market in India is experiencing i.e known as a hurdle to B2B, moreover it also describes how organizational buyers and retailers can be benefited from the current market situation.
According to a wallmart report in 2014, India’s B2B e-competence industry will grow to $700 billion by 2020 from $300. B2B is a type of a commerce transaction that exists between business such as those involving a manufacturer and wholesaler or wholesaler and retailer. On the contrary B2C (Business to Consumer) transaction in an electronic market is all time high, for instance, in 2014 the flipkart.com launched its “ Big Billion Day” whereas it sold 0.5 million mobiles online which was actually sold by the retailer who entered into a Business to Business contract with Flipkart . Such retailer sourced their product from either manufacturer or wholesaler from an electronic market in India to resale it through Flipkart.com.
Having said the fact that the B2B electronic market in India is emerging and it is on its way to create niche and mass market in a different segment, there are opportunity and benefits for the retailer and organizational buyer from the manufacturer and wholesaler.
BENEFITS AND ADVANTAGES
The increasing awareness of organizational buyer has the pressurized manufacturer and business supplier to increase and ease their supply chain management and reduce cost by the way of bulk manufacturing and installing efficient machinery that rewards business buyers as in decreased cost of an electronic product and fast delivery. Some manufacturer is also providing “dropship” facility whereas business buyer can easily book their order to manufacturer or wholesaler directly over the internet and the manufacturer then directly supply the order to the customer of a buyer. This process saves freight expenses and packaging time for the buyer. It is now noted that the manufacturer and wholesaler have set up customer care services and local repairing center in the most region of India, it is easy for the business buyer to sell their product confidently and even it motivate new entrepreneur joining electronic industry of India.
It is evident now that the online e-marketplace is growing ever than before. Business organization, manufacturer, retailers, dealer and wholesaler around the world have come together online and exchange their demand and supply requirement to reduce their cost and increase their efficiency in their niche market. Moreover, Banks have intermediate in such transaction by the way of issuing “letter of credit” so that transaction has protected both ways. It is also possible to share, compare quotes for the different product and sometimes getting a sample to test and try before actually buying the product. For instance, a leading Chinese company, Alibaba.com or Leading Indian company such as Indiamart.com provides such opportunity to meet all kind of business to business organization to achieve their profitability, service related or quality related goals by the way of online participation for business wholesale activities. On the other side, for example, “Apple” is a reputed brand who designed and modified its mobile in the United States, however, it sends its product to get manufactured in Brazil and get it assembled in China where it exports to different countries as per the demand. Hence, growing awareness about internet e-marketplace and online forum whereas business organization engaged in their requirement related conversation has increased an efficiency of the business organization itself.
Emerging electronic market segment has also provided a new opportunity to start-up entrepreneur to set up an online eCommerce website and sell their product throughout the world or sourcing their product from a business supplier from the online platform of wholesalers and sell it to the local market.
CHALLENGES AND HURDLES
However, the electronic B2B market is facing several hurdles and challenges that need to overcome by the way of implementing several standard practices of management. The government laws and regulation in import duty are the greatest hurdle that the manufacturer is facing as their import of electronic parts become expensive hence they are unable to compete with Chinese supplier who is relatively inexpensive. The increased cost of the product of Indian manufacturers ends up in a high-cost deal for the local buyer, hence they Indian manufacturer tends to approach international supplier for cost effective spare parts which increase the deficit in “balance of payment” which adversely affect the growth of the electronic market in India and its economy. There are also security issues such as electronic products design copyright infringement whereas Indian laws are ineffective compared to international law. It is fact that “MI” Mobile of China is extremely inexpensive compared to any Indian Mobile in terms of design, Feature and costs.
One of the greatest hurdle in the electronic segment is that the services after sale sometimes terribly go wrong or customer is properly not aware whom should they consult for after sale services in case they have found their product damaged or they are not satisfied with it. It is important that the original company should set up a proper service center in the city and if possible multiple service centers would add more comforts to the customer. However, one can learn from the example of flipkart.com who sells mobile and if the customer is not happy with the product, they get it replaced on the same day and they have their tie ups with all major cities’ local repairing center to maintain quality service in order to retain their customer.
Another challenge is for the illiterate people or people having no idea about the internet are not able to source competitive price advantage in the developing online B2B electronic marketplace. They found online marketplace complicated and sometimes they cannot even comply with the policy of online market platform service provider such as, Alibaba.com has strict verification process whereas a person needs to update with his business licenses but there are number of small business owner who does not have certain licenses or permission hence they cannot enter to such market and deprived of competitive advantage of price efficiency and quality product.
In a nutshell, We have observed significant growth in India’s business to business electronic market industry and their continuous interaction that may take this industry at next high level of digital market however it is important that government take active participation in trade related policy making and industry federation such as CII (Confederation of Indian Industry) that can direct government to make their import duty policy in favour of domestic market to improve local manufacture efficiency which will give positive cost effect and competitive advantage to local business and wholesaler as against other competitive businesses that are backed up by international fund and mass production capacity due to their multinational nature of operation.
When it comes to convincing organizational customers to buy a product from the b2b electronic marketplace, the B2B sale is certainly the bigger challenge. Impulse buying doesn’t exist, and clients require a clear understanding of each product’s specifications, profit potential, and the merchandising implications of adding it to their selection before making a purchase decision.
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