Traditional Commerce v/s E-commerce and Impact of Demonetization on E-commerce

This paper examines the comparison between traditional commerce and e-commerce, as well as the impact of demonetization on e-commerce. It discusses the advantages and disadvantages of both forms of commerce and analyzes the effects of demonetization on consumer behavior in online shopping.

www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
136 Copyright © 2018. IJEMR. All Rights Reserved.
Volume-8, Issue-2, April 2018
International Journal of Engineering and Management Research
Page Number: 136-142
DOI: doi.org/10.31033/ijemr.v8i02.11601
Traditional Commerce v/s E-commerce and Impact of Demonetization on
E-commerce
Dinesh Chand Gupta1, Prof. Meenakshi Bindal2, Naman Agarwal3 and Kratika Khandelwal4
1Assistant Professor, Department of Management Studies, Modern Institute of Technology and Research Centre, Alwar,
Rajasthan, INDIA
2Professor, Department of Management Studies, Modern Institute of Technology and Research Centre, Alwar, Rajasthan,
INDIA
3Student, Department of Mechanical Engineering, Modern Institute of Technology and Research Centre, Alwar, Rajasthan,
INDIA
4Student, Department of Management Studies, Modern Institute of Technology and Research Centre, Alwar, Rajasthan, INDIA
1Corresponding Author: [e-mail]
ABSTRACT
The accompanying paper looks at a join
investigation of electronic business or web based business and
customary Commerce and impact of demonetization on web
based business. Electronic trade is procedure of working
together through PC systems. A man sitting on his seat before
a PC or portable can get to every one of the offices of the web
to purchase or offer the items. Not at all like conventional
business that is completed physically with exertion of a man
to go and get items, internet business has made it simpler for
human to diminish physical work and to spare time. Online
business which was begun in mid 1990's has taken an
incredible jump in the realm of PCs, however the way that
has prevented the development of web based business is
security. Security is the test confronting internet business
today and there is still a great deal of progression made in the
field of security. Government pulled the old RS. 500 and RS.
1000 notes unavailable for general use. While the exceptional
move made by the Prime Minister Narendra Modi has
affected web based business and in the meantime it affects the
purchasers and their shopping conduct through web based
shopping. Along these lines it ends up important to ponder
the effect of demonetization on web based business industry.
The fundamental point of the examination is to comprehend
and break down the impact of demonetization on purchaser's
recurrence of purchasing item and shopper's method of
installment mode through internet shopping post
demonetization.
Keywords-- E-commerce, Traditional, Comparison,
Survey, demonetization
I. INTRODUCTION
As the internet is growing exponentially,
companies are trying to attract buyers through it by selling
their products online. The e-commerce has grown to such
an extent that it attracts almost 80% of Indian population.
The main reason is because of availability of different
products, discount, less time and effort consuming,
reaching to large number of people in lesser amount of
time.
II. REVIEW OF LITERATURE
According to a statement by Amrish Rau, CEO
of PayU India “Around 40 per cent of COD was driven by
black money according to a study done two years ago.”
Demonetization cracked down the whip on black money
forcing people to go digital. In fact, the first 2 months after
Demonetization did see a decline in e-commerce growth in
India as there was a reduction in sales. The cash crunch
and cap on ATM withdrawal limits affected the buying
capacity of majority of consumers, especially customers in
tier-2 and tier-3 cities who are used to the payment mode
of COD. Some of the online retailers had to temporarily
suspend their COD payment option. Redseer Management,
a research and advisory firm, projected in August 2016
that the e-commerce industry in India would see a growth
of $79.41 billion by 2020. But Demonetization managed to
upset the numbers and the growth for 2020 is currently
pegged at $47.45 billion.

www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
137 Copyright © 2018. IJEMR. All Rights Reserved.
Paytm, one among the biggest players in the
mobile wallet space revealed that it served 45 million
customers within 3 weeks after Demonetization.
Transactions via RuPay cards have also increased
suggesting that more JanDhan account holders have started
using debit cards for online transactions. “We saw an
initial decline in transactions for the 1st 10 days of
Demonetization, however the transactions started getting
back to normal from 1st week of December. As of
February, we see a steady increase in transactions as well
as online payments” as mentioned by Vikash Khetan,
Founder Of CouponzGuru (A coupons and deals
aggregator in India)
Traditional commerce-Traditional commerce
refers to the practice of selling products and services
within a single industry and in some cases, within a
specific geographical area. Traditional commerce relies on
operating business hours during a specific period of time
and requires housing inventory or occupying a retail store.
Traditional commerce often relies on face to face
interaction with consumers and thrives based on word of
mouth, networking and customer referrals for new and
repeat business.
Advantages
1. Easy availability of products-All the required products
which are important for daily routine can easily be
obtained from the nearby stores and can be purchased
easily.
2. Easy to approach- Less complications are concerned
with traditional market. All that is to be done by the buyer
is to visit the store of choice with a mode of payment.
3. Personal contact- Personal relationship increases as
there is direct interaction between the customer and the
retailer.
4. Preferable option for backward area- Due to
unavailability of modern technology in backward areas;
people who live there choose to buy products in traditional
way.
5. Regional products- Popular products of a particular
area are easily available in traditional market.
6. Visibility of products- Consumers can actually touch
and see the products they have chosen to buy until they are
fully satisfied about the quality and quantity as well.
7. Credit availability-Since personal relationship and trust
is usually built between consumer and retailer; it is
possible to buy products on credit in case of shortage of
money.
8. Suitable for every social structure- Anyone, educated,
undereducated or uneducated, can start business in a
traditional market.
9. Perishable goods-Goods which are consumed in a
shorter period of time (milk, fruits, vegetables, sweets) are
available in traditional market.
Disadvantages
1. Limited geographical area- Due to complex structure
of cities, there is limited space provided for market
activities.
2. Less variety of products- As most of the retailers only
sell popular or more marginal products, it is difficult to
obtain different variety of products.
3. Time consuming and exhausting process-A lot of time
and effort is required for actually going to the market and
buying products which makes the purchase a time
consuming and exhausting process.
4. Time bounded- A considerable amount of time is
required in order to buy products, so time management
becomes a rather important aspect to bring traditional
market under consideration for the purchase.
5. Higher cost- As a hierarchy is involved in traditional
market, the cost of productsis increased.
6. Weather dependent- The buying and selling of
products depend on the weather, so market activities are
difficult to execute in extreme weather.
7. Lack of global product- Since retailers sell biased
products, global products are difficult to obtain in
traditional market.
8. Limited mode of payment- Most of the retailers prefer
cash over any other modes of payment. So, options for
payment are limited for the consumer.
9. More corruption- Most of the retailers sell their
products without generating proper bills and they do not
pay any tax on the product which ultimately increases
corruption. This brings reduction in the economic
development.
E-commerce - Electronic commerce (e-
commerce) is the marketing, buying and selling of
merchandise or services over the Internet. It envelops the
whole extent of online item and administration deals all the
way. Internet business devices incorporate PC stages,
applications, arrangements, servers and different
programming positions produced by web based business
specialist co-ops and obtained by shippers to increment
online deals [2].
Commerce facilitates the growth of online
business. It is categorized as follows:
 Online marketing
 Online advertising
 Online sales
 Product delivery
 Product service
 Online billing
 Online payment

www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
138 Copyright © 2018. IJEMR. All Rights Reserved.
Fig. 1 Process of e-commerce [3].
Fig. 1 shows the process in which a product a
product reach home, right from the buying of product to
shipping, delivery of it.
Timeline
1994 - Sting CD the very first purchase of e-commerce.
1995 - Jeff Bezoes launches Amazon.com.
- Pierre Omidyar starts eBay.com.
1996- Indiamart, launch of an Indian online marketplace.
1997 – Launch of Netflix
1998 – Conifity was founded which leads to the launch of
PayPal
1999- Alibaba.com was launched.
2000- Walmart launches its website for online shopping.
2002 – Start of Google shopping.
- eBay.com acquires PayPal for $1.5 billion.
2005- Amazon launches prime service.
2006 – Facebook Start selling advertisements.
2007 – Flipkart was launched.
2009 – Launch of a popular cryptocurrency BITCOIN.
2013 – China becomes world’s largest ecommerce market.
2015- Singles' Day sales on Alibaba sites reach US$14.3
billion.
2016- Singles' Day sales on Alibaba sites reach US$17.7
billion.
Advantages
1. Lower cost- Products can be ordered at any place which
reduce the transportation cost. For selling purpose, renting
or buying a shop is not a necessity. It can be done from
one’s home only.
2. Less time consuming-With the help of e-commerce, all
products are available at one place and in just a few clicks
which saves a lot of time of the consumer.
3. Suitable for startup-To start a business, loads of
investment is needed but in e-commerce, less amount of
money is required which is suitable for every class of
society.
4. No geographical restrictions- There is a free entry and
exits. Restriction in e-commerce is less as compare to
other.
5. 24x7 product availability- No specific time period is
defined in e-commerce. Services are usually available at
any time that pleases the consumer.
6. Variety of option for similar product-due to increase
in the competition in the market every product has a
similar substitute product. Which is not possible for the
seller to keep all of them, but with the help of e-commerce
many competitor sales their product at one place which
increase the variety of the product.
7. Delivery at door step- The ordered products are
delivered at the consumer’s house.
8. More discount- Due to reduction in intermediates, the
cost of products also reduces which help the producer to
sell their products at a lower cost by providing higher
discount.
9. Easy to advertise-with the help of internet producer can
easily promote their product on internet by providing all
the information of the product. All the information is
available regarding the product so customer can easily find
their product, which help the consumer to increase the
satisfaction.
10. Employment opportunities- From the starting point
(placing the order) to the ending point (delivery of the
product), a lot of manpower is needed. E-commerce helps
to reducing unemployment.
11. Less corruption-In e-commerce, chances of
corruption is nearly nil. All the purchases done, comes
with proper bills and the suitable taxes are paid, hence
developing the economy.
12. E-payment options-A variety of modes of payment is
available for the consumer making the purchase more
consumer-friendly.
13. Return and replacement policy- Better return and
replacement policies are available for the consumer. If the
consumer is not satisfied with the product which is
delivered, they can return or replace the product within a
certain time period.
14. Product description-for buying any product there is a
requirement of information regarding the product and their
substitute product which help the consumer to find the best
suitable product for them. E-commerce help to supply the
information regarding the product.
15. Systematic process-The processes involved in e-
commerce are quite systematic from placing the order till
the delivery.
Disadvantages
1. Less visualization-Since the products being purchased
are seen on just a screen and not in reality, the consumer is
usually in doubt about the product.
2. Harder to deliver to backward areas- Delivery of
products in rural areas is comparatively more difficult than
it is in urban areas since the routes are not proper.

www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
139 Copyright © 2018. IJEMR. All Rights Reserved.
3. Unavailability of regional products- Many regional
products are not available at commercial e-commerce.
4. Security and privacy breach- For online transfer of
money, customers have to fill many debit card and credit
card details and there is always a risk of information to be
leaked.
5. Impersonal contact- There is lack of personal contact
between seller and buyer, because many people do not buy
product without any personal contact between seller and
buyer.
6. Additional cost of delivery – Most of the times, seller
charges additional cost for the delivery of the product
which increase the cost of the product.
Comparison between traditional market and e-
commerce [4]
Table 1
Table 1 shows a direct comparison between
traditional market and e-commerce. And, shows how the e-
commerce market is better than the traditional market due
to its advantages over the traditional market.
Future of e-commerce-From hailing a cab to
ordering food, from buying pre-owned kids’ clothing to
procuring services online, we have seen how cheaper
connectivity and growing penetration of smartphones can
transform businesses and lives. This statistic provides the
retail e-commerce volume in India from 2016 to 2022.
India is one of the quickest developing web based business
markets around the world, with a great many new web
clients exploiting shabby portable associations with send
versatile messages, watch online recordings, utilize
portable administrations, and obviously, to shop. Starting
at 2015, just 26 percent of the nearby populace was
utilizing the web; right around ten times the group of
onlookers measure from 10 years earlier. As indicated by
late statistical surveying, cell phone web client infiltration
in India is anticipated to achieve 37.36 percent of the
populace in 2021, speaking to a tremendous potential as
far as computerized and versatile purchaser group of
onlookers. Add up to web crowds in India are evaluated to
outperform 635 million online clients in 2021.
III. RESEARCH METHODOLOGY
Sources of Date: Primary data has been collected
directly from the consumers by communicating with them
through interview and observation method.
The secondary data was collected from newspapers,
books, magazines and internet sources.
Limitation of the study: 1. The sample size is
limited to 60 respondents therefore; the result of the study
cannot be considered as universal.
2. Findings of the research are based on the assumption
that the respondents have given correct information.
3. The study was conducted only in Alwar city hence,
various other potential samples outside city were not
considered.
Survey
Method of surveying
To obtain the knowledge of people’s preferences
towards both the markers, an online survey was conducted
among people. Social media platforms were used to reach
different sectors in order to know their attitude towards the
“E-commerce”. The data collected and recorded are in
“percentage format” and to obtain the following
information as many as 60 people participated in the
survey.
The study was conducted for the following objectives
 Platform preferred for shopping.
 Purchasing of same product on both platforms.
 Online shopping delivery satisfaction.
 People who have used e-commerce website in
their lives.
 Platform which gives more description for same
product.
 Growth of ecommerce in upcoming days.
Data Analysis
The following data were obtained after survey. 60
people participated in the following online survey.
Platform preferred for shopping
Table 2
Response Percentage of Respondents
(%)
E-commerce 61.66
Traditional market 38.34

www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
140 Copyright © 2018. IJEMR. All Rights Reserved.
Chart 1
The above pie- chart shows that there is about
61.66% of people who prefer e-commerce over traditional
market because of the following reasons:
 Overcome Geographical Limitations
 Gain New Customers with Search Engine
Visibility
 Lower Costs
 Locate the Product Quicker
 Eliminates Travel Time and Cost
 Provide Comparison Shopping
 Enable Deals, Bargains, Coupons, and Group
Buying
 Provide Abundant Information
 Create Targeted Communication
 Remain Open All the Time
Purchasing of same product on both platforms.
Table 3
Response Percentage of Respondents
(%)
E-commerce 68%
Traditional 32%
Chart 2
This study shows that if the product is same in
online and offline then, nearly 68% of population prefers
buying the product from online as it save time and
transportation cost, and provide a lot of information of the
same product.
Online shopping delivery satisfaction
Table 4
Response Percentage of
Respondents (%)
Satisfied 79%
Not Satisfied 21%
Chart 3
This study clearly tells the satisfied number of
customer. nearly 79% of the people satisfied with the
product because e-shopping sites provide easy return and
replacement policy, and fast delivery option like one day
etc.
People who have used e-commerce website in their lives
Table 5
Response Percentage of Respondents
(%)
Purchased 98%
Not Purchased 2%
Chart 4
62%
38%
RESULTS
E-commerce
Trditional Market
68%
32%
Results
E-commerce Traditional
79%
21%
Results
Satisfied Not Satisfied
98%
2%
Results
Purchased
Never Purchased

www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
141 Copyright © 2018. IJEMR. All Rights Reserved.
This study shows that the only 2% of the people
who did not purchase product from online site and 98%
people who purchased product from online sites, because
online sites provide a lot of benefits to the customer like
heavy discount, free home delivery, product information.
Platform which gives more description for same product
Table 6
Response Percentage of Respondents
(%)
E-commerce 90%
Traditional 10%
Chart 5
This study shows that, nearly 90% platform gives
more product description of same product and provide
substitute product and their information which provide
customer a lot of benefits and help them to select right
choice of product.
Growth of ecommerce in upcoming days
Table 7
Response Percentage of Respondents
(%)
Increase 57%
Decrease 13%
Not Sure 30%
Chart 6
This study shows that nearly 57% of the people
think that e-commerce will grow in upcoming year,
because increase the growth of internet will definitely
increase the e-commerce, and only 13% people think that
e-commerce will decrease, and 30% of people are not sure
about the growth.
Demonetization-in 2016, the Indian government
chose to demonetize the 500-and 1000-rupee takes note of,
the two greatest groups in its money framework; these
notes represented 86% of the nation's circling money. With
small cautioning, India's Prime Minister Narendra Modi
reported to the citizenry on Nov. 8 that those notes were
useless, from this point forward – and they had until the
finish of the year to store or trade them for recently
presented 2000 rupee and 500 rupee bills.
IV. IMPACT OF DEMONETIZATION
ON E-COMMERCE
1. Reduce corruption- 80% of the payment done by
the people is cash on delivery which increase the
rate of corruption through paying black money,
but after the demonetization above 50% payments
are done though e-banking hence demonetization
cracked down the whip on black money forcing
people to go online [5].
2. Growth of e-commerce after demonetization-at an
initial stage there was decline in the sale ofe-
commerce. Demonetization aims at pushing
consumers towards making digital payments,
thereby contributing to a cashless economy. NITI
Aayog published a report on the growth of digital
payments in India post-demonetization.
According to this report, digital payments have
seen a whopping surge of 271 per cent in the very
first month following demonetization. The
number of mobile wallet transactions has
increased to 63 lakhs from 17 lakhs. Paytm, one
among the biggest players in the mobile wallet
space revealed that it served 45 million customers
within 3 weeks after demonetization.
Transactions via Rupay cards have also increased
suggesting that more JanDhan account holders
have started using debit cards for online
transactions.
3. Increase online transaction in small city- almost
all the payment made by the small city are in the
form of cash or cheque, but after the
demonetization payment done by the small city
has change. According to the company’s chief
executive Rajeev Agrawal digital transactions
have seen a 150 per cent growth in tier-2 cities
and 157 per cent growth in tier-3 cities.
Demonetization has caused an increase in digital
transactions at these places by almost one-and-a-
quarter times when compared to big cities. Now
90%
10%
Results
E-commerce
57%
13%
30%
Results
Increase

www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
142 Copyright © 2018. IJEMR. All Rights Reserved.
smaller cities also aware about the benefit of e-
payment and also avail the discount.
4. Increase online payment-after the demonetisation
keeping cash is not very important.it increase the
value of online payment app,for e.g paytm by
39%,freecharge by 26%,mobikwik by 17%, my
airtel by 10% pockets by icici by 4% etc.
5. Go cashless for any payment- it helps the
customer to pay their mobile bill, electricity bill
in just one click without going to that place and
wait for their turn. Online retail provides a lots of
benefit to the customer for cashless
payments.This will increase the number payment
though e-banking rather than cash on delivery For
avail the dicount benefits. Which helping the e-
commerce businesses to retain a reasonable cash
flow [6].
V. CONCLUSION
1. E-commerce will have great future in India.
2. With compare to traditional commerce, e-
commerce is more preferable by customer.
3. In some case future of e-commerce is not certain,
but delivery time will defiantly improve in near
future.
4. From the inception of the internet and e-
commerce, the possibility has become endless for
both businesses and consumers. This will increase
more profit for business man and increase choice
for customer.
5. The present study has brought new dimensions
and ideas to understand the online consumer
behavior and increase the market potential of
online shopping in India [7].
6. Online shopping is a new experience and has
greatly impacted the lives of consumers in its
short time of existence. It is expected to grow
constantly in years to come with advancements in
technology. Online shopping has made consumers
more effective and efficient in their shopping
behavior and has driven businesses to a new level,
forcing many to make the necessary adjustments
and changes to reach the new market of
knowledgeable consumers.
7. Rapid growth of e-commerce has resulted in a E-
transformation in the global retail infrastructure.
Internet has emerged as a cost-effective means of
doing business.
REFERENCE
[1] https://www.reference.com/world-view/traditional-
commerce-1799feed9389d105#
[2] https://www.techopedia.com/definition/351/electronic-
commerce-e-commerce
[3] https://www.scottish-enterprise.com/knowledge-
hub/articles/comment/scottish-ecommerce-trends
[4] https://keydifferences.com/difference-between-
traditional-commerce-and-e-commerce.html
[5]
https://www.deccanchronicle.com/business/economy/0303
17/impact-of-demonetisation-on-e-commerce.html
[6] http://www.digitalvidya.com/blog/demonetization-
effects-on-ecommerce-online-payments
[7]
http://shodhganga.inflibnet.ac.in/bitstream/10603/13562/1
6/16_chapter%209.pdf
[8] http://www.dnaindia.com/money/report-80-people-in-
india-prefer-to-buy-online-yahoo-mindshare-survey-
2214579