Challenges for Adoption of Digital Commerce in Retail

Online shopping in India is no longer a niche activity. Retail’s online penetration is projected to reach 14% by 2028, up from 8% in 2024, and the number of online shoppers is expected to climb past 300 million by 2030. Yet many retailers, especially small and mid-sized players, still find the shift to digital commerce harder than the headline numbers suggest. Setting up a website or listing on a marketplace is the easy part. Turning that presence into a profitable, integrated channel is where most stumble. Below are six major challenges that hold retailers back, along with what each one really demands.

Treating digital media as an afterthought 🔗

The first hurdle is mindset. Many retailers still see online sales and in-store sales as two separate worlds. They build a basic online presence mostly to make up for the limits of offline promotion, not as a channel that works alongside the store. The Internet and mobile become a noticeboard rather than a selling engine.

This split thinking weakens both branding and customer acquisition. A shopper who discovers a brand on Instagram, checks reviews on a phone, and finally walks into a store is following a single journey, not three disconnected ones. Industry leaders now argue that the real challenge is no longer adopting digital tools, but integrating them to drive measurable outcomes. Consumers move across online and offline at the same time, so a retailer who treats digital as a side project loses the chance to guide that journey.

What integration actually looks like 🔗

Integration means the online and offline channels share data, inventory, pricing, and messaging. A customer should be able to browse online, check whether an item is in stock at a nearby store, and complete the purchase wherever it suits them. When retailers achieve this, digital media becomes a tool for acquiring new customers and deepening loyalty, not just a digital flyer.

An incomplete and inconsistent product experience 🔗

The second challenge appears the moment a customer starts browsing. Many retailers do not feature all their products online. A shopper who cannot find the item they want simply assumes the retailer does not stock it and looks elsewhere. The store may have the product on its shelves, but if it is invisible online, it might as well not exist.

Consistency is the other half of the problem. Product images, descriptions, features, and prices often differ between the website, the app, and the marketplace listing. When information is patchy or contradictory, it reduces the shopper’s confidence and lowers the chance of a sale. Maintaining service and information consistency across platforms is repeatedly named as one of the toughest parts of running multiple channels.

Why product data quality matters so much 🔗

Online, the product page does the work that a salesperson does in a store. Clear images, accurate specifications, and complete details replace the ability to touch and inspect an item. If that information is thin or missing, the influence on the buying decision drops sharply. Retailers who invest in a complete, well-organised product catalogue across every channel give themselves a far better chance of converting interest into purchase.

The technology burden 🔗

Running a digital storefront is a technology business, and technology is rarely a retailer’s core skill. Managing websites, apps, inventory systems, and customer databases requires both capital investment and technical knowledge that many retailers do not have in-house. The cost of building and maintaining these systems can be a real barrier, particularly for smaller stores.

A common and expensive failure is fragmentation. Many retailers continue to operate on disconnected systems where inventory, CRM, point-of-sale, and e-commerce platforms function in silos. Without integration, real-time stock visibility is low, leading to fulfilment errors and frustrated customers. Academic research on Indian retail confirms that smaller retailers often find it difficult to invest in new technology because of its high cost, and suggests practical routes such as affordable cloud-based services, technology-sharing programmes, and prioritising tools with the best return on investment.

Government infrastructure as a workaround 🔗

One response to the technology burden is shared public infrastructure. The Open Network for Digital Commerce (ONDC), launched by the Commerce and Industry Ministry, is designed to help small retailers use digital commerce without building everything themselves. By promoting open, interoperable standards for cataloguing, order management, and fulfilment, it lowers the technical and financial entry barrier for businesses that cannot afford a full custom platform.

Payment complexity 🔗

The fourth challenge is arranging payment options that are both flexible for the customer and affordable for the business. India has a wide range of payment preferences, from UPI and cards to wallets and cash. Offering all of them, securely and at a reasonable cost, is not simple. Retailers also have to protect payment security and customer data while keeping checkout fast and smooth, which is a constant balancing act.

Digital payments have grown rapidly, supported by reforms such as UPI, which has made online transactions far easier than they were a decade ago. Even so, a large share of Indian shoppers still prefer cash on delivery because it feels safe and familiar. That preference creates a knock-on set of problems that fall mostly on the retailer and the logistics partner rather than the buyer.

Logistics and the cash-on-delivery tangle 🔗

Getting products to customers reliably and cheaply is the fifth challenge, and cash on delivery (COD) makes it considerably harder. With COD, the logistics partner must collect payment at the doorstep and then remit it to the retailer, which adds reconciliation work and delays the retailer’s cash flow. Managing this collected cash and matching it against delivery records is tedious and costly, especially at high volumes.

The bigger problem is returns. COD orders carry much higher rejection rates than prepaid orders because customers can refuse a delivery with no financial commitment. Handling these returns requires efficient reverse logistics, including processing returned items, restocking, and managing refunds, and every refused order means the retailer pays for both the forward and the return journey. Reports indicate that return rates in fashion can reach 30-35% and COD rejections sit near 26%, with inefficient reverse logistics costing up to 1.5 times more than the original delivery. For a small retailer, these costs can quietly erase the margin on every sale.

Reaching beyond the metros 🔗

Logistics also struggle with geography. COD and reliable delivery are easy to arrange in metro and Tier 1 cities but become difficult in Tier 2, Tier 3, and remote locations where courier coverage thins out. Since much of India’s future online growth is expected to come from smaller towns, retailers who cannot serve these areas affordably will miss the most promising part of the market.

Poor product discovery and losing customers to competitors 🔗

The final challenge ties the others together. Shoppers want to find products and offers quickly. If a customer searches for a retailer online and instead lands on a competitor, or finds a poor, confusing, or incomplete page, the result is often not just a lost sale but a lost customer altogether. A bad first impression online can mean that person never does business with the retailer again, in store or online.

This is a high-stakes problem because competition is fierce. Research using behavioural reasoning theory on nearly 1,400 Indian omnichannel shoppers found that the attractiveness of competing alternatives and concerns over delivery timeliness are key deterrents to shopping with a traditional retailer’s digital storefront. In other words, large e-commerce players are only a click away, and they set the standard for speed and convenience. A retailer whose online experience is slower, harder to navigate, or less complete will struggle to hold attention.

Discoverability is a competitive necessity 🔗

Strong product discovery depends on being easy to find through search, having clear and complete listings, and presenting offers in a way that matches what shoppers expect. Initiatives like ONDC aim to give small businesses, including kirana stores, access to national supply chains through features such as AI-driven cataloguing and multilingual interfaces, helping them compete on discoverability rather than being squeezed out by larger platforms.

Bringing the challenges together 🔗

None of these six challenges stands alone. Weak digital media strategy leads to poor discovery. Incomplete catalogues and technology silos produce inconsistent experiences. Payment preferences shape logistics costs, and logistics failures damage the customer impression that determines whether a shopper ever returns. Retailers who treat digital commerce as a connected system, rather than a set of separate problems, are far better placed to turn India’s online growth into real, sustainable sales. Shared infrastructure, affordable cloud tools, and a relentless focus on a complete and consistent customer experience are the practical ways forward.

What do you think? If you were running a mid-sized retail store, which of these six challenges would you tackle first, and why? And do you believe shared public infrastructure like ONDC can truly level the playing field against the largest e-commerce platforms?

References

1. https://www.ibef.org/industry/ecommerce-presentation
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3. https://www.fibre2fashion.com/industry-article/10434/omni-channel-fashion-retailing-in-india-the-future-of-seamless-shopping
4. https://ciiblog.in/growth-of-omnichannel-retail-in-india/
5. https://www.sciencedirect.com/science/article/abs/pii/S0969698924003436
6. https://www.ibef.org/news/ondc-provides-huge-growth-opportunities-for-financial-services-manufacturing-e-commerce-and-agri-sectors-deloitte
7. https://razorpay.com/learn/cash-on-delivery-meaning/
8. https://www.whalesbook.com/news/English/industrial-goodsservices/India-Retail-Loses-indian-rupee2000-Crore-Yearly-to-Slow-Logistics/69ce040169ec081354dc4e5e
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