IMPACT OF ELECTRONIC COMMERCE (E-COMMERCE) ON NIGERIA ECONOMY; A CASE STUDY OF KONGA.COM AND JUMIA.COM.

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No of Pages: 68

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                                            Abstract

This study examines the impact of E-commerce on Nigerian economic growth: a case study of jumia and konga. Nigeria has continued to evolve in different realms. The economy is being reformed, the institutions are being reshaped and legislations are being re-examined so as to reposition the nation to take its rightful position in the international community. As a way of fast-tracking the Nigerian economy so as to be among the first 20 world economies come 2020, Nigeria has joined other developing economy in 2012 to adopt the E-commerce system. The research objectives were set to determine the degree of the relationship between E-commerce and Nigerian economy and the trend in E-commerce in Nigeria. Three research questions were formulated in line with the research objectives. Carrying out the study the researcher adopted descriptive survey research design in order to make use of primary data using questionnaire as an instrument for data collection. The questionnaires were distributed to a sample size of 310 respondents randomly selected and the data collected were analyzed and the two hypotheses formulated were tested using non-parametric tool of chi square to determine the relationship and the impact of E-commerce on Nigerian economic growth; A case study of Jumia and Konga. The result of the findings have shown that E-commerce has positive relationship with an effect on Nigerian economy but it would require huge amount of capital on technology and other facilities needed for smooth operation of the policy. The researcher therefore recommended that there should be need for government and owners of E-commerce should make concerted efforts to design an internet security framework to check online fraud, e-payment facilities, securities, steady power supply and adequate enlightenment of people on the benefits and proper usage of the system for effective implementation of the policy in order to ensure economic growth and development in Nigeria otherwise there would be economic decline.

 

 

 

TABLE OF CONTENTS

 

CHAPTER ONE: INTRODUCTION                                                    1

1.1       Background to the Study                                                         1

1.2       Statement of the Problem                                                         7

1.3       Objectives of the Study                                                                      8

1.4       Research Questions                                                                 8

1.5       Research Hypothesis                                                              8

1.6       Significance of the Study                                                         9

1.7       Scope and Limitation of the Study                                           10

 

CHAPTER TWO: LITERATURE REVIEW                            

2.1.      Review of Related Literature                                                   11

2.2.      Conceptual Framework                                                                        13

2.2.1    Customer Satisfaction                                                              16

2.2.2    Challenges of E-Commerce Implementation in Nigeria              19

2.2.3    Prospects of E-commerce                                                       21

2.2.3    Relative Rationale and Impact of a e-commerce                  24

2.3       Theoretical Review                                                                  26

2.3.1.   Rogers’ Diffusion Theory                                                       26

2.4       Empirical Review                                                                    30

2.5       Summary Literature review                                                      33


CHAPTER THREE: RESEARCH METHODOLOGY                         

3.1       Research Design                                                                     34

3.2       Method of Data analysis                                                                      34

3.3       Sampling and Sampling Procedures                                         35

3.4       Instrument for Data Collection                                                           36

3.5       Validity and Reliability of the Instrument.                               36

3.6       Sources of Data                                                                                   36

3.7       Method of Data Analysis                                                        37

 

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1       Introduction                                                                             38

4.2       Data Presentation                                                                     38


CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION           

5.0.      Introduction                                                                             56

5.1.      Summary of Major Findings                                                    56

5.2.      Conclusion                                                                              60

5.3       Recommendation                                                                     61

5.4.      Suggestion for further Studies                                                  64

REFERENCES                                                                                     65

APPENDIX I                                                                                       67








 

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The rapid development in Information and Communication Technology (ICT) has created a lot of opportunities in scientific innovation, industries and economic revolution particular in area of electronic commerce or e-commerce. As a matter of fact, it has proven to be a vibrant source of economic growth in developed economies like the U.S.A, U.K and more recently the Asia Countries.

Interestingly, e-commerce is now being witnessed in Africa particularly in Nigeria, Kenya and South Africa. This has created a lot of opportunities in Economic growth and development in Nigeria.

Globalization and the growth in new technological developments has commenced a new era of e-commerce which In recent time, there has  been a great  shift in literature among scholars concerning the use of Information and Communication Technologies (ICT) towards economic growth and development (Javier,etal.,2011). However, E-commerce is defined by Tito (2014) as business carried out over the Internet.  It could be purchasing or selling, or a mix of both. It could be product, service or a mix of both. E-Commerce is an improvement which has developed in parallel to the development of communication and computer technologies. It has the potential and capabilities for revolutionizing the whole structure of retail selling and shopping (Ikemelu, 2012). Despite the fact that it is a new concept, it does not just suggest an alternative to the conventional commerce. The potential benefits and importance derived from the adoption of ICT in businesses have been pointed out in a wide variety of contexts, including commerce, health, education to mention only but few. Many business practices have been altered due rapid development and popularity of information technology. Today, with the aid of information and modern communication technologies, consumers are able to shop via the Internet using several Social Media network and different websites (Toomey & Wysocki, 2005). This type of shopping mode can come in several names such as; online shopping, online buying behavior and Internet shopping. Konga (http://www.konga.com/) and jumia  (http://www.jumia.com/) are similar e-commerce websites.

Konga is a Nigerian electronic commerce organization founded in 2012 with headquarters in Ikeja, Lagos State. It offers an outsider online marketplace, and also first party direct retail spreading over different categories including consumer electronics, fashion, home appliances, books, children's items, and personal care products. Konga was founded in July 2012 by Sim Shagaya, with 20 staff (Financial - Times, 2015). Generally, Konga Nigeria is likewise one of the today's Nigerian one-stop online retail shops offering a wide selection of products including Mobile Phones, Computers, Electronics, Home Appliances, Toys, Books, Wears and numerous more similarly as Jumia, conveying them ideal to customers' doorstep. Konga is an indirect competitor to Jumia in four categories and currently only delivers to Lagos. It likewise offers a wide selection of styles and brands, 100% convenience with every minute of every day online access from home or office, secure payment, for example, Bank Deposit/Online banking and Cash on Delivery, exceptional customer care service, Fast next – day or few days delivery and parcels more. Konga can additionally be followed up via web – based networking media like Facebook, Twitter, and Youtube.

Jumia Group is a company which operates a range of online marketplaces. The company was founded by Jeremy Hodara and Sacha Poignonnec in 2013. Its headquarters is currently in Yaba area of Lagos, Nigeria. The company initially started out as the Rocket Internet Company. However, the rapid growth of the company allowed it to secure strategic investors, including CDC, Goldman Sachs, Orange, MTN and the Millicom group. On June 23, 2016, Africa Internet Group (AIG), Jumia Market’s parent company announced that it was bringing all its known e-commerce companies under the Jumia umbrella.

Shopping mode refers to the process of purchasing and buying products or services via the Internet using several Social Media and different websites (Li & Zhang, 2002). Online shopping is a new trend of trade that emerged as a result of the overbearing usefulness of the internet as an information dissemination tool or platform. The sharp increase of Internet usage, as well as, the systematic progress of Information Technology has transformed the way goods are bought and sold, resulting to the exponential growth in the number of online shoppers. As a new marketing channel, e-commerce can be characterized by easy access, relatively low organizational set-up cost, a global reach, time independence and interactivity. The advances in Internet technology allow for the expansion of shopping options beyond traditional methods that may be more time consuming. Issues with having to physically gather information with offline shopping methods are alleviated, and customers are better able to efficiently use their time. For instance, instead of having to physically visit different stores to compare prices or rely on circular pamphlets in newspapers, a consumer is able to search and retrieve needed information through the Internet. The Internet explosion has opened the doors to a new electronic world. Consumers are now able to use the Internet for a variety of purposes such as research, communication, online banking, online marketing and even shopping. Where Customers buy products and pay for them on the Web or online. Globally, internet technology has been improving rapidly. This has brought with it a lot of opportunities in all spheres of life. Economically, socially, and culturally, the internet continues to greatly impact on nations, communities, institutions, and the individual. Today we continue to embrace new ideas like e-governance, e-learning, e-banking, and of course, e-commerce, among others.

Internet technology is creating exciting opportunities, particularly in the aspect of industrial innovation. Electronic commerce or e-commerce, as it is better known, is one of such opportunities. While it has proven to be a vibrant source of economic growth in developed countries in America, Europe, and parts of Asia since the turn of the 21st century, e-commerce is also now witnessing rapid growth in Nigeria and some other African countries including Kenya, Egypt, and South Africa having grown rapidly and become a critical channel for reaching consumers which then affect positively the economic development of Nigeria.

Online marketing and shopping is becoming quite popular in Nigeria, due to its relative convenience and the reasonable prices. And in the light of this, many firms in Nigeria have also started plunging into using these platforms. The Nigerian experiences in all these have been partially explored. Ayo (2011) surprisingly asserted that in spite of the growth rate of internet marketing, consumers still assess business website only to source for information but yet make their purchases traditionally. Possible factors responsible for such behavior like technology fit, trust and risk (security issues), internet infrastructures were tested. The work seeks to validate empirically, while analyzing Jumia and Konga online marketing and the impact of e-commerce on Nigeria economy.

 

 

1.2       Statement of the Problem

The impact of e-commerce in promoting economic growth and development in Emerging market can be over-estimated. Without the e-commerce, creations of awareness about goods and services may not be possible and therefore company sales may be hampered and the detrimental effect of this is low productivity or inability of the firm to cover the cost of production. However, there are some challenges towards the impact of e-commerce on Nigeria economy may be in term of internet fraud where some people may collect credit information of consumers and use it as a means of duping them. This is a serious issue that makes some people to be skeptical of engaging in buying online especially in Nigeria where the issue of cybercrime is very serious. Cybercrime is a great threat to e-commerce in the world and specifically in Nigeria. Many Nigerians still do not know what it means to buy and sell on the internet, and the items purchased delivered to the buyers. Lots of companies in Nigeria advertise their products and services on radio, television, and billboards, which can only reach the consumers within the national boundaries and leaving out the international market that would have produced consumers for their products and services. Ayo (2011) surprisingly asserted that in spite of the growth rate of internet marketing, consumers still assess business website only to source for information but yet make their purchases traditionally. It is equally doubted that the percentage of Internet users in Nigeria who purchase products online is in nowhere near the records of other countries. It is imperative to state, Electronic commerce face a lot of implications for the growth of Nigerian economy. Since Nigeria embraced the world of ICT particularly e-commerce, it has witnessed growth both in domestic and international trade. Therefore this study seek to examine the impact of e-commerce on the Nigeria economy using Jumia and Konga as a case study.

1.3       Objectives of the Study

The general objective of this study is to examine the impact of E-commerce on Nigerian economic growth. However, the specific objectives were:

(i)                 To determine the degree of the relationship between E-commerce and Nigerian economy.

(ii)               The trend in E-commerce in Nigeria.

 

1.4       Research Questions

In order to carry out this study effectively these research questions were made:

(i)      To what degree does E-commerce relate to the Nigerian economy?

(ii)    To what extent does the E-commerce effect the Nigeria economic growth?

(iii)  The current trend in electronic commerce in Nigeria. 

1.5       Research Hypothesis

The following research hypotheses were formulated and tested for the study:

Ho- E-commerce does not relate to the Nigerian economy.

H1- E-commerce relate to the Nigerian economy.

Ho - E-commerce has no effect on the Nigeria economic growth.

H1- E-commerce has effect on the Nigeria economic growth.

 

1.6       Significance of the Study

This study will be of immense benefit to the following persons:

It would add the new knowledge generated to the existing knowledge of the researcher.  It will increase the volume of literature in the institution’s library. It will serve as a reference material to people who would want to carry out further research study on this topic in future. It will also assist e-business, bankers, business analysts and policy makers on e-marketplaces formulation and effective decision making.

1.      It will help the general public who may have time to go through the findings and recommendations of this study to gain knowledge as regard to the benefits and challenges of E-commerce to Nigerian economy

2.      Readers of the work will learn its nature, components, impacts, prospect, implication in Nigeria and the global market place. The study gives a presentation of opportunities and reasons why corporations, firms and individuals should embrace the technology in order to enhance productivity maximize profit and improve the goal of the organization.

3.      This technology is a development that has evolved to bridge the shortcomings associated with traditional method of marketing intermediation, the end-users are in this trend linked directly to the producers. Thereby, eliminating the delay and cost associated with the use of channel members; hence the price of the product will be at the minimum which is readily affordable by the consumers.

4.      The role of information in marketing of goods and services is also emphasized, since information plays a paramount role in creating awareness about new product brands and innovations in the market place.

5.      E-commerce is a development that has emerged to take care of the shortcoming associated with the traditional marketing methods. Online businesses emerged, and electronic methods of marketing goods and services evolved. Also many organizations adopted new methods of marketing which break cultural barriers. The study cannot cover all the numerous organizations in Nigeria and overseas.

 

1.7       Scope and Limitation of the Study

This study is geographically limited to Nigeria and cover between 2000 and 2018 when the country embraced and witnessed advancement in technology. It includes both human and material resources drawn from two selected websites, Konga (http://www.konga.com/) and jumia (http://www.jumia.com/in Nigeria, However, the major constraints of this study are the attitudes of some respondents who deliberately and out of bias refuse to disclose some relevant information needed for successful completion of this study; there was insufficient fund to be able to gather enough data and materials needed for this study due to non-reliable source of income of the researcher and time given to carry out this empirical study was very short and therefore inadequate comparing to the nature of this empirical study. Despite that the researcher endeavored to make effective use of the available resources at his disposal to ensure that this study became successful.

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