ABSTRACT
The purpose of this thesis is to examine the impact of the
adoption of third party electronic commerce platforms on small and medium
enterprises (SMEs) companies in Nigeria. This thesis describes the drivers for
e-commerce adoption and investigates the barriers and benefits to the companies
when starting the process of implementation. A qualitative research was
performed and an adductive approach was used, where the research findings and
the theoretical background were connected by going back and forward in the
process of analysis. Questionnaires were distributed to registered merchants
who have electronic store fronts in the three major e-commerce platforms.
This study shows that the adoption of e-commerce is extremely low
compared to what obtains in Asia and Western nations. The decisions for
e-commerce adoption are dependent on the knowledge of the owner /manager. Main
benefits of e-commerce adoption are higher profit as a result of the expanded
market share, improved internal efficiency and increased information exchange.
The results suggest that companies value less than before the cost factor and
consider the lack of knowledge as a main barrier.
The
most significant benefits derived from third party electronic commerce adoption
and usage were the huge direct marketing planning and implementation it lifts
off the shoulders of the merchants, improved quality of information and
communicating with e-commerce site partners. Regarding barriers, awareness and
technical know-how appeared to be the biggest barrier.
Keywords:
Electronic commerce, third-party
e-commerce, storefront, retail business, TAM, Perceived Ease of Use
(PEOU),
TABLE OF CONTENT
Title
Page
Certification
Acknowledgement
Abstract
Table
of Contents
Chapter One – Introduction
1.1 Background
to the Study.
1.2
What Is Third Party E-commerce?
1.3 How
did Third Party E-commerce come about?
1.4 Statement
of the Problem
1.5 Objective
of the Study
1.6 Research
Questions
1.7 Research
Hypothesis
1.8
Scope and Limitation of the Study
1.9 Significance
of the Study
Chapter Two – Literature Review
2.1 Introduction
2.2 Conceptual Framework
2.2.1 The Concept of Third Party E-commerce
2.2
2 History
of E-Commerce
2.2.2 Your website versus third-party ecommerce
platform
2.2.3 The Role of Third Party E-commerce
2.2..
TAM
And E-Commerces
2.2.
Comparison of Traditional Commerce and
E-Commerce
2.2.
E-Commerce and Value Chain
2.2.
Classification of E-Commerce
2.2.4
Models Of Third Party E-commerce
2.3 Theoretical Framework
2.4 Empirical
Analysis
Chapter Three – Research Methods
3.1 Introduction
3.2 Research Design
3.3 Population of the Study
3.4 Sample Size
3.6 Data Collection
3.8 Data Analysis
Chapter Four – Data Presentation,
Analysis and Discussion Of Findings
4.1 Introduction
4.2 Data Presentation and Analysis
4.3 Distribution of Socio - Demographics Data
4.4 Test Hypothesis for the Study
Chapter Five – Summary Of Findings,
Conclusion And Recommendations
5.1 Introduction
5.2 Summary Of Findings
5.3 Conclusion
5.4 Recommendations
5.5 Suggestions for Further Studies
References
Questionnaire
CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND
We
live in the most astounding time when it comes to marketing resources and
potential. Not too long ago, a small business had very limited reach and it
sometimes took years before their marketing reach is able to go beyond their
local community. However, in today’s environment, all that is fast changing.
A
small business can be launched today and literally reach around the world with
their product or service same day...a marketing miracle courtesy of the
internet. The internet is all about the speed of information dissemination. How
you gather, manage and use information, according to Gates, Bill, (1999) will
determine whether you win or lose in business.
While
that may be an oversimplification of the process, it is not an exaggeration.
Granted, certain infrastructural components need to be put in place before the
marketing reach can be effectively achieved. But the reality is that you no
longer have to be a giant company with a huge marketing budget to have a
worldwide marketing footprint.
Several
terms are used in the virtual world for promoting businesses. They include
online marketing, internet marketing, webvertising, web marketing, e-marketing,
social media marketing, e-commerce marketing… and the list goes on and on. The
name a company chooses to call it does not matter. The important fact remains
that a business, no matter its size, will be losing out a reasonable percentage
of its potential market share, if it fails to implement it as a part of their
marketing efforts.
One
does not even need to have a formal academic background in online marketing to
be able to implement it in a business. In fact, one of the interesting things
about the digital age is that the very successful online marketing
practitioners are self-taught or accomplished through informal or semi-formal
training methods like seminars and workshops.
In recent years there has been a proliferation
of online marketing training programmes, aimed at finding individuals that will
pay a web-based company, to be trained in the art of online marketing through a
series of training modules. In other words, people have made a great deal of
money training others both online and offline to become digital media marketing
experts. These group of experts now go by different professional titles ranging
from Digital Marketing Strategist, Digital Brand Specialist, Online Marketing
Manager, Social Media Marketing Consultant, Digital Media Expert, and the list
goes on and on..
It
would be an understatement to say that internet marketing can become complex,
confusing, and ever changing. What is written about internet marketing today
may become old news in a matter of months. New services are always in the
horizon and the next magic application is usually lurking around the corner.
Yet, there are some consistent strategies that have stood the test of time as
business owners ride the wave of the constantly evolving cyber world. Further
discussion of these strategies is in order here.
Taking
a business online requires commitment and funding. A business owner must see
his foray into the cyber space as an investment and not an expense, which will
eventually make a return on investment, when effectively implemented. Where the
need arises, a sizeable percentage of your traditional marketing budget can be
deployed for online marketing campaigns. This is fast becoming the practice in
corporate circles these days.
The
rate at which electronic (e)-commerce is adopted by the small business sector
has remained relatively slower than anticipated (Van Akkeren and Cavaye, 1999; Walczuch,
Van Braven and Lundgren, 2000; Stockdale and Standing, 2006; Lowry, Singh and
Scollary, 1999 and Pease and Rowe, 2003a). This is despite the fact that small
and medium enterprises (SMEs) were the first companies to embrace web-based
commerce (Turban, King, Viehland and Lee, 2006) and have been noted for their
ability to respond to new opportunities and innovations more quickly than
larger enterprises, that tend to be slower in their adoption of innovations as
a result of management beaurocratic bottlenecking. (Lomerson, McGrath and
Schwager, nd).
In addition, the sluggish adoption rate is
despite the significant benefits and opportunities, which can be realised by
SMEs, which adopt and use e-commerce (MacGregor and Vrazalic, 2004 and
Bolongkikit, Obit, Asing and Tanakinjal, 2006). However, the ability of SMEs to
successfully adopt and utilize e-commerce is fundamental in ensuring their
stability and success (Ramsey, Ibbotson, Bell and Gray, 2003 and Stansfield and
Grant, 2003a).
Growing
evidence suggests that e-commerce adoption is not optional for growing SMEs but
a prerequisite for competing well in markets (MacGregor and Vrazalic, 2005a and
Payne, nd). Henceforth, SMEs must quickly embrace e-commerce technologies or
they will succumb to their competitors (Pease and Rowe, 2003b) while in the
long run the Internet might affect their productivity, market access and
competitiveness (Walczuch et al, 2000).
Financial
institutions, having being in the forefront of adoption of internet technology
to enhance service delivery to their customers, have not relented their effort
in that direction. They are not just looking at leveraging ICT to directly
enhance their return on investment, but putting structures in place for their
customers to take advantage of. The implication of this is that, if the
customers adopt ecommerce and declare bigger profits at the end of the day, the
bank automatically becomes richer as a result of their customers who have
adopted ecommerce and now make bigger profits as a result.
This
is exactly the case with Nigeria’s G T Bank. This vision has resulted in G T
Bank setting up the SMEMarketHub, a fully functional e-commerce marketplace for
its teaming customers. It can be safely assumed that apart from the mutual
financial benefits accruable to both parties, the SMEMarketHub is also a
marketing strategy as an increasing number of retailers are opening accounts
with G T Bank in other to take advantage of the marketplace.
1.1 AIM AND OBJECTIVES OF THE STUDY
While
much of the research regarding the diffusion and assimilation of e-commerce in
retail businesses has been conducted in developed countries, little or no
research has been carried out in developing countries.
The aim of this research is to
investigate the benefits and barriers of e-commerce adoption in small size
retail businesses in Nigeria. In order to do this, the following tasks will be
performed: This study therefore endeavours to fill this apparent gap by
investigating electronic commerce benefits and adoption barriers in retail
businesses within the context of a developing country like Nigeria.
In
view of this background, the following research aims/objectives were formulated
to:
•
explore the awareness and usage level of e-commerce applications among
Retailers.
•
examine the importance of perceived benefits in the adoption and usage of
e-commerce.
•
identify the important barriers of e-commerce adoption in Retailers.
1.2 RESEARCH QUESTIONS
The
following research questions would have to be asked in order to guide this
study.
To
what extent are retail business owners aware of third party e-commerce?
What
are the barriers hindering retailers from adopting third-party e-commerce?
What
benefits do retailers derive in adopting third party e-commerce?
1.3 SCOPE OF THE STUDY
E-commerce
though a relatively new business concept has different models and has continued
to expand in scope at an ever increasing speed dictated by advancement in
information and communication technology, ( ICT). Most of these different
models require a merchant planning to have an online presence, to build and
upload a website in cyberspace. This approach presents a challenge because of
the technicalities involved in building and maintaining an e-commerce website.
As
a result, this study is deliberately narrowed down to focus on third party
e-commerce where a potential e-commerce merchant does not have to bother with
the technicalities and cost of building a website. Instead, he partners with a
marketplace that provides an e-commerce platform where goods are displayed and
sold and the portal owners paid a commission whenever a product is sold. In
some cases, the website owner is paid what could be termed an advert fee for
providing retail merchants with e-store fronts in his e-commerce portal, just the
same way a merchant buys space in a newspaper or magazine for advert placement
or pays rent for his traditional business space.
Still
on this third party e-commerce model, there is yet another group where an
e-commerce portal owner does not charge fees in order for retailers to display
their products on his website. The question here would be, “how does this kind
of e-commerce portal owner make money to maintain his website and make profit?’
The answer is that because of the buying and selling that take place on the
website and the traffic generated in the process, owners of big search engines
like Google place adverts there, for which they pay..
This
model raises questions as to whether a merchant is better off financial and
otherwise when he hosts his own stand-alone e-commerce storefront or better
compensated when he partners with a third party marketplace, a comparison of
the pros and cons associated with each, either in the short or long term. Or
would a combination of both be in the best interest of the merchant. All of
these boil down to management of the business, fulfillment of orders, payment
processing, shipping and questions about customer data base, opportunities for
repeat orders and branding.
Other
issues that are looked into include the category of products that are shipped
cost effectively, either by the third party market place or on the stand-alone
e-commerce site.
1.4 LIMITATION
A
major limitation for this study has to do with fact that, though significant
research work has been carried out in the developed nations of the world on
e-commerce, the same cannot be said for West Africa especially Nigeria.
Therefore sourcing for relevant literature from Nigeria and West Africa proved
to be a challenge.
Secondly,
tracking managers of third-party marketplaces and getting them to submit to
interviews proved challenging. They appeared very busy and unwilling to be
engaged in any extended periods to provide exhaustive answers to the
researcher’s questions. They were not willing to volunteer a list of retailers
on their platforms so that the researcher would hand out questionnaires to
them.
1.5 THE SIGNIFICANCE OF THE STUDY
The
significance of this study on the opportunities and challenges associated with
the adoption of third party e-commerce marketplace as against traditional
advertising and marketing approaches for a regular brick and mortars business
is not only to advance the frontiers of knowledge for academic purposes. This
study will serve as a reliable reference material for the benefits of
entrepreneurs, practitioners and social media consultants who are contemplating
leveraging e-commerce to extend the marketing reach of either their companies
or that of their clients for higher profits and consequent expansion.
This
study will provide answers to business management issues, third party
marketplaces as against stand-alone e-commerce storefront, fulfillment of
orders, payment processing, shipping and branding.
For
the retailer gearing up to adopt e-commerce to extend his marketing reach and
garner higher profit margins, this study will provide him with the detailed
information to guide his decision.
The
scholar, on the other hand, will not only see this as an addition to the body
of knowledge but also a fertile ground from which he could generate more
research topics such as ;E-commerce and Logistics, E-commerce and Branding,
E-commerce and Traditional Marketing.
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