E-commerce includes the sale of goods as well as the exchange of data and payment for transactions.
Types of E-commerce
The various forms of e-commerce include:
Business-to-Business (EBB)
EBB transactions occur between business entities such as manufacturers, wholesalers, suppliers, and distributors. The applications of e-commerce in EBB extend beyond efficient trading and also include activities such as forecasting customer demand and facilitating the flow of necessary information among relevant parties. Transactions with end consumers, such as manufacturers and middlemen, are not considered part of EBB.
Business-to-consumer (BBC)
The International Chamber of Commerce (ICC) promotes a business transaction between a manufacturer or retailer and a non-business consumer. Opening an online store has become simpler for Small and Medium-sized Enterprises (SEEM). Developed countries have retailers who sell different products and services
...through the internet.
Viewing websites as a crucial part of their promotional and advertising strategy, businesses utilize them along with advertising directories, newspaper ads, and signage. This approach brings numerous advantages to both retailers and customers such as quicker and more convenient shopping experience, access to a larger customer base, the capability to attract national and international customers, and reduced operating expenses in comparison with physical stores. Nevertheless, there are also challenges linked to e-commerce and its business-to-business-to-consumer (BBC) model.
The primary obstacles faced by BBC e-commerce involve the attraction and retention of a substantial customer base. Technological advancements, evolving customer preferences, and the demand for lower prices pose challenges for small retailers to remain competitive. Online customers are generally price-sensitive and can be easily influenced by lower prices, thereby making it more challenging for retailers to maintain their loyalty.
Business-to-Employee
(BEE)
The concept of EYE e-commerce involves employees ordering supplies for their work, but it has expanded to include more. BEE e-commerce facilitates easy electronic orders, with supervisors approving orders to ensure they do not exceed limits. BEE also allows employees to access their records for updating address information and maintaining their internal resume.
By implementing BEE technologies, companies have experienced significant reductions in administrative costs and the burden on their human resources department for managing employee information and records.
Consumer-to-Business (CB)
CB e-commerce is a situation where consumers determine what they want to pay, and vendors decide whether or not to accept the consumer's bid. An illustration of CB is when a person wants to travel from Appeaser to Karachi but only has RSI. 8000 in their bank account to cover the transaction for this round-trip.
He places advertisements on an Internet CB site, searching for airlines that provide this round trip for RSI. 8000 or lower. The Internet is advantageous because it targets customers who have specific service requirements that numerous airlines may be interested in providing.
Consumer-to-consumer (ICC)
ICC e-commerce is an online marketplace that enables consumers to participate in the buying and selling of goods. One prominent illustration is "e-bay", a website that connects individuals from America and the UK, offering them a platform to auction their personal belongings.
In Pakistan, websites like "Passels. Com" have introduced the concept of e-commerce, allowing car owners to auction their vehicles for potential buyers. The benefits of ICC e-commerce include reaching a larger market and enabling buyers to find products with specific specifications without intermediaries. Moreover, alternative forms of e-commerce serve purposes
beyond commercial use.
The text discusses various forms of commerce, such as Government-to-Government (GAG), Government-to-Employee (GEE), Government-to-Business (EBB), Business-to-Government (826), Government-to-citizen (GAG), and Citizen- to-Government (COG). These modes primarily serve administrative functions like registrations, license renewals, and filing taxes. The study mainly concentrates on Business to Consumer (BBC) e-commerce, also known as E-tailing or virtual storefront.
Before moving forward in the report, it is important to provide a brief explanation of E-tailing and review its history.
E-Tailing
E-tailing, which is also referred to as electronic retailing, pertains to the online selling of consumer products like books, clothing, games, and fashion accessories. The concept gained considerable focus in discussions about the internet in 1995 among economists, analysts, and entrepreneurs. E-tailing is frequently used interchangeably with business-to-consumer (BBC) transactions.
In 1997, various major American companies like Dell Computer and Barnes and Nobles began adopting e-tailing. Dell Computer revealed receiving multimillion dollar orders through its website, while Barnes and Nobles quickly launched their e-tail site to counter Amazon's achievements. During that year, numerous companies also marked significant milestones in their e-tailing operations. For instance, Auto-By-Tell sold its millionth car online, and Nielsen Media documented 10 million individuals buying goods on the Web.
The rise of e-tailing led to the creation of software programs designed for developing online catalogs and managing internet-based businesses.
Key drivers of E-tailing
Many writers and researchers have identified various key drivers of E-tailing over the years to analyze the trends in different countries. Some of the main key drivers discussed by these individuals are as follows.
Social Factors
The region's social factors, such as the literacy rate of computer and information technology,
play a crucial role. If the computer literacy rate is high, it indicates the presence of an available workforce within society. Additionally, it suggests the presence of potential customers who can readily understand and embrace the concept of e-tailing.
Economic Factors
Economic factors for e-tailing encompass the costs of hardware and software, transportation and its infrastructure, telecommunication and banking infrastructure, as well as the mechanisms for payments.
Low above-mentioned costs and a strong, updated banking infrastructure will have a positive impact on e-tailing, promoting its growth.
Political/ Legal Factors
The growth of e-tailing business in the region is supported by various factors, including government programs, technology promotion, and laws and regulations. The objective of these initiatives is to raise awareness and establish a favorable environment for buyers and sellers in cyberspace.
Technological Factors
The advancements in telecommunication technology in the region and penetration of these technologies in society, along with the availability of internet services and networking infrastructure, are all encompassed in it.
Organizational Culture
To accomplish its organizational goals, an organization must be open to adopting and implementing new technologies.
Commercial Benefits
Another important factor is that the company recognizes the financial advantages associated with the lower expenses and improved effectiveness of the new technologies.
Benefits of E-tailing to Business
E-tailing offers numerous advantages, including the ability for businesses to expand into international markets and reach a larger customer base without the need for extensive investments in export licenses, foreign distributors, or foreign direct investment (FDI). Additionally, opening and maintaining an online store is cost-effective.
Operating and sustaining a physical store involves higher expenses, including rent,
decor, personnel, and utilities. In contrast, an online store can be smaller and more cost-effective due to its less critical geographical position. Additionally, e-commerce stores require cheaper decor and fewer employees, resulting in lower overall costs for the digital retailer.
The firm has the ability to expand its online store without the limitations of a physical store, allowing for the addition of more products. This expansion in product lines enables the firm to reach a larger customer base and ultimately contribute to business growth. E-tailing provides the advantage of operating 24/7, unlike traditional retailing, which is bound by specific hours. This constant availability allows for potential higher revenue generation and overall benefits for the business.
Limitations of E-tailing to Business
Insufficient security measures make e-tail stores vulnerable to hacking and put customer personal information at risk, especially when credit cards are used for payment. Neglecting proper protection can expose the firm to cyber attacks, leading to legal issues as it is their responsibility to safeguard customer data. Additionally, rapidly evolving technologies may pose limitations for e-tail firms.
It has a negative impact on businesses as it results in expenses for frequently updating technologies, leading to disruptions in business operations. Additionally, intense competition from both domestic and international e-tailing companies, which have been in the industry for a long time and have distinctive product offerings and loyal customer bases, makes it challenging for new online companies to compete. Moreover, another limitation for an e-tailing firm is the scarcity of skilled and computer literate personnel.
Establishing an e-tailing firm can be challenging in countries with low computer literacy rates and unfamiliarity with e-commerce and e-business. Technological
limitations, such as poor internet services, a lack of essential banking services like merchant accounts and credit cards, inefficient credit card payment systems, insufficient electricity availability, and inadequate transportation infrastructure within and outside the country further complicate these challenges.
Overview of E-commerce in Pakistan
In Pakistan, the banking sector is propelling the expansion of E-commerce by providing various online banking services. These services include modern e-commerce features like online banking, mobile banking, credit card services, ATM access, and online payment options for utility bills. Consequently, this surge in E-commerce has led to a rise in job opportunities within the industry in Pakistan.
Growth of E-commerce in Pakistan
Pakistan is experiencing a rapid growth in Internet usage and users.
The "Economic website" reported that in June 2009, there were approximately 2.5 million Internet subscribers and around 18.5 million Internet users. Internet access had also grown significantly, expanding from 29 cities in August 2000 to 950 cities and towns by June 2009. In terms of optical-fiber networks, there were 53 cities with access in August 2000, but by June 2009, this number had increased to 840 cities. Currently, Pakistan has 42 registered internet service providers that offer internet services.
Around 90% of urban commercial bank branches had been computerized by 2006. Furthermore, online services provided by numerous banks and exchange companies allowed for international fund transfers. Mobile-phone banking services have also been introduced by many banks, making it convenient for customers to pay utility bills using their mobile devices. In August 2006, various e-commerce projects worth approximately USD mom were announced, applicable at federal and provincial levels and involving both the private and public sectors.
align="justify">To boost foreign involvement in Pakistan's technology sector, the country has allowed foreign investors to invest up to 100% in software companies. As a result of this decision, around 100 call centers have been established within Pakistan over the past three years. Furthermore, Pakistan is actively encouraging e-commerce as a way to support small businesses, improve efficiency, create jobs, and ultimately reduce poverty. The country recognizes the importance of information and communications technology (ACT) in today's global context.
During an international conference on e-commerce and development organized by the Ministry of Science and Technology, UNDO, and the UN Conference on Trade and Development in Islamabad (2007-08), experts gathered to assess Pakistan's advancements in e-commerce and proposed new strategies. These experts believed that e-commerce would foster closer collaboration among businesses, governments, and academia. Dir. Attar-Raman, who served as the Minister of Science and Technology at the time, expressed the government's intention to establish an e-commerce policy framework.
He believed that the private sector would drive e-commerce. He also stated that if the government is able to provide a straightforward, secure legal framework, e-commerce would greatly contribute to Pakistan's economic development. Pakistan has acknowledged CIT as a significant means of reviving the economy. The Ministry of Science and Technology has requested UNDO to utilize its e-commerce expertise in formulating relevant policies and identifying areas where it can promote the country's development, such as integrating impoverished communities into the economic mainstream.
E-commerce has not been widely adopted in Pakistan. However, there are successful companies conducting business through e-business. One example is Malabar Private Limited Malabar IIS, an online business based in Karachi. They provide auction, trading, and
classified services online in Pakistan. Malabar prioritizes consumer satisfaction by offering convenient, inexpensive, and dependable online services. By utilizing the internet for easy comparison of competitive pricing, they are able to offer lower prices compared to other merchandise services in Pakistan. Another successful online store in Pakistan is Bellicosity.Com Bellicosity.Com IIS. Established in 2001 in Dublin, AJAX, it offers a wide range of products globally to leading manufacturers, retailers, corporations, and individual customers. Their services are known for being quick, easy, and reliable. The products they sell are competitively priced with free delivery within Pakistan and AJAX. Bellicosity.Mom aims to expand its website by introducing new brands and product categories to fulfill their vision of providing people with the convenience of buying anything they desire online.
The study focuses on the problem of online stores, which have become a global phenomenon. Initially introduced in the Western world and later adopted in various Asian countries, online stores still lack widespread acceptance in Pakistan. Currently, online stores are mainly concentrated in Karachi and Lahore, the capital cities of Pakistan.
The purpose of this research is to determine the reasons why local retailers in Appeaser do not widely adopt the concept of online stores. The study will involve conducting surveys and interviews with local retailers in Appeaser who are involved in various product lines such as Redeemed garments, Home textiles, Books, Shoes, Furniture, sport goods, Computers and mobiles.
Examples of retailers that were interviewed include:
Imperial stores
Mobile zone
Peak-Danish Furniture stores
Computer channel
Eased Book Bank
However, retailers selling food products, drugs, alcohol, and perishable goods were not included in the sample. The objective of the study is
to identify the reasons for the lack of online stores in Appeaser, measure the wariness level of local retailers about E-tailing, assess the availability of necessary resources for E-Business in Appeaser, and anticipate future prospects of online retailing in Appeaser in the present environment.
Limitations
This research has limitations in gathering information from retailers who may lack knowledge of E-tailing and E-business. There is also a time constraint for completing the study. Furthermore, the current law and order situation in the country poses an additional limitation. Chapter two of this report focuses on the "Literature Review" and encompasses case studies to enhance comprehension of the research topic.
Chapter three, called "Research Methodology," examines different aspects such as sample size and characteristics, data collection methods, and options for research tools like questionnaire surveys or interviews. In chapter four, the focus shifts to the availability of resources, infrastructure, and administrative bodies in Pakistan, specifically in Appeaser. These factors are essential for establishing and operating an e-tailing business.
Chapter five, titled "Data Analysis," provides a thorough analysis of the data gathered using the research methodology. The concluding chapter, Chapter six, encompasses the "Conclusion and Recommendation" section which is derived from this analysis. As for Chapter 2, it concentrates on the Literature review. Nevertheless, finding relevant literature concerning retailers' reluctance to venture into online platforms proved difficult as this behavior is still relatively new in comparison to more advanced nations.
By examining research papers and articles written by both Indians and Americans, relevant literature on the issues and barriers that Small and Medium Enterprises (Seems) may encounter while transitioning their businesses online can be found. These barriers often
lead to hesitation among many businessmen in converting their established brick and mortar businesses into click and mortar ones. A research paper titled "e-Value propositions to Small and Medium Enterprises (Seems)" was authored by a CITIBANK employee named Mr..
Sank Krishna conducted a study in 2004 that focuses on the essential e-commerce initiatives needed for the growth and development of Seems in emerging markets. The study utilized data collected in 2000 by a European research firm, which revealed the challenges European Seems faced when establishing an online presence. The data identified several issues that can protect Seems from fraudulent e-tailing transactions. These issues include a lengthy training period to align employees with the requirements of an e-business structure, high costs involved in purchasing and installing necessary computer systems and equipment, expensive communication expenses such as internet facility and telephone charges, and a lack of specialized staff within the organization to effectively manage the e-business setup.
Additional personnel must be hired and trained for handling e-business or e-tailing activities. Reorganization problems, such as difficulties arising from changes in the organizational structure when transitioning from a traditional form to a virtual one, may occur. The employees' limited acceptance of e-tailing could make it challenging for them to comprehend the e-business model, as they are accustomed to conventional practices. Consequently, this may lead to dissatisfaction among the employees involved.
After researching the mentioned points, valuable insights were discovered. 47% of importance was placed on the issue of European Seems lacking legal guarantees. In addition, 21% of significance was given to the lengthy training period required for training the employees involved. The third highest importance, amounting to 20%, was
given to the acquisition of costly hardware for the e-tailing task. Lastly, a weight of 14% was assigned to the problem of low acceptance by the employees assigned to the job.
In the European Seems, high communication costs were ranked fifth with a weight of 10%. The lack of specialized personnel was given a weight of 12%, while the reorganization of the firm by the European Seems had the lowest weight of 11%. Based on these results, it can be inferred that many European Seems had reservations (i.e. the aforementioned issues) about conducting their business online. These factors served as obstacles in the early adoption of e-tailing business.
The research titled "Availability of E-commerce Support for Seems in Developing Countries" was conducted in 2008 by Mr. Mashes Superabundant and Robin Lawson. It focused on a developing country, specifically Sardinia, with a sample taken from Colombo as a representation of developing countries. The primary goal was to examine the presence of a support system that could facilitate the early adoption of e-commerce in business.
In their study, the researchers examined two sections of literature. The initial section explored the obstacles to information and communication in developing nations. It was discovered that a significant barrier encountered by these countries is the limited understanding among owners and managers regarding e-commerce, accessible technologies, and the advantages of embracing e-commerce. Additionally, they discussed the challenge of integrating e-commerce into current organizational settings.
The Organization for Economic Co-operation and Development (COED) has identified several barriers to e-commerce in its literature. These barriers include lack of awareness and recognition of the benefits of e-commerce, unavailability of human resources and skills for
conducting e-tailing, high setup costs, and lack of legal securities related to e-business. COED's report states that these barriers were found in member countries such as Australia, Greece, Denmark, the UK, and the USA. Furthermore, COED notes that developing countries encounter different obstacles in adopting e-commerce compared to developed countries.
Various factors including insufficient telecommunications infrastructure, scarcity of skilled personnel for e-commerce website development and management, lack of consumer knowledge about online purchasing procedures, inadequate systems for prompt and reliable delivery of physical goods, limited credit card ownership, lower consumer income levels, and low rates of computer and Internet ownership among the population hinder the adoption of e-commerce in developing countries.
A study on the adoption of e-commerce in South Africa revealed that internal factors greatly influence the adoption process. These factors include limited access to computers, software/hardware, and affordable telecommunications facilities. Additionally, there is a lack of e-commerce use by supply chain partners and concerns regarding security and legal issues. Furthermore, inadequate understanding of e-business among management and employees and unclear benefits from e-commerce contribute to the limited acceptance of e-commerce/e-tailing.
A study conducted in the People's Republic of China revealed that various factors impact e-commerce. These include low computer diffusion, expensive Internet services, and a lack of online payment processes. Furthermore, inadequate transportation and delivery networks, limited banking services to support online business, and uncertain taxation policies also indirectly hinder the adoption of e-commerce.
A study conducted in Egypt identified various obstacles to the adoption of e-tailing. These hindrances include lack of awareness and education, small market size, weak e-commerce infrastructure, inadequate telecommunications infrastructure, poor financial infrastructure, insufficient legal system, lack of government
support, and social and psychological factors. Comparing the findings from two studies conducted in Argentina and Egypt reveals that common factors influencing the adoption of e-commerce in developing countries are lack of awareness, inadequate telecommunication infrastructure, and fluctuating cost of organizational structure.
The researchers conducted research to develop a conceptual model on the barriers to adopting e-commerce in developing countries, specifically focusing on Seems. They categorized these barriers into two major categories: Internal Barriers and External Barriers. The External Barriers included infrastructure, politics, cultural/social, and legal/regulatory factors. The figure used in this text is borrowed from a research paper titled "Availability of E-commerce support in developing countries." Based on this conceptual model, the researchers designed a research methodology that was applied to the Sardinian market to test the validity and reliability of the model.
The research was conducted in three phases, which is widely recognized as enhancing the richness and validity of research findings due to the use of multiple methods.
- Stage 1: The Pilot Exploratory Study with Seems
- Stage 2: Survey of the SEEM organization using a questionnaire
- Stage 3: Interviews with intermediary SEEM organizations to see the support systems available for the growth of e-commerce in Sardinia.
At the conclusion of each stage, valuable conclusions were obtained regarding the perception of Sardinian consumers. Based on the pilot study, researchers found that the main obstacle to the acceptance of e-tailing as a business method was lack of awareness. The next important hurdle was identified as the expense associated with internet access, equipment, and e-commerce implementation. The third highest ranked barrier was found to be insufficient
telecommunications infrastructure.
The respondents identified various barriers that hindered progress, including an unstable economy, political uncertainty, lack of time, channel conflict, lack of information about e-commerce, and lack of access to expert help. The analysis of collected data showed that the highest ranked internal barriers were lack of skills and awareness of the benefits and returns on investments. Additionally, several external barriers were observed, such as cultural barriers, low popularity of online marketing and sales, and infrastructure limitations.
There are several challenges that impede the development of e-commerce in the country. These obstacles encompass low internet penetration, inadequate internet services in terms of quality and speed, a lack of infrastructure for supporting e-commerce services, an unstable economic climate, shifting regulations with each change in government, limited access to reliable expert assistance and information, senior management in other sectors lacking knowledge about computer and information technology (CIT), insufficient support from the government and industrial associations, an inadequate legal framework for businesses utilizing e-commerce, as well as a scarcity of straightforward procedures and guidelines.
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