THIRD PARTY E-COMMERCE PLATFORMS: BENEFITS AND BARRIERS FOR RETAIL BUSINESSES IN NIGERIA
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THIRD PARTY E-COMMERCE PLATFORMS: BENEFITS AND BARRIERS FOR RETAIL BUSINESSES IN NIGERIA
ABSTRACT
The goal of this thesis is to investigate the influence of third-party electronic commerce platform adoption on small and medium-sized firms (SMEs) in Nigeria. This thesis describes the causes of e-commerce adoption and investigates the hurdles and rewards that organisations face when beginning the implementation process.
A qualitative study was conducted using an adductive technique, in which the research findings and theoretical background were linked by travelling back and forth in the analytic process. Questionnaires were issued to registered retailers with electronic storefronts on the three major e-commerce platforms.
This study demonstrates that e-commerce adoption is significantly low when compared to what occurs in Asia and Western nations. The decision to adopt e-commerce is based on the owner/manager’s knowledge.
The primary benefits of e-commerce adoption are increased profit due to increasing market share, enhanced internal efficiency, and increased information interchange.
The findings indicate that organisations value the cost element less than they did previously, and that a lack of expertise is the most significant barrier.
The most notable benefits of third-party electronic commerce adoption and usage were the large reduction in direct marketing planning and implementation that merchants experienced, as well as increased information quality and communication with e-commerce site partners. Awareness and technical know-how revealed to be the most significant hurdles.
CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND
We live in an amazing moment in terms of marketing resources and possibilities. Not long ago, a small firm had extremely limited reach, and it could take years for their marketing reach to go outside their local region. However, in today’s world, all of that is rapidly changing.
The internet allows small businesses to debut their products or services globally on the same day, making it a true marketing miracle. The internet is all about speed and information transmission. According to Gates, Bill (1999), how you obtain, manage, and use information will determine whether you succeed or fail in business.
That may be an oversimplification of the process, but it is not an exaggeration. Granted, certain infrastructure components must be put in place before marketing reach can be properly realised. However, you no longer need to be a massive corporation with a large marketing budget to have a global marketing footprint.
There are several phrases used in the virtual world to promote enterprises. Online marketing refers to internet marketing, web advertising, e-marketing, social media marketing, and e-commerce marketing.
And the list goes on. It makes no difference what name a corporation gives itself. The crucial reality remains that a business, regardless of size, will lose a reasonable percentage of its potential market share if it does not incorporate it into its marketing activities.
To use web marketing in business, no formal academic background is required. In reality, one of the most intriguing aspects of the digital age is that the most effective internet marketers are self-taught or have received informal or semi-formal training through methods such as seminars and workshops.
In recent years, there has been an explosion of online marketing training programmes targeted at identifying individuals willing to pay a web-based organisation to be schooled in the art of internet marketing via a series of training modules.
In other words, people have made a lot of money both online and offline by teaching others how to become digital media marketing professionals.
These experts today use a variety of professional titles, including Digital Marketing Strategist, Digital Brand Specialist, Online Marketing Manager, Social Media Marketing Consultant, Digital Media Expert, and so on.
It’s an understatement to suggest that internet marketing can be complicated, difficult, and ever-changing. What is published about internet marketing now may become old news in a few months.
New services are constantly on the horizon, and the next miracle application is usually just around the corner. However, some consistent techniques have stood the test of time as business owners surf the wave of the ever-changing cyber world. Further discussion of these tactics is necessary here.
Taking a business online demands dedication and funding. A business owner must view his entrance into the cyber domain as an investment, not an expense, that will eventually yield a return on investment if properly implemented.
When the necessity arises, a significant portion of your traditional marketing budget might be allocated to online marketing activities. This is rapidly becoming standard practice in corporate circles these days.
The small business sector’s adoption of electronic (e)-commerce has been slower than expected (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-sized enterprises (SMEs) were the first 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, which are slower to adopt innovations due to management bureaucratic bottlenecking. (Lomerson, McGrath, & Schwager, nd).
Furthermore, the slow adoption rate is despite the enormous benefits and opportunities available to SMEs who adopt and use e-commerce (MacGregor and Vrazalic, 2004; Bolongkikit, Obit, Asing, and Tanakinjal, 2006).
However, the ability of SMEs to successfully adapt and use e-commerce is critical to their stability and success (Ramsey, Ibbotson, Bell, and Grey, 2003; Stansfield and Grant, 2003a).
developing data demonstrates that e-commerce adoption is not an option for developing SMEs, but rather a must for market competitiveness (MacGregor and Vrazalic, 2005a; Payne, nd).
SMEs must now quickly integrate e-commerce technology or risk losing out to their competitors (Pease and Rowe, 2003b), while the Internet may have a long-term impact on their productivity, market access, and competitiveness (Walczuch et al, 2000).
Financial institutions, which have been at the forefront of using internet technologies to improve customer service delivery, have not relented in their efforts. They are not only trying to use ICT to increase their return on investment, but also to put mechanisms in place for their consumers to use.
The assumption is that if customers adopt ecommerce and declare higher profits at the end of the day, the bank will automatically get wealthier as a result of their customers’ adoption of ecommerce and subsequent increased earnings.
This is precisely the case with Nigeria’s GT Bank. This concept led to G T Bank establishing the SMEMarketHub, a fully functional e-commerce portal for its teaming customers.
It is logical to assume that, in addition to the mutual financial benefits accruing to both sides, the SMEMarketHub is a marketing strategy, since an increasing number of retailers create accounts with G T Bank in order to take use of the marketplace.
1.1 Aim and Objectives of the Study
While much of the study on the diffusion and assimilation of e-commerce in retail enterprises has taken place in industrialised nations, little or no research has been done in developing countries.
The purpose of this study is to look into the advantages and disadvantages of e-commerce adoption in small retail firms in Nigeria. To do this, the tasks listed below will be performed:
This study aims to fill this apparent gap by investigating the benefits and hurdles to electronic commerce adoption in retail firms in a developing country such as Nigeria.
In light of this background, the following study goals/objectives were developed:
• Investigate retailers’ awareness and use of e-commerce applications.
• investigate the role of perceived benefits in the adoption and use of e-commerce.
• Identify the key impediments to e-commerce adoption in retailers.
1.2 RESEARCH QUESTIONS
The following research questions would need to be asked to guide this investigation.
To what extent do retail business owners understand third-party e-commerce?
What are the constraints that prevent retailers from implementing third-party e-commerce?
What benefits do retailers gain from using third-party e-commerce?
1.3 SCOPE OF THE STUDY.
E-commerce, a relatively new commercial concept, has various models and has continued to grow in breadth at an ever-increasing rate, driven by advances in information and communication technology (ICT).
The majority of these various methods demand a merchant who wishes to have an online presence to create and post a website in cyberspace. This technique is difficult to implement due to the technical aspects of creating and maintaining an e-commerce website.
As a result, this study has been purposefully focused to focus on third-party e-commerce, where a potential e-commerce merchant does not have to deal with the difficulties and costs of developing a website.
Instead, he works with a marketplace that provides an e-commerce platform where things are advertised and sold, with the portal owners receiving a commission anytime a product is sold.
In certain circumstances, the website owner is compensated with an advertisement charge for supplying retail merchants with e-store fronts in his e-commerce portal, in the same manner that a merchant purchases advertising space in a newspaper or magazine or pays rent for his traditional company space.
Still following the third-party e-commerce paradigm, there is another group in which an e-commerce portal owner does not charge fees for shops to show their products on his website.
The question here is, “How does this type of e-commerce portal owner make money to keep his website running and profitable?” The reason is that because of the buying and selling that occurs on the website, as well as the traffic created as a result, owners of major search engines such as Google place advertisements there for a fee.
This model raises the question of whether a merchant is better off financially and otherwise when he hosts his own stand-alone e-commerce storefront or when he partners with a third-party marketplace; a comparison of the benefits and drawbacks of each, either in the short or long term.
Or might a combination of the two be beneficial to the merchant? All of this boils down to business management, order fulfilment, payment processing, shipping, and questions about client databases, repeat orders, and branding.
Other difficulties investigated include the category of products that are sent at a low cost, either through a third-party marketplace or a standalone e-commerce site.
1.4 LIMITATION.
A key drawback of this study is that, while extensive e-commerce research has been conducted in industrialised countries around the world, the same cannot be said for West Africa, particularly Nigeria. Finding relevant literature from Nigeria and West Africa was difficult.
Second, tracking out managers from third-party marketplaces and convincing them to participate in interviews was difficult. They appeared to be quite busy and hesitant to spend any significant amount of time answering the researcher’s inquiries in detail.
They were unwilling to offer a list of retailers on their platforms so that the researcher might distribute 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 marketplaces as opposed to traditional advertising and marketing approaches for a traditional brick-and-mortar business is not only to advance academic knowledge.
This study will be a valuable resource for entrepreneurs, practitioners, and social media consultants who are thinking about using e-commerce to expand the marketing reach of their companies or those of their clients in order to increase profits and thus expand.
This study will address business management concerns, third-party marketplaces versus standalone e-commerce storefronts, order fulfilment, payment processing, shipping, and branding.
This study will provide extensive information to retailers who are considering adopting e-commerce to expand their marketing reach and increase profit margins.
The scholar, on the other hand, will see this not just as an addition to the body of knowledge, but also as fertile ground for future research themes such as E-commerce and Logistics, E-commerce and Branding, and E-commerce and Traditional Marketing.
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