Abstract
Background: Traditional ways of doing business are changing. More efficient ways of doing business are coming up as a result of transformation in communication technologies. Advancement in information technologies has brought about the internet which is an efficient electronic tool of communication. With the internet, there has been the development of e-commerce which has totally transformed business.
Aims: There are voluminous benefits of e-commerce with some few constraints. This paper looks into e-commerce: the rate at which it has been adopted in business, its benefits and challenges.
Method: This paper looked into different aspects of e-commerce especially so in business organizations. Data about e-commerce, its adoption in business and how it is changing business was gathered from different sources more so the latest academic journals and books. From the data, findings and conclusions were derived.
Results: From all the data and literature collected it was evident that e-commerce is the way to go in business because. E-commerce has revitalized and paced up the rate at which business transactions take place. A few challenges of adopting e-commerce were also identified in the literature.
Conclusion: The findings in this research are important and can act as motivators for businesses which have not fully incorporated e-commerce business practices. The conclusion is drawn from literature and highlights the areas of importance. Major points are noted here.
Introduction
The world has witnessed major development in the communication technology sector. These developments have affected virtually all aspects of the society. The advancement in the communication technology witnessed the advent of the World Wide Web. A lot of developments have further been noted in the World Wide Web. All this can be described as a process or a journey that began in the early years of the 20th century.
The web has been structured so that it could capture different needs in business. Traditional business was facing many challenges. One of the main challenges of early commerce is that it entirely depended on the manual transactions. These transactions were slower, inefficient and pegged on physical proximity of business people.
In the second half of the 20th century, the development of the internet and the worldwide web gained momentum. It pace of growth accelerated. Though many advanced business firms had already began using the internet or web services in transacting, it is at this time that many businesses began gaining the real sense of e-commerce in business enhancement (Ching and Ellis, 2004). Therefore, many firms began making efforts to connect and export their businesses to the internet and the World Wide Web.
Firms began realizing the benefits of the web service. However, this was met with various bottlenecks as it is common with new technologies. The benefits of e-commerce continued to take root in business as a significant number of people were absorbed into using the e-web services or the internet. E-commerce can be defined as a process through which products are bought and sold using the electronic data transmission services. These services are found on the internet and the worldwide web. There is a broad range of e-commerce activities. Among them is an online shopping, online retailing, e-selling and purchasing, e-procurement, e-travelling, online banking electronic payment of online services and online investment (Grandona and Pearson, 2004).
As it is today, the use of the internet has spread world over with more than a billion people being active users of the internet. The internet has become a lifestyle for most people and even organizations. It would be unreasonable for any person to argue that the web has not revolutionized business as this is too obvious and evident in different business sectors. E-commerce is used in different kinds of business: both products-centered and service-oriented businesses.
With the help of e-commerce technologies and services, business firms have been able to form and expand their customer bases. Customers can also easily access business products and services. Therefore, e-commerce has a positive impact in business. This is because it acts to promote business excellence and performance (McIvor, Humphreys and Huang, 2001). This paper thus assesses the level of e-commerce use within businesses and the benefits and setbacks associated with e-commerce implementation and use in business firms.
Literature Review
E-commerce activities
There are different types of e-commerce services most of which aim at accelerating the pace of service delivery and enhancing efficiency and effectiveness while delivering services. The first e-commerce service is the business-to-consumer (B2C). In such services, organizations seek to use e-technologies to reach their customers or consumers in a more expansive way. We also have business-to-business e-commerce services (B2B).
This takes place in the transaction between different firms. B2B services are used in business development as organizations work with others to maximize on business functions. A firm may be working with another supplier organization or the industry from where it gets some of its supplies or where it takes supplies.
The working between and among these organizations can be enhanced if the organization opts to adopt B2B services. This will only be effective when both organizations are using e-services.
Consumer to consumer C2C is another e-service. This mostly happens in internet auctions and classified advertisements. C2C selling is common in a number of countries where buying and selling takes place on auctions sites with auctions being conducted by intermediary firms like e-Bay (Rainer & Cegielski, 2011).
Business-to-employee (B2E) services are used for enhancing the relationship between the organization and its workforce. The organization uses e-commerce to give information and provide services to the employees. Through E-services, employees are enabled to manage the benefits from the organization.
Employees are also allowed to take classes electronically. The access and transacting of the business of the organization becomes easier due to easy access to information and other services. B2E is used in human resource management to improve employee-management relationships in the organization. It improves organizational delivery (Rainer & Cegielski, 2011).
Lastly, there is the e-governance, which is the incorporation of e-commerce in public administration. Governments are continuing to adopt e-commerce strategies in public services.
This is aimed at making the public service efficient and speeding up public transactions. When the delivery of public services is improved the business environment is greatly improved. The public service is the major determiner of the business atmosphere and environment in any given nation. They give supportive services to both public and private enterprises (Cui, Zhang, Zhang and Huang, 2006).
Applying e-commerce in technical firms
In the past two decades, there has been a change in the application of e-commerce in business. E-commerce application in firms has been shifting from its earlier focus on technology to focus on technology users. Therefore, e-commerce has become identified in communication and strategies as well as the general business practices.
E-commerce helps in the exchange of information and eases the execution of business transactions between individuals and enterprises. E-commerce enables firms to adopt electronic communication practices in business processes via the Electronic Data Interchange. E-commerce has found a very soft ground especially in technology intensive industries like the Pharmaceutical industry.
Such industries utilize high levels of technology thus e-commerce services will easily blend with the practices in these industries boosting the rate of transactions. For firms in these industries to perform well and sustain their growth, as well as gain competitive advantage over other firms, they must adapt and implement innovative technologies.
E-commerce is one of these required technologies as it gives firms in the industry an enhanced mode of transacting. E-commerce has far-reaching positive effects when applied on a business-to-business basis.
An example is when different enterprises within the industry converges with the aim of consulting on processes and crafting key decisions on products such as clinical development and test of drugs, marketing and sales, people management and drug innovation among others.
E-commerce is synchronized with the corporate strategies of firms which bring significant value in firms and the industry at large. The value created has positive implication on both products and processes in the firms (Kanungo, 2004).
Factors influencing e-commerce adoption in different regions
Zhu & Thatcher (2010) observed that the rate of use of e-commerce differs in different regions and different countries of the world because of the varied features inherent in these countries or regions. Different countries have different levels of technological infrastructure, which affect the adoption of e-commerce.
Research has ascertained that e-commerce adoption has three main perspectives which determine its application in business. These are environmental, firm and technology perspectives. Under the environmental perspective, there are three main areas of focus. These are the economic, institutional and the social cultural environment. All the three environments have forces which affect e-commerce adoption, implementation and enforcement.
On the other hand, the firm perspective has its forces that include the corporate strategy of the firm, managerial attitudes, globalization and external pressures. There is also the technological perspective which entails the macro technology environment and the technical strengths of the firm applying the technology.
Further research showed that these perspectives affect different organizations differently. An organization may have a full grasp of one perspective and yet lack the others. This will still hinder the firm in developing e-commerce practices. The three perspectives are interactive thence a lapse or weakness in any end up influencing the entire process of ecommerce adoption (Li & Xie, 2012).
Studies that were conducted in Singapore in the year 2003 showed that Singapore was well prepared as far as the development and use of e-commerce technologies was concerned. Singapore was noted as having certain and unique features such as efficient telecommunication and transport infrastructure, transparent financial and legal structures, and a very affluent population that has well-articulated multicultural links. The population uses the English language as a common language in communication (Li & Xie, 2012).
The table below is a summary of research which was conducted by different scholars in different times and regions to ascertain factors which influence the adoption of e-commerce.
Figure 1.0 factors influencing e-commerce adoption.
Source: (Li & Xie, 2012).
From the data in the table it is noted that different regions and countries are affected by different factors. The level of development is a major boosting factor for e-commerce adoption.
Application of e-commerce using appropriate models
According to Lee and Kim (2007), the use of e-commerce by business firms is considered to be of a big advantage. It is seen as one way through which business organizations can remain competitive thence relevant in the prevailing business environment. Just like it would be for any venture, there are considerations that have to be adhered to prior to the initiation of e-commerce in business.
There are different models, which can be followed in initiating e-commerce by firms. Most of the models of e-commerce application show that e-commerce is beneficial to business organizations. Research has shown that most e-commerce initiatives in the business end up either failing or not achieving full results.
Also, these initiatives exploit all the potential due to poor or mal-planning that goes into the initiative. Different models of e-commerce have been developed due to this fact. This could bear enhanced results if they are used by organizations prior to the acquisition and implementation of e-commerce.
Most models of e-commerce ignore the planning aspect. Therefore, it will be beneficial if firms in their prior stages of e-commerce adoption focus on e-commerce planning models. These will give a good background for the organization eliminating gaps that are often inherent in the implementation phase (Kao and Decou, 2003).
Benefits of e-commerce in supply chain management
Firms across the world are being forced to reinvent the relations with their customers and suppliers by way of adding value to the relations at a minimized cost. This is due to the demands of the economy. Therefore, research shows that many firms are adopting integrated global business models which end up further complicating their supply chains (Mora-Monge, 2010).
Therefore, companies are embracing information technology to help them in minimizing the impact of the complicated supply chains. They help in optimizing supply chains. Companies use B2B e-commerce transactions as evidenced in recent research (Crespo and Bosque, 2008).
E-commerce has a profound effect on supply chain. E-commerce has been found to pace up the rate of performance of many supply chains across different firms. This is evident in the findings of an empirical study by Hong, Tran, and Park (2010) titled “Electronic commerce applications for supply chain integration and competitive capabilities’. This research has its foundation in the resource based view theory.
A model was developed by the authors and then tested using a total of 711 sample companies (IMSS IV). These firms were located in 20 different countries across the globe.
The results showed the importance of two specific electronic technologies – Internet based communication and technologies and EDI for integrating supplier and consumer functions. The results revealed that supplier and customer chains can be enhanced by using selected forms of information and communication technologies in business (Hong, Tran and Park, 2010).
E-commerce is quite beneficial to buyer seller relationships. It speeds up buyer-sellers transactions through what is called comparison shopping. Customers are able to compare prices of a big range of commodities quickly. These commodities are found on sales and advertising sites.
Such sites are synonymous with certain industries for instance the automobile, air travel and insurance. E-commerce also cuts down the cost of business and raises competitiveness.
The consumers will get to enjoy the services being provides on sites by firms competing. They are likely to get products at reduced prices. For the business firms, they will only undergo the initial cost of establishing internet and other e-commerce enablement tools. One this is established, the firms will experience reduced costs of the transactions that they make (Rob and Coronel, 2009).
Benefits of e-procurement
Quesada, Gonzalez, Muller and Muller conducted a research in the year 2010 titled “Impact of e-procurement on procurement practices and performance”. They wanted to establish the correlation between the usage of e- procurement technology, practices and their effect on procurement performance.
They used a model which was derived from other researches. The model was tested using 368 procurement specialists as a sample. All the specialists came from the United States. The findings of this research indicated that procurement practices and e-procurement technology had a positive effect when applied in business firms.
The findings also showed that there was a high rate of adoption of e-procurement services in business for a majority of the companies that were surveyed. This suggests that a significant number of companies should buy into the usage of e-procurement technologies. This is a good way of improving the collection of information, contacting suppliers and conducting intelligence and analysis exercises (Quesada, González, Mueller and Mueller, 2010).
The support for e-commerce
E-commerce can be applied in both large firms or even in the Small and Medium Enterprises. SMEs can maximize the potential of their firms when they opt to use e-commerce. E-commerce can lead to the reduction in business coats for small businesses. These costs include the establishment of offices and other operational costs.
Notably, the cost incurred in establishing a single store is almost similar to that of setting up a fully functional e-commerce web for a small business. However, e-commerce has more benefits when compared to the storefront. E-commerce will help the business to reach a significant number of customers.
This is the main aim of any business venture. Once a substantial number of customers are reached, the business will be able to attain increased sales. The new customers will be likely to demand goods and services of the company once they are reached and are able to learn about the products of the company. The firm becomes more open to opportunities for instance up-selling and cross-selling (Thanasankit, 2002).
The other aspect which makes e-commerce to be more relevant and important in business is convenience. Online services are always available and can be accessed by the online shoppers at any time. These services can also be accessed from any place by the shoppers. Therefore, business remains active all the time (Rob and Coronel, 2009).
Business to business procurement services yields about 5 trillion US dollars each year. This was as at 2000. This is the total figure globally. This has been growing with time. An estimation made by the Boston consulting group showed that, in the US, business conducted transactions worth about $2 trillion in the business-to-business purchase. These transactions were done using the internet.
They were transacted as at the end of the year 2003. Business-to-business transactions are increasing with the explosion of internet usage and the growth of e-commerce. While business-to-business transactions have a positive impact on the growth of business, a lot of focus has only been paid to the large firms that are conducting such transactions. Small firms also conduct such transactions but they end up being left out in the overall statistics (Mullane, Peters and Bullington, 2001).
Schlenker and Crocker (2003) found out that there are real benefits of applying e-commerce in small businesses. There is a major problem that has prevented the application of e-commerce in small business firms. This is because the staffs of these firms have a notion that e-services are expensive.
They are thus reluctant releasing resources which would help in applying such services in the firms. These services have to be supported by the senior staffs that are well aware of the benefits of reducing business costs by way of embracing e-commerce (Caskey and Subirana, 2007).
Conclusion
Literature has revealed that e-commerce is a quite old phenomenon. However, its comprehensive or wide usage is a recent phenomenon. E-commerce gained prominence from the late 20th century when there was a revolution in the use of the internet and the worldwide web as a result of the revolution in information and communication technologies. E-commerce has gained roots in business especially so from the beginning of the 20th century.
E-commerce has become one of the fashions of doing business. Many business firms have either adopted online services or are working on modalities of exporting their businesses to the web and the internet. E-commerce involves either the use of the internet or the worldwide web services by organizations.
There are different activities that are related to e-commerce. These include online shopping, online banking, e-selling and purchasing, online retailing, e-procurement, e-travelling, electronic payment of online services and online investment among others.
Business and other non-profit motive organizations are adopting e-commerce initiatives at a very high rate. This, as argued by many researchers, is a reflector of the benefits that accrue to e-commerce. The general notion is that e-commerce is turning out to be a very influential tool in enhancing business performance.
Even the non-profit organizations are of the view that e-commerce will enhance service delivery in their activities. In this case, performance will be enhanced and is rated basing on how efficient and effective they are in delivering services.
Literature reveals that there is a difference in the rate at which organizations are adopting e-commerce strategies. Notably, big organizations are the major adaptors of e-commerce. Small and medium enterprises are buying into e-commerce at a very slow rate. This means that there are challenges of acquiring, implementing and enforcing e-commerce especially for SMEs. SMEs often have a low capital on which they operate.
Adopting e-commerce needs quite a substantial capital which goes into the installation of internet. However, this is just a fear as research has revealed that the cost of installing online services is affordable. Moreover, the benefits of adopting e-commerce will exceed the cost of installing e-commerce enablers by far. As it is now, more advanced countries are more favored in conducting e-commerce because of advanced technological, legal, organizational and developmental structures.
For organizations that are already using e-services, there are a lot of benefits being ripped. These includes improvement delivery of services to customers – supply chain efficiency, increased efficiency in procurement- e-procurement, increased number of customers – online marketing, improved service delivery in banks among many others. However, literature has also revealed that there are major barriers and challenges which come with e-commerce.
A good example is a security risk resulting from cyber terrorism, technical problems and policy problems related to adopting e-commerce. However, when proper prior planning is done before adopting e-commerce both small and big organizations will make substantive gains. Therefore, it can be concluded that the adoption of e-commerce is beneficial in many aspects despite a few hitches. In this respect, organizations should be encouraged to adopt e-commerce in order to maximize on their potentials.
References
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Appendix
A: Member responsibility matrix
This assignment was done by five people namely x1, x2, x3, x4 and x5. All the group members converged and discussed the topic together in order to get a deeper understanding of the topic of research.
After a discussion and understanding of the research topic we planned on how we were to conduct the research by assigning each group member a task which was to be completed by the member and presented for discussion and approval by the group. We assigned ourselves tasks basing on the topic which we thought were important for our research. Therefore, the topics were assigned to each member as in the table below: