E Commerce and Socio Economic Development - Research Paper Example

E-Commerce Literature Review Introduction There has been frequent development the development in terms of information technology and especially the use of computers for the last two decades. Computers precisely, are now slicker, faster and most significantly, more accessible. Convenience is becoming more and more important and contacting people throughout the world has never been easier. Adham & Ahmad (2005), Jehangir, Dominic and Downe (2011), and Shin-Ping (2008) argue that e-commerce gives SMEs one of the most cost effective ways of reaching their customers. The importance of having convenience when contacting people made the development of e-commerce. E-commerce will embody the selling of anything from goods and services by the use of internet using computers that are linked together. Gunasekaran and Ngai (2005) in contrast to Adham & Ahmad (2005) argue that beyond being strictly committed to internet businesses, e-commerce also involves improvement in business functions for traditional retailers. They also argue that it also helps face many businesses tasks including development, marketing, communication, sales and more. These innovations in prevailing business functions radicallydevelop productivity, sales and more. According to Gunasekaran and Ngai (2005) and Shin-Ping (2008), e-commerce is doing various businesses via the internet, since these days the world has become a web in which one has to worry about other businesses, and have an interaction, collaboration and exchanging of various business data with other businesses. However, Boateng, Heeks, Molla and Hinson (2008) there is some concern about the security of e-commerce and this is done through the examination of the current status of the framework under the e-Privacy Directive, and contemplation concerning the inclusion of a harmonized framework in the Data Protection Directive. Their findings show that in order for these connections to happen, there has to be a connection between one organization and another. E-commerce enables information interchange on demand to a unified platform where a company can connect to all its partners and customers and integrate easily. Successes of e-commerce Many companies tend to work together for producing ecommerce platforms whichimprove their customers’ experience as it increases their brand awareness. According to Blythe (2012), Bharadwaj and Soni (2007) and Sumanjeet (2010), for these companies to achieve this, they have to ensure that their websites are compatible with Search Engine Optimization (SEO), easy to use by the customers and other back-end prospective, and it was responsive to customers’ requirements. Sumanjeet (2010) however, argues that while the e-commerce platform is ideal for a company’s position because it is possible to integrate the site with the company’s brochure site and have a seamless transition, it is not always the ideal way of conducting business because of the fact that a majority of the market does not have access to the internet. The company is therefore able to strengthen its brand image and increase its customers’ confidence by having same commercial on all its sites, this is often very important in improving sales. In addition, Sumanjeet (2010) states that there is optimization of error handling messages including thank you messages in the site to prevent the clients from dropping out during ordering processes. Moreover, the site customized thank you emails, these shows customer experience has been thought and this will ensure low dropout rates. Customers have the easiest way of ordering similar goods in large numbers. Blythe (2012) states that featured product scrollers and categories that show special offers are included in the site and this increases the size of orders made by the customers. The site displays delivery prices and thresholds where the service is free and this increases transparency to customers. In contrast, Lin, Huang & Burn, (2007) state that there are often confidence banners that are featured across the e-commerce sites which instil confidence in the customers and this ensures that there are increases in the companies’ sales. Many e-commerce sites are developed to have the appearance of impulse offers, various related products and bundle deals, which was able to encourage customers to participate in last minute purchases. Designs of e-commerce sites The sites are also designed in a manner that is able to collect market data and this helps the company in targeting specific markets where it can venture. It has now become the custom for companies to create a professionally built ecommerce websites that have the ability to instill customer confidence while raising the companies’ brand awareness. According to Sperdea, Enescu & Enescu (2011) the sites are normally professional, look modern and are easy to use making the customers have a good feeling about the company.Most companies in the modern world tend to have rapidly changing marketsand this raises the risk that they may be left behind by their customers, and this means that they have to take drastic measures to ensure their relevance. Using e-commerce, these companies take measures to ensure that they bring operations closer to the customers and be able to gain better information regarding buying habits and at the same time be in a position of giving customers a platform in which they can give a feedback about products. Lin, Huang & Burn, (2007) state that this enables global companies such as GlaxoSmithKline to have qualified information that can be used for markets and development of better products. The main purpose behind being actively involved in e-commerce is to have a long-term vision for the company’s addition of value to the products manufactured in order to help in supporting its customers. This is done through having close contact with the customers and having an understanding of their shopping behaviours. It has been found that a company such as Lucozade Sports, which is the world’s leader in sports nutrition, has the main aim of being the best producer of sports nutrition and advice by developing a variety of sports nutritional products capable of satisfying the needs of sports personnel. These include products that have strength, fuel, recovery, hydration and quick recovery. The company has had a loyal customer base for many years and during this time, it has managed development and marketing on various platforms.Therefore, Lucozade has come to adopt e-commerce solutions in order to sell nutritional drinks directly to its customers. Recent research has shown that Lucozade began looking for e-commerce platform capable of allowing the customers to have brand categories, which would help them to understanding items that are related to their sports needs. In addition to this, the solution is required to be helpful in the process of streamlining internal processes while allowing the warehouse team to process orders in an easy manner, so that shipment can be done swiftly and effectively. Failures of e-commerce The use of e-commerce can be extremely useful in the expansion of the market scope and increasing business opportunities for companies. However, in order to use an e-commerce platform, a company has to invest plenty money not only to ensure that the system is up and running, but that it provides customers with satisfactory services. Toys R Us Company is one of the leading retailers of toys, baby products and other apparels and it tried to implement e-commerce so that it could provide its services to its customers from whatever location they were located. The company had plans of creating an e-commerce subsidiary so that it could become an established premier online toy, store and video game outlet. According to Sumanjeet (2010), the company lost track of thousands of its orders when it was unable to handle orders that were delivered to them, and this led to the company being fined up to 350,000 dollars despite the fact that the company had pumped millions of dollars in putting up the platform. The company spent more on both investment and distribution network, and besides this, the company announced a 75% slump of profits in that same year. The problem began when the company jumped into e-commerce systems while forgetting common factors, which had a huge impact on the company during the holidays. Zhao, Truell, Alexander and Woosley (2011) state that for the products to be shipped there had to be the presence of man-power to carry out the work of distributing during the holiday season. This slowed down the process with the increase in sheer volume of orders received by the service mail industry over a short time span. Very few companies have sufficient capital power needed to invest in large expansion of e-commerce system and this was the case with Toys R Us because it did not have enough capital to invest in e-commerce platform (Zhao, Truell, Alexander &Woosley, 2011).Besides lack of enough capital to invest in e-commerce, the Toys R Us website did not have the ability to allow customers to choose a variety of products that are sold online than those present in the real world. In online cloth shopping, customers are required to guess what they would look like when wearing the garments displayed on the website and in the company’s attempt to sell automobiles on the website without the opportunity of the customers to have a test drive was woe fully unsuccessful. There was a hard sell of the provisions because majority of the customers preferred picking products they preferred despite the inconveniences they had to undergo by doing shopping on their own. The other cause of failure of the e-commerce platform in Toys R US is poor delivery of the stocks to customers, since it is something different to get customers to the site while delivering ordered goods is another thing. Sumanjeet (2010) and Shin-Ping (2008) state that in the twenty first century, a large number of people try to set up simple e-commerce websites whose main purpose are to enable the selling and promotion of products. Some e-commerce websites have been very helpful to many businesses, but there have also been many failures that have occurred because of e-commerce. A case study of Boo.com is made by Shin-Ping (2008) as an example of one of the biggest failures of an e-commerce website, not only in Europe but also in the world. According to Shin-Ping (2008), this website was a British fashion store that was launched in 1999 with most of the capital required to start it having been raised by some few famous entrepreneurs. Because of the fact that most of its investors were famous people, this website became a high profile e-commerce website and everyone looked forward to visiting it to view the products that it offered. The idea that led to the creation of Boo.com was to produce a brand that was essentially European, which would eventually become the world largest fashion e-retailer. Khin, Fatt and Kaur (2010) and Shin-Ping (2008), however conclude that despite its great ambitions, this website turned out to be a failure since it lasted only a year in the market. The fact that famous entrepreneurs funded it and that it was a popular website does not seem to have aided it because things took a bad turn for it in 18th May 2000, when Boo.com was closed down. The failure of this website can be said to have been phenomenal because of the fact that it was most unexpected, as since its founding, it was believed that it would grow into one of the greatest success stories of e-commerce. The main reason for the failure of Boo.com was the fact that the investor funding available to it could not meet the spiralling marketing, technology and wage bills. Boo.com had spent had invested a huge amount of money into programming for multi-currency sales and product delivery, and the high maintenance costs in creating the 3D photographs for the product every month. Khin, Fatt and Kaur (2010), state that Boo.com was most extravagant in the provision of employment benefits and luxurious spending in its bid to attract "some of the brightest brains in Europe" a circumstance that may have contributed to its demise. Because of its extravagance, a situation was created where investors refused to invest any more cash into this business because they disagreed with the way that the business was run. In addition, according to Jehangir, Dominic and Downe (2011), the web design of Boo.com was poor because the website system limited the amount required so that only three transactions could be made in twenty minutes and between 1999 and 2000, the internet bandwidth was not sufficient for the average internet user to view the 3D website. This kind of approach could not persuade a customer to shop at this website again anddisheartened the prospective customer from making purchases over this website. Traditionally, customers are attracted to buy over internet because of the lower prices on offer. Boo.com was failed to do that because it only sold premium and quality fashion goods; the goods sold in this website were of high cost and the high cost of maintenance on the website increased the selling price of the clothes. Role of e-commerce in the modern world While e-commerce marketing targeting customers can be considered to be an immensely important tool that can be used by companies to gain an understanding of their customers who buy their products, it is not necessarily the only one. According to Cho, Ozment and Sink (2008), this process has to be augmented by these companies ensuring that there are open lines of communication available between them and their customers throughout that ensure that there is an understanding, which helps in the determination of a good and effective relationship. When conducting e-commerce, the company’s management must ensure that each customer is given a perspective of the product that is thoughtful and careful so that the customer can make an accurate assessment of it. In order for an online marketing strategy for a product to be successful, the company must display a willingness to conduct a type of marketing that is both constructive and objective. In addition, the company must ensure that it creates a situation where its customers display a willingness to take positively all the suggestions that are made to them, and to be able to work with the company to ensure that the products they receive are enhanced to their satisfaction. To gain a competitive advantage when using e-commerce, a company can introduce niche products. Niche products will enable the company to counteract the various threats arising from product substitutes, new products entering the market, and the competition that exists between companies. According to Bharadwaj&Soni (2007), using the internet as direct contact to customers, the company can get information from customers, identify the various target customers and produce goods and services that cater for the customer’s specific needs. A company can also obtain competitive advantage by expanding its product line. It has been found that for a company to have a competitive advantage using e-commerce; it has to manage its resources well. This exploits the transfer of various skills and even the sharing of various business activities such as promotion of products and services, and distribution which enables a company to have a competitive advantage. A company will be able to achieve economies of scale by utilizing its various resources such as the market information, both management and technical expertise it possesses; the company can also expand its products line into their existing product lines. According to Cullen and Webster, 2007) an appropriate price strategy is important for internet selling and a company can employ price discrimination in the selling of its products.This strategy is important because it prevents the customers from comparing prices of other related goods and services. The company, therefore, can collect information from its customers and be able to apply this strategy more effectively. Having an experience in the usage of the internet will enable future internet users to master the various technological developments enabling better networking of skills, people and knowledge in the various countries of the world (Boateng, Heeks, Molla& Hinson, 2008). With future usage of the internet, there will be untapped opportunities to use various initiatives and be able to leverage applications and be able to deploy the dimensions for future internet. Having forums for the internet will be able to allow various companies to develop and share various practices and experiences of using the internet. With these forums, companies will be able to develop ideas to overcome the various difficulties in global commerce and this will ensure that they not only make higher profits, but that their customers are satisfied. The advances in existing business utilities radically improve output, sales and more. These days the world has become a web in which one has to worry about other businesses, and have an interaction, collaboration and exchanging of various business data with other businesses. In order for these connections to happen, there has to be a connection between one organization and another. Al-Refaee (2012) states that e-commerce enables information interchange on demand to a unified platform where a company can connect to all its partners and customers and integrate easily. The marketing of products for online customers should be done using all the media available, both visual and print, to ensure that a much wider audience is reached than anticipated. This will guarantee the success of the product within the market for a long time since the marketing strategy adopted would be one that retains the attention of its audience. However, the studies conducted by Al-Refaee (2012) and Sperdea, Enescu and Enescu (2011) place a lot of reliance on the narration of the participants regarding incidents that have taken place to gain information from participant’s perceptions. Among the findings of both of these studies is that one of the best means through which the product can be marketed is online since there are billions of users of the internet who would be a ready audience. Most of those who use the internet today are young people and these are more likely than not to choose to make purchases online as well as be audiences for the online marketing strategies that various companies may choose to use. Because the internet is a leading tool in marketing, this is where most companies and other institutions go to when they need to acquire products for the use of their clients, in this case blind people. Consequently, according to Lin, Huang and Burn (2007) and Bharadwaj and Soni, (2007), e-commerce ensures that clients stay up to date with the current product so that they are able to get the best out of it.  Conclusion One would say that companies in the modern world have chosen to work together for the purpose of producing e-commerce platforms to improve their customers’ experience as well as to maximise their profits. In addition, these e-commerce platforms are designed in a manner that is able to collect market data and this helps the companies involved in targeting specific markets where it can venture. An example of companies that have developed platforms is Lucozade Sports, which is the world’s leader in sports nutrition and has been an active participant in e-commerce which has ensured that it retains its position in the world markets. It is a fact that while the use of e-commerce can be extremely useful in the expansion of the market scope it also needs plenty of money to be invested to ensure that customers are satisfied. While e-commerce marketing targeting customers can be considered to be an immensely important tool that can be used by companies to gain an understanding of their customers who buy their products, it is not necessarily the only one. This is the reason why companies have to work hard to ensure that they have the best customer service platforms to attract more online customers. References Adham, K.A. & Ahmad, M. 2005, "Adoption of web site and e-commerce technology among Malaysian public companies", Industrial Management + Data Systems, vol. 105, no. 9, pp. 1172-1187. Al-Refaee, K. 2012, "The Effect Of E-Commerce on the Development of the Accounting Information Systems in the Islamic Banks", American Journal of Applied Sciences, vol. 9, no. 9, pp. 1479-1490. 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