The Pilot Exploratory - Essay Example

Egypt etc. E-commerce Is mainly considered to be limited to the sales aspect of the business, but it also entails the exchange of data and payment aspect of the transaction. 1. 2 Types of E-commerce: E-commerce is mainly deemed Into the following types: 1 . 2. 1 Business-to-Business (EBB): The EBB transactions are taking place between business concerns I. E. Manufacturers, wholesalers, suppliers, distributors. Applications of e-commerce for EBB not only involve efficient trading but also encompasses myriad of activities like forecasting of customer demand, flow of the needed Information among concerned parties, etc.

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Transactions with ultimate consumers by manufacturers, middlemen, etc. Are however excluded from the area of EBB. 1. 2. 2 Business-to-consumer (BBC): ICC advert to a business transaction taking place between a manufacturer, or retailer on the one hand, and an ultimate consumer for non-business use, on the other hand. Opening an online store Is not a big Investment today for a SEEM. In developed countries retailers are selling wide range of products and services over the net.

They consider web site as a major part of the promotional and advertising campaign along with the use of other tools such as advertising directories, newspaper advertising ND signage. A number of advantages accrue to both the retailers and consumers, included among them are; Shopping can be faster and more convenient; retailers get access to larger customer base; retailers can make approach not only to national but also to International customers; and incur lesser running cost than physical stores. There are also some challenges that are faced In e-commerce In using Its BBC model.

The two major hurdles that come across BBC e-commerce are, firstly, bringing and making large number of customers to buy online, and secondly, to make a customer loyal to your online store for a longer period of time. Small retailers mainly find it difficult to maintain their competitiveness due to the rapid changes taking place In technology, changing customer preferences and maintaining lower prices. Generally online customers are more price-conscious and are easily tempted by slightly lesser price, which makes it more difficult for retailers to retain online customers. . 2. 3 Business-to-Employees (BEE): EYE e-commerce generally refers to ordering for supplies by employees which they use in their jobs, but this concept has now really grown and includes much more. For very easily by using BEE e-commerce. These orders are completely electronic in auteur and supervisors are asked to approve these orders Just to monitor that employee does not exceeds its order limit. BEE allow the employee to access their own records in order to update address information, and maintain their internal resume.

A major benefit that companies have got by adopting BEE technologies is that it has dramatically reduced the administrative cost and has also lowered the burden of human resources department for maintaining employees’ information and records. 1. 2. 4 Consumer-to-Business (CB): CB e-commerce refers to a setting in which consumers decide what they want to ay, and the vendors decide whether, or not to accept the consumer ‘s bid. The following is an example of CB. A person wants to fly from Appeaser to Karachi, but has only RSI. 8000 in the bank account to make the payment for this round- trip.

He advertises on an Internet CB site, looking for airlines that are offering this round trip for RSI. 8000, or less. The main feature of the Internet here is that it creates a segment of customers with specific need of services in which a number of airliners will be interested in offering those services. 1. 2. 5 Consumer-to-consumer (ICC): ICC e-commerce refers to a setting where consumers among themselves buy and sell goods. The most popular example of ICC e-commerce is “e-bay’, it is a website which brings a large number of people from all over America and I-J, provide them a platform where they can auction their personal belongings.

This concept has also been adopted in Pakistan. Most popular example from Pakistan would be “Passels. Com” where cars are being auctioned by their owners, and are purchased by other consumers. ICC e-commerce has its own advantages, including the following are some: access to broader market, no intermediary is involved, convenient or buyers to search the product they are looking for with the required specifications. Other than five major types of e-commerce, the following are the names of some not so popular types of e?commerce which are not meant for commercial use.

Government-to-Government (GAG), Government-to-Employee (GEE), Government-to- Business (EBB), Business-to-Government (826), Government-to-citizen (GAG), Citizen- to-Government (COG), are amongst these modes of commerce. These modes are mainly used for administrative work such as registrations to licenses renewal, filing taxes to businesses, etc. This research is mainly related to Business to Consumer (BBC) e-commerce which is commonly known as E-tailing or virtual storefront.

So before proceeding forward in the report it would be better to first explain E-tailing briefly and review its history. 1. 3 E-Tailing: E-tailing (electronic retailing) is the selling of consumer products on the net, examples of goods commonly transacted includes books, garments, games, fashion accessories, etc. The idea of E-tailing was one of the talked about topic, whenever discussions related to internet took place among economists, analysts and entrepreneurs back in the year 1995. E-tailing is synonymous with business-to- consumer (BBC) transaction.

E-tailing began to work for some big companies and some Seems in America in the year 1997 when Dell Computer reported that multimillion dollar orders were taken at its Web site. In the same year Barnes and Nobles e-tail site was launched. This website was launched in haste after watching e-tail site was opened on the same footings as that of Amazon. In the year 1997 many companies biblically announced their achievements they had made in their e-tailing business, for example sale of the millionth car over the web by Auto-By-Tell, and Nielsen Media’s recorded 10 million people purchasing goods on the Web in the same year.

Growing popularity of e-tailing resulted in the development of software programs that were used for creating online catalogs, and also had management tools that will help businesses that are operating on the internet. 1. 4 Key drivers of E-tailing: Different key drivers of E-tailing are identified by many researchers over the years because the understanding of these key factors, E-tailing trends in different countries can easily be analyzed. The following are some of the main key drivers that are generally discussed by many writers and researchers.

SOCIAL FACTORS: Social factors includes literacy rate of computer and information technology in the region, because if the computer literacy-rate is high, it will mean that potential workforce is available in the society. It will also mean the existence of potential customers who can easily grasp the idea of e-tailing, and are likely to adopt it. ECONOMIC FACTORS: Economic factors include cost of hardware and software that are essential for e- tailing, cost of transportation, and its infrastructure, cost of telecommunication, and banking infrastructure, and the necessary mechanism for making and receiving payments.

When the above- mentioned costs are low, and the banking infrastructure is strong, and updated, it will positively affect e-tailing and will help in its growth. POLITICAL/ LEGAL FACTORS: These include government’s awareness and support programs, and the resolve to promote new technology in the region. It also includes laws and regulations made by the government to protect the rights of both buyers and sellers in the cyberspace. The presence of strong awareness level, and the needed regulations provide conducive environments to the growth of e-tailing business in the region.

TECHNOLOGICAL FACTORS: It includes telecommunication advancement in the region and penetration of these technologies in the society, also it includes availability of internet services and networking infrastructure. ORGANIZATIONAL CULTURE: That is , organization should be adaptive of new technologies and is willing to implement them in order to achieve its organizational goals. COMMERCIAL BENEFITS: An other key driver is that the firm realizes the financial benefits that comes from the lower cost and efficiency of the new technologies. . 5 Benefits of E-tailing to Business: Major benefit of e-tailing is that, business get access to international markets and also reach out to larger customer base than in the case of physical store. By e-tailing businesses can sell their products directly to international customer without investing heavily in other modes of international business for example export licenses, foreign distributors, foreign direct investment (FED) etc. Low cost of opening and maintaining an online store is an other benefit to the firm.

Opening a physical store in a prime location, spending heavy money on its interior decorations, hiring and recruitment of staff and its utility expenses cost more than an online store such smaller than a retail store and it is not necessary for this place to be in a prime location as its physical existence is of least importance. Less expensive interior d©core and lesser number of employees further keeps the over all cost of the e-tailing store on the lower side.

Firm can add as many products to its online store as there are no physical boundaries as in the case of physical store. Adding more product lines to its online store will help the firm in targeting more customers and in turn helps the business to grow. E-tailing can be done twenty-four hours a day, seven days a week. It is not time bound like retailing. So e-tailing can generate more revenues by operating twenty-four hours a day thus benefiting the business. 1. Limitations of E-tailing to Business: Lack of sufficient security measures to product e-tail store from being hacked and to protect personal information of the customer that is registered on the website when they use credit cards for payment purposes. By not taking proper protection measure the firm may fell target to cybernetic and this may create legal problems for the firm as it was their responsibility to protect customers information from getting leaked. An there limitation for an e-tailing firm may be rapidly changing technologies.

It affects business negatively as it will incur costs for changing the current technologies after short interval of time which will hinder the smooth running of the business. High level of competition from both national and international e-tailing firms as they would be doing e-tailing for many years and has unique product line and loyal customers. So it would be difficult for a new online company to compete with experienced and well established firms An other limitation for an e-tailing firm is that of availability of skilled and computer literate personals.

In the countries where computer literacy rate in low and people are not aware of the concepts like e- commerce and e-business, an e-tailing firm will face a hard time in establishing itself. Other limitations includes technological limitations which includes, poor internet services, lack of banking services that are essential for online store for example merchant accounts service, no credit cards , poor payment system by credit cards, poor availability of electricity and poor transportation infrastructure with the country and also outside the country. . 7 Overview of E-commerce in Pakistan: The banking sector is causing E-commerce to grow in Pakistan. Almost all banks in Pakistan have started online banking and are helping their clients by giving modern e-commerce banking facilities such as online banking, mobile banking, credit card, ATM facility and also the online payment of the utility bills. The growth of e- commerce business in Pakistan has also created more e-commerce Jobs in Pakistan. 1. 8 Growth of E-commerce in Pakistan: Internet usage and users in Pakistan are growing rapidly.

According to the “Economic website, there were an estimated 2. 5 million Internet subscribers and about 18. 5 lion Internet users in June 2009 and Internet access had expanded from 29 cities in August 2000 to 950 cities and towns by June 2009. Optical-fiber networks were available in 53 cities in the August of 2000 whereas in the June of 2009 the numbers of cities were increased to 840 cities. At present Pakistan have 42 registered internet service providers that are providing internet service.

By the year 2006 almost 90% of the branches of commercial banks that were located in urban areas were computerized and many banks and exchange companies were offering online services like transfers of funds from other countries. Mobile-phone banking services are now also offered by many banks which make it easy for customers to pay utility bills using their mobile phones In the August of 2006 several e-commerce projects were announced. The worth of these projects was approximately USED mom. These projects were for both the private and public sectors and were applicable at federal as well as provincial level.

Investment up to 100% was allowed to foreign investors in software companies to increase foreign interest in Pakistanis technology sector. Almost 100 call centers were established in last three years in Pakistan. 1. 9 E-tailing business in Pakistan: Understanding the importance of information and communications technology (ACT) in today’s world, Pakistan is promoting e-commerce to help small businesses to improve their efficiency, to create more employment and most importantly to reduce poverty.

In an international conference in Islamabad (2007-08), organized by the Ministry of Science and Technology, UNDO, on e-commerce and development, and the UN Conference on Trade and Development, brought together experts to review Pakistanis progress in the area of e-commerce and recommended new strategies. Experts were of the view that e-commerce will encourage business, government and academia to work more closely together. Dir. Attar-Raman, the then (Minister of Science and Technology), in the conference mentioned government interest in plans to put an e-commerce policy framework in place.

He believed that the private sector would be the driving force behind e-commerce; he also said that, if the government succeeds to provide a simple, secure legal environment, e-commerce would play a major role in the economic development in Pakistan. Pakistan has recognized CIT as a major source of economic revitalization, and the Ministry of Science and Technology as asked UNDO to mobile e-commerce expertise to help develop appropriate policies and identify areas where it can benefit the country’s development, including bringing poor communities into the economic mainstream.

As E-commerce is not widely adopted by the people of Pakistan, Some big companies however are doing a successful business through e-business. Some of them include Malabar Private Limited Malabar IIS a Karachi-based online business which provides auction, trading and classified-services online in Pakistan. Malabar offers the most convenient, inexpensive and dependable online services. Through consumer-satisfaction-driven sound practices such as using the Internet to allow prospective sellers and buyers to competitive pricing that is easily able to undercut competing merchandise services in Pakistan. Bellicosity. Com Bellicosity. Com IIS one of the leading online shopping stores in Pakistan. It was founded in 2001. Its head office is located in Dublin, AJAX. It offers a vast range of products. It supplies its products to world’s leading manufacturers, retailers, corporations as well as too single customer across the globe. They privilege their customers with services that are quick, easy and reliable. Products are sold at the most competitive prices with free delivery in Pakistan and AJAX. Bellicosity. Mom is in process of expansion by introducing new brands and product categories to their website in order to fulfill their vision that people can buy anything they desire online without any inconvenience. 1. 10 Problem statement of study: Today, the concept of online stores is global. It was first introduced in the Western world and today the concept has been adopted in many Asian countries. In Pakistan the idea of online stores is not new but it is not widely accepted so far. The online tortes that exist in Pakistan are mainly operating from capital cities of Karachi and Lahore.

This research is basically conducted to identify the reasons due to which the idea of online stores is not widely practiced by local retailers of Appeaser. 1. 11 Scope of the study: To identify the reasons for low acceptance of online stores, survey/interviews will be conducted with local retailers from Appeaser. The retailers that were surveyed were related to different product lines for example Redeemed garments, Home textiles, Books, Shoes, Furniture, sport goods, Computers and mobiles.

Examples of such retailers are given below. Imperial stores Mobile zone Peak-Danish Furniture stores Computer channel Eased Book Bank But while conducting this research it has been taken care of that the retailers that are interviewed were selling products that also easily be sold on the internet and are not prohibited by transportation companies for delivery, that’s why retailers selling products like food products, Drugs, alcohol and perishable goods were not included in the sample. . 12 Objectives of the study: To identify the reasons of non-existence of online stores in Appeaser To measure the wariness level of local retailers about E-tailing To assess availability of fundamental resources needed for E-Business in Appeaser. To anticipate future Prospects of Online retailing in Appeaser in the present environment. 1. 13 Limitations: This research also has its due share of limitations.

One of the limitations is that of obtaining the required information from the retailers in case of their lack of awareness of the concept of E- tailing and E-business. The second limitation is that of time constraint in which the research study has to be completed. The final limitation specially in the present law and order situation in the country. 1. 14 Plan of Study: Chapter two of this report is focusing on the “Literature Review’. In this chapter case studies on the topic are discussed for the understanding of the topic of the research.

In chapter three “Research Methodology’ of the report is addressed, and in which issues such as size and characteristics of the sample will be entertained, the type of data that would be collected, the research tool that would be used to collect data e. G. Questionnaire survey or an interview etc. Chapter four discusses the availability of monumental resources, infrastructure and administrative bodies in Pakistan and specifically in Appeaser that are essential to establish and run an e-tailing business.

Chapter five is the “Data Analysis” I. E. The data that is collected by following research methodology would be analyzed in detail. Chapter six is the final chapter of the report which comprises of “Conclusion and Recommendation” that would be drawn on the basis of the analysis. Chapter 2 Literature review Literature review related to the research topic was not easy to look for because the problem of retailer’s hesitations in going online is new to this region where in plopped countries this behavior of retailers is a long gone story.

But still by going through research papers and articles that has been written by Indians and Americans some relevant literature is found that would put light on the issues and barriers that Seems (Small and Medium Enterprises) could face in taking their businesses on net and these barriers become the reasons of hesitation for many businessmen about making their established brick and mortar business, to a click and mortar business. A research paper titled e-Value propositions to Small and Medium Enterprises (Seems) was written by a CITIBANK employee Mr..

Sank Krishna in the year 2004. This research paper highlights the key e-commerce initiatives that are crucial to the growth and development of Seems in the emerging markets. In his research the author had used data which was collected by a European research firm in the year 2000. This data highlighted the issues that were faced by European Seems in going online. The following issues were mentioned in the that will protect Seems against cases of frauds in making e-tailing transactions. Long training period I. . It will take time to train employees according to the requirements of e-business structure. Expensive hardware I. E. High investment costs will be involved for purchasing and installing the required computer systems and equipment for conducting the business. Heavy communication expenses: I. E. High costs of internet facility and telephone charges are to be paid by the business. Lack of specialized staff I. E. No specialized personal would be available within the organization to run the e-business set up.

Additional personnel are to be hired and trained in order to handle the e-business or e-tailing activities. Reorganization problems I. E. Problems that will arise due to changes in the organizational structure hen the business shifts from the conventional form to the new form, which exists virtually. Low acceptance of e-tailing by the employees I. E. It would be tough for the employees to understand e-business model as they are used to the conventional practices, and this may result in dissatisfaction of the concerned personnel.

After conducting research on the above mentioned points useful insight came forth. 47% weight was given to the problem of lack of legal guarantee by European Seems. Whereas, 21% weight was given to the long training period required to train the concerned employees. The third highest weight of 20% was given to the procurement of expensive hardware for the e-tailing task. A weight of 14% was given to the issue of low acceptance of the new idea by the employees assigned to the Job.

High costs of communication came in fifth position with the weight of 10%. A weight of 12% was given to the issue of lack of specialized personnel and the lowest weight of 11% was given to the issues related to the reorganization of the firm by the European Seems. From the results revealed above it could be deduced that most European Seems at that time had one or more reservations (I. . Issues mentioned above) pertaining to conducting their business on internet. These factors served as bottle necks in the early acceptance of e-tailing business.

Availability of E- commerce Support for Seems in Developing Countries is another research which was conducted in the year 2008. This research was conducted by two researchers Mr.. Mashes Superabundant and Robin Lawson. As the title suggests, the research was conducted in a developing country I. E. Sardinia. Sample from Colombo was taken as a representation of developing countries. The main objective of this research was to e the availability of support system that can result in the early acceptance of this mode of conducting business.

The literature that was used by the researchers for their study comprised of two parts; Barriers to “Information and Communication Developing Countries In the first section of the study the researchers discussed that the major barrier that Seems of developing countries face is the lack of knowledge of their owners and managers about e-commerce, the technologies available, and the benefits that they would have from adopting e-commerce. Another problem that they addressed was hat of incorporating e-commerce to the existing organizational environments.

Further in the literature it was mentioned that The Organization for Economic Co- operation and Development (COED (1998) had identified the following barriers to e- commerce, Lack of awareness Lack of recognition of the benefits of e-commerce Unavailability of human resources and skills for conducting e-tailing High setup cost Lack of legal securities related to e-business These barriers to e-commerce were reported for Seems of member countries of COED. NOTE: COED comprises of countries like Australia. Greece, Denmark, I-J, USA. In the second part of their report they mentioned barriers to the adoption of e-commerce in developing counties. The study revealed that the problems that are faced by developed countries in the acceptance of e-commerce are different from those encountered in developing countries.

Factors retarding the adoption of e-commerce in developing countries includes problems like: Poor telecommunications infrastructure, lack of skilled personnel to develop and supports- commerce sites, lack of assistance that consumers needed in order to understand buying procedure on Internet, lack of timely and reliable goods transportation systems for the delivery f physical goods, low credit card ownership, lower level of consumers’ income, and low density of computer and Internet ownership by the people.

In South Africa a study of Seems adoption of e-commerce found that adoption is heavily influenced by internal factors of the organization, which are as follow; Lack of access to computers, software/hardware, affordable telecommunications facilities, low e-commerce use by supply chain partners, concerns regarding security and legal issues, lack of knowledge about e-business of both the management and employees, and unclear benefits from e-commerce were found to be main factors that were limiting he adoption of e-commerce / e-tailing.

A similar study conducted in People Republic of China found that low diffusion of computers, high cost of Internet services and lack of online payment processes directly influence e-commerce. Poor transportation and delivery networks, limited banking services to support e-business, and uncertain taxation policies indirectly inhibit e-commerce adoption.

A study conducted in Egypt found certain inhibiting factors resulting in non-adoption of e-tailing: factors include lack of awareness and education, small market size, weak e-commerce infrastructure, ad telecommunications infrastructure, poor financial infrastructure, inadequate legal system, non-supportive role of government and social and psychological factors. A comparison of two studies in Argentina and Egypt suggests key factors affecting e- commerce adoption in developing countries are: lack of awareness, poor telecommunication infrastructure, and changing cost of organization structure.

On the basis of their research they developed a conceptual model on which they divided the barriers to adoption to e-commerce in Seems in developing countries in two major the organization. The second category was of External Barriers which includes barriers related to Infrastructure, Politics, cultural/social and legal/regulatory domain. Figure Borrowed from research paper “Availability of E-commerce support in developing countries” On the basis of the above mentioned conceptual model the researchers developed a research methodology on which the research was conducted to test the validity and reliability of this model in Sardinian market.

The research was carried out in three stages. The use of such multiple methods is widely accepted as providing increased richness and validity to research results 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 end each stage gave very useful findings pertaining to Sardinian Seems. On the basis of the pilot study researchers reported that the majority of respondents ranked lack of awareness to be the most significant barrier to the acceptance of e-tailing as a mode of doing business. Next important reported barrier was stated to be the cost of Internet, equipment and e-commerce implementation. The third highest ranked barrier was inadequate telecoms infrastructure.

Unstable economy, political uncertainty, lack of time, channel conflict, lack of information about e-commerce and lack of access to expert help, were also stated as other barriers by the respondents. Analysis of data collected revealed that lack of skills, lack of awareness of benefits and returns on investments were the highly ranked internal barriers. Whereas a list of external barriers that were found are as follow. External Barriers Cultural Barriers Lack of popularity of online marketing and sales Infrastructure Barriers

Low internet penetration in the country Inadequate quality and speed of internet services Inadequate infrastructure of e-commerce support services in the country Political Barriers Unstable economic climate in the country Changing regulations with each government change Social Barriers Lack of information of e-commerce No access to reliable expert help Senior management in other sections lack CIT knowledge Legal and regulatory Barriers Little support to Seems from government and industrial associations Inadequate legal framework for business using e-commerce No simple procedures and guidelines