E-commerce (online shopping) in Saudi Arabia and the UK - Coursework Example

E-commerce (online shopping) in Saudi Arabia and the UK Introduction The need to promote the sales for many organizations has promoted the rise of E-commerce1. However, E-commerce was initially a preserve of large companies, until the perception for its structures and models changed. Recently, many organizations, both big and small are venturing into E-commerce, which is a promising prospect for enhanced growth. Therefore, to reap the benefits arising from E-commerce, many governments have been promoting technology use for the governmental and the private sector organizations2. In advancing technology use for business growth, Saudi Arabia and the UK alike have been involved in E-commerce. Structure of E-commerce in Saudi Arabia Saudi Arabia has adopted E-commerce as a channel for sales and distribution, to enhance the internationalization of the country’s brands and sales, while also reaching the target market 1. The country has a large retail market, consisting of domestic consumers of both genders, whose purchasing power is high. The rate of growth of the Saudi Arabian Middle Class has been on the rise, making it possible for a large population to earn good incomes, which increase their purchasing power 2. However, E-commerce has not been fully adopted in the retail sector, due to lack of effective knowhow, lack of necessary infrastructure and lack of requisite full government support 1. Nevertheless, the structure of E-commerce in Saudi Arabia takes the form of business-to-business (B2B) for large organizations mostly in the manufacturing sector, and only to a small extent in Business-to-Consumer transactions. Therefore, for most retailers in Saudi, E-commerce and online shopping is still a new business, since there is already a big market with sizeable incomes that supports the sector5. Therefore, the structure of E-commerce in Saudi Arabia does not take the form of full Business-to-Consumer (B2C) integration. It operates between large organizations which apply it to sell their products domestically and internationally2. Structure of E-commerce in the UK In the UK, internet based business have been operating for many years. In fact, the UK ranks as the most internet-based economy in the world3. The rate of E-commerce in the UK grows very fast, with its contribution to the economy being significant. According to a study conducted by the Boston Consulting Group (BCG), E-commerce alone contributed 8.3% of the UK economy in the year 20104. This serves to indicate that buying and selling of goods and services over the internet is a serious business in the UK. The structure of E-commerce in the UK takes the form of retail marketing, where the purchase of products by customers over the internet is a routine business. According to the BCG study, online purchases contributed 13.5% of the total retail purchases that were made in the UK for the year 20103. Considering that the rate of E-commerce and retail marketing is growing at a very high rate, it is projected that this rate will double within the next 6 years, to stand at 23% by 20163. Therefore, in the UK, the structure of E-commerce takes both the form of B2C and B2B. Under the B2C E-commerce, it is observed that 66% of all adults in the UK make their purchases online. B2B transactions that are undertaken online are also high4. Therefore, E-commerce is a major channel for sales and distribution in the UK. Comparison of online shopping in the UK and Saudi Arabia While E-commerce has been thriving in the UK for many years, it has not had strong grounds in Saudi Arabia. Nevertheless, with the current need for businesses to internationalize and sell their products beyond their national borders, E-commerce has started gaining ground in Saudi Arabia. The growth of online shopping in Saudi Arabia over the years has increased, with a rise from 11% of online shopping in 2000 to 30% in 20111. Currently, the most booming business in Saudi Arabia E-commerce is the sale of air ticket, home appliances and electronics. The number of people involved in online shopping has grown significantly, to reach a high of 2 million by February 20125. On the other hand, E-commerce and online shopping are major economic contributors in the UK, with over 32 million adults using the internet to purchase products in the UK6. Clothing and shopping items make the bulk of online purchases, with 46% of online shoppers buying these commodities in 2011. Film and music purchasing also forms the bulk of online shopping in the UK, with 40% of all online shoppers going for these commodities in 20113. E-commerce has been growing significantly in the UK; having internet businesses contribute 7.2% of the overall UK GDP in 20094. The rate of online purchasing has been growing significantly, with the rise in adult population undertaking online shopping from 51% in 2008 to 66% in 20104. Advantages and disadvantages of E-commerce (online shopping) for Saudi Arabia and the UK There are various advantages associated with E-commerce for both Saudi Arabia and the UK. E-commerce and online shopping has significantly contributed to the growth and expansion of business6. Additionally, E-commerce has become a significant contributor to the economies of these countries, with E-commerce and internet businesses contributing 8.3% of the UK economy in 2010 and making up 7.2% of the overall UK GDP in 20093. Another advantage is that E-commerce is a channel that has been exploited by many businesses to internationalize their brands. While it is a great challenge for companies to venture into foreign countries and establish their affiliates there, E-commerce has provided organizations with a channel through which they can sell and distribute the products internationally6. Additionally, E-commerce and online shopping have allowed businesses to keep in contact with their customers efficiently. However, the disadvantages associated with E-commerce and online shopping for Saudi Arabia and the UK is that, they have increased the risks associated with online fraud2. Despite the two countries having a good network of internet infrastructure, lack of credible payments methods have hindered half of the population that has internet access to engage in online shopping in Saudi Arabia5. Reference List (1) Almehmadi, B. (2011). Measuring the factors influencing e-commerce growth in Saudi Arabia: I.S. success factors and demographics measurements. Saarbrücken, Germany, LAP. (2) Fazlollahi, B. (2002). Strategies for ecommerce success. Hershey, Pa, IRM Press. 32-56. (3) Daniel, M & Grimshaw, J. (2012). An exploratory comparison of electronic commerce adoption in large and small enterprises. Journal of Information Technology, 17:3, p133-147. (4) Jun, L, Mitra, J & Matlay, H. (2010). E-commerce and management of channel conflict: evidence from small manufacturing firms in the UK. International Journal of Technology Management, 28:8, p747-766. 20p. (5) Orloff , A. (2012). E-Commerce in Saudi Arabia: Driving the evolution, adaption and growth of e-commerce in the retail industry. Sacha Orloff Consulting Group. 1-25. (6) Tassabehji, R. (2003). Applying e-commerce in business. London, SAGE Publications. Read More