Success Factors Affecting the Spread of E-commerce Worldwide - Research Paper Example

Running Head: E-Commerce E-Commerce INTRODUCTION Since almost a decade, there has been noteworthy alteration in almost every area of human society, and business has been one of the most significant stakeholders of this global revolution. In specific, advancements in the field of information and technology have been one of the foremost causes of changes in the processes and approaches of business around the globe, as business organizations are now directly or indirectly depending on computers, communications, and technologies to survive and struggle in this competitive business environment. Among major developments in the field of information technology, appearance of internet service providers has been one of the major factors that transform internet from a limited-elite tool to a necessity of every home, school, and workplace. In other words, internet has been able to incline business organizations towards innovation of their business processes in the form e-commerce. In particular, e-commerce involves different transactions that are business-to-business, business-to-customer, and customer-to-customer (B2B, B2C, and C2C respectively) (Khosrowpour, pp. 21-25, 2004). With all such transactions, e-commerce is “the sharing of business information, maintaining business relationships and conducting business transactions using computers inter-connected by a telecommunication system” (Fingar et al, 22-26, 2000). In this regard, nowadays, business organizations are profoundly relying on the platform of e-commerce to carry out their business activities; however, some critical or key success factors are playing a crucial role in the spread and success of e-commerce globally that will be the major focus of this paper. However, before stepping into the discussion of success factors of e-commerce, it is very imperative to understand the basics of e-commerce, and this will be possible with basic understanding of different transactions encompassing the arena of e-commerce. From this aspect, bookshop was the first form of B2C application in the e-commerce that involved internet as a platform to sell books that gave an opportunity to the book suppliers to avoid physical stockings of the books, and it gave added-value facility to the book lovers to browse and buy the books without walking up to the bookstores. Another example of B2C is railway reservation applications that have become fundamental need of railway companies to sell their tickets on the internet. Besides B2C, E-Bay is the best example of C2C e-commerce that involves two stakeholders (buyer/seller); however, until now, C2C has been limited mostly to second-hand items, paintings, and antique items in which, two individuals carry out the buying and selling process with the help of a third party that facilitates the business activity. Last, but the most important form of e-commerce is B2B that constitutes the major share of e-commerce, and has been enjoying significant importance since the emergence of e-commerce globally. In specific, B2B is the extensive form of e-commerce that involves different business organizations buying, selling, paying, delivering, etc with the help of an electronic platform. Experts (Khosrowpour, pp. 20-29, 2004) believe that in the coming years, e-commerce will be the only way of carrying out businesses. However, in midst of such an importance and significance of different modes of e-commerce, it has now become imperative to carry out investigations regarding critical success factors that affect of influence different processes of e-commerce, and thus, the paper will now analysis and discussion regarding such key success factors. KEY SUCCESS FACTORS In every business organization, key success factors enjoy the most significant importance as they play an important role in determining success of any business activity in the organization. In other words, critical success factors are requisites that a company may ensure to achieve success. Researchers (Rockart, pp. 81-93, 1979) have indicated that critical success factors are not limited to any specific form and may range from external to internal, or from organizational to personal actions and activities that may influence of affect desired objectives of the organization. Until a decade ago, key success factors were not a part of information technology industry; however, recent studies have included the conceptual framework of key success factors in the field of e-commerce to ensure its efficient development while providing a structural support to the e-commerce industry. Studies (Hill, pp. 30-36, 2005) have pointed out that key success factors have until now played a significant role in facilitating organizations involved in e-commerce to evaluate and assess the performance based on different critical success factors that have now become an indication of spread, survival, success, or failure of e-commerce around the globe. Before identifying and discussing specific key success factors particularly that are responsible for affecting spread of e-commerce today, it is an observation that a number of researchers in the past have been carrying out the same studies while focusing on the e-commerce. In this regard, researchers have pointed out that so far, e-tailers are the major obstacles of e-commerce that limit the activities of e-commerce companies to ship their products overseas due to various factors of e-tailers such as shipping, customs, etc. Experts (Khosrowpour, pp. 66-69, 2004) believe that trust has been the most important factor that creates hindrances in the spread of e-commerce, and besides trust between the stakeholders, unavailability of computers and internet facilities is still an obstacle in a number of geographical locations around the world that has limited the scope of e-commerce until today. In addition to unavailability of internet facilities, consumers in a number of countries are still relying on the mode of cash to carry out their purchases that has been significant obstacle in the path of e-commerce global success. Experts (Rawley, pp. 339-359, 2006) believe that maintaining an individual look on the business websites is a critical factor that plays a considerable role in ensuring success of e-commerce. This has been the major factor of failure of various e-commerce websites globally that focused primarily on their products and services while overlooking the factor of familiarity on the internet that is very critical to ensure customer loyalty in the e-commerce. In other words, localization of website despite being an international business organization is considered an art in the e-commerce according to few experts. Researchers (Selnes & Hansen, pp. 79-90, 2001) have indicated that localization of websites is an effective way of acquiring and building trust with the consumers that is the major prerequisite in a B2B relationship. Like a usual business activity, it is very important for e-commerce stakeholders to ensure continuous evolution of the sites as the technology develops, as it is an observation that business organizations with extensive capabilities often confront failures due to lack of technological updates on their sites that has become a crucial factor in the success of e-commerce. In the year 2000, Gattiker et al. (pp. 126-140) emphasized the significance of cultural and economic factors in the success and spread of e-commerce around the globe. These experts argued that despite of lower costs of e-commerce as compared with traditional business organizations, it is very imperative that e-commerce organizations should have non-refundable capital for providing the facility of online shipping for individual consumers. It is an observation that unavailability of such disposable income has been one of the crucial factors of slower spread of e-commerce worldwide. In other words, a successful e-commerce organization must put efforts to ensure momentous investments to create and acquire e-commerce technological products that will be critical in determining consumer decisions. Besides, Gattiker et al. (2000, pp. 126-140) identified cultural risk factors as well such as language, values, norms, etc that will be a part of detailed explanation later in the paper. Still, such researchers argued that focusing on only English language would be detrimental for global spread of e-commerce, as translation into English language will somehow eliminate or diminish specific cultural values that are only possible in the local language. In this regard, language does play a critical role in the success or failure of e-commerce worldwide. Besides language and culture, Sairamesh and his fellow researches (pp. 242-252, 2002) emphasized the consequential ability of contracts and legal factors in the spread of e-commerce. They believes that in majority of the countries, there have been instances involving disputes regarding contracts, intellectual property, and legal matters that have been discouraging and slowing down the globalization of e-commerce on the internet. In specific, copyright matters exist in all the three modes of e-commerce (B2C, C2C, and B2B), resulted in the emergence of a huge number of companies offering patented businesses, copyright facilities, and contractual tools to ensure reduction in the legal matters that have become critical obstacles in the path of e-commerce success around the globe. In the year 2000, Castelluccio (pp. 85-86) identified approximately twelve key factors that play a considerable role in spread of e-commerce worldwide. In specific, these were “sufficient business procedures, maintaining financial information and association profile, high-quality website browsing, effective utilization of graphics, offering decision support, utilizing technology involving shopping carts, evaluating and assessing purchase delivery processes, getting hold of customers, offering value-added services, updating and improving website material, offering facilities for international consumers, and last, multi-channel incorporation.” Besides identifying key success factors for the triumph of e-commerce on global level, Castelluccio (2000, pp. 85-86) indicated a number of factors that act as obstacles and hindrances in the same process, and suggested that e-commerce stakeholders should take efficient steps to avoid such issues that may result in failure of e-commerce. Some of such issues were broken links on the websites, unavailability of agents on phone, spam mails on the internet, lack of security on the websites, etc that need immediate attention, and may result in detrimental outcomes in terms of spread of e-commerce worldwide. INTERNAL FACTORS Until now, the paper identified and discussed works of some of the researches in brief, in order to acquire a fundamental basis of key success factors affecting the spread of e-commerce worldwide. Now the paper will put efforts to identify and analyze some of the factors that matter significantly in the success of e-commerce internally in the business organizations. Reliability A huge number of studies have identified existence of a single notion that play the most important role in any service industry and that factor is reliability. In this regard, analysis of the literature (Awad, pp. 39-44, 2002) has indicated that in the industry of e-commerce, reliability has been the most common key factor that ensures service quality of any company. It is an observation that on the internet, huge number of companies gets involved in promising impractical offers and facilities to their prospective consumers, and the major drawback in this regard is that such companies focus primarily on one-time sales that has been detrimental for serious investors and e-commerce companies on the internet. From this aspect, reliability generally means capability of a company to fulfill the assured service appropriately; however, reliability has been the foremost key success factor that has been affecting the spread of e-commerce worldwide, and it has now become imperative to take considerable steps to ensure reliability in different modes of e-commerce. In the year 2002, Zeithaml (pp. 135-155) indicated that effective functioning of the websites is the common way of determining reliability of the company by majority of consumers in the e-commerce. It is observation that some websites are often unavailable due to malfunctioning cheap servers that enforce customers to doubt the reliability of the company, and that has been the case of huge number of companies in the e-commerce. Similar to Zeithaml, in the year 2003, Santos (pp. 233-246) argued that besides website performance, frequency in the updates of websites is another way of ensuring reliability of the company. Responsiveness Analysis of the studies has specified that although products and services matter fundamentally in every business process, however, in the e-commerce, surveys have indicated that responsiveness has been a crucial need of online consumers. In specific, customers are unhappy due to lack of responsiveness in the e-commerce, which has inclined experts (Amoroso, pp. 12-22, 2001) to consider it as a critical success factor affecting spread of e-commerce worldwide. It is an observation that usually during an online transaction and especially after the transaction, responsiveness factor plays a crucial role particularly in times of any issue regarding the product or service. In particular, responsiveness is the capability to handle the issues efficiently after the transaction in the e-commerce (Amoroso, pp. 5-15, 2002). In this regard, although a number of e-commerce companies promise 24-hr services to their consumers, however, many of the companies only promise such level of responsiveness that has resulted in lack of customer satisfaction, and subsequently, inefficient spread of e-commerce worldwide. Ease of Use In the e-commerce industry, ease of use is the most significant critical success factor that has been affecting the spread of e-commerce, and slowing down its emergence in different parts of the world adversely. Analysis has indicated that although various companies are involved in updating their websites and utilizing graphics and animations to attract prospective customers, however, it is an understanding that level of ease of use is reducing that should have been increased with other facilities (Hackney & Dunn, 51-57, 2000). One of the drawbacks of e-commerce is its prerequisite of knowledge and awareness about computers and internet, and thus, technologies such as shopping carts and payment forms require extensive knowledge of internet options that is affecting the industry of e-commerce unfavorably. In other words, nowadays, e-commerce organizations are focusing primarily on attractive representation of their products and services that is overlooking the needs and abilities of customers, and will be detrimental for e-commerce sales in the end (Kaynama & Black, pp. 35-44, 2000). Thus, it is very important that stakeholders of the e-commerce industry should take some efficient steps to ensure ease of use on their website that will be very momentous in developing the e-commerce industry significantly. Consumer-centric Strategy Like in conventional business environment, e-commerce industry is also experiencing the transformation of power from seller to the buyer. In this regard, it is very important that e-commerce companies should begin to accept such notion in their business activities by acquiring an approach of strategize things in a consumer-centric manner, another significant key success factor that is affecting e-commerce spread worldwide (Applegate & Gogan, pp. 1613-30, 1995). In the conventional business environment, it is still not possible for consumer to submit the feedback that will be in reach of other consumers; however, such option is available on the internet, and that is the basic reason of such importance of consumer-centric factor in the spread of e-commerce. In specific, internet provides the platforms to the customers to share their shopping experiences with other prospective consumers. For instance, one of the examples of such platforms for consumers on the internet is the Consumer Democracy (2010) that “is for information on products: quality, praise, complaints, ratings, features, descriptions, reviews, comparisons, discussion, problem reports, information, statistics, rankings, prices, rip-offs, bargains and shady affairs." Some of the other platforms on the internet are EComplaints.com that is an indication of the importance of consumer-centric strategy that is a significant critical success factor in terms of the success of e-commerce globally. EXTERNAL FACTORS Until now, the paper discussed and analyzed different internal key success factors that are in the hands of e-commerce organizations; however, few external factors are also affecting the spread of e-commerce worldwide that are out of reach of e-commerce stakeholders, which will now be the focus of this paper. Government Support The most imperative external key success factor in terms of the e-commerce success is government support that plays the most crucial role in determining the success and spread of e-commerce in any country. In other words, government policies of one country can be beneficial for emergence and development of e-commerce activities as in free market policies; however, on the other hand, restrictive policies of the government may result in detrimental effects on e-commerce industry of the particular country (Greenstein & Vasarhelyi, pp. 44-48, 2002). It is an observation that although majority of countries encourage development of e-commerce, however, imposition of taxes on e-commerce activities discourage efforts of e-commerce entrepreneurs. In this regard, governmental support is an important external critical success factor in the spread of e-commerce, and should become an essential component of every governmental policy. In particular, experts (Reynolds et al, pp. 69-81, 2003) have pointed out two basic roles of governments in the spread and success of e-commerce that are encouragement of e-commerce in the country by utilizing e-commerce applications in the governmental projects and organizations that will offer an encouraging indication in the private sector as well. Secondly, government can play an effective role in the e-commerce development by offering comfortable and encouraging legal infrastructure for the e-commerce entrepreneurs. Culture Experts (Hill, pp. 30-36, 2005) have indicated another crucial success factor for the development and advancement of e-commerce, culture. Researchers have pointed out that despite of materialization of the world, cultural and social environment plays a significant role in developing thinking patterns of individuals, and thus, culture influences and affects decision process in the e-commerce as well. For instance, in the United Kingdom, internet is more a platform for research and educational purposes, and in the United States, it is more of a platform for entertainment and shopping. As the e-commerce spreads, it will have to cater different and diverse cultural norms and values, and such incapability of dealing with different cultural factors will be affecting the spread of e-commerce worldwide adversely. Another example is of Chinese consumers (Efendioglu & Yip, pp. 45-62, 2004) who are generally more interested in carrying out the business activities while remaining in face-to-face communication of the buyer or seller, whereas, this does not matter in the United Kingdom. Thus, e-commerce companies should keep this external cultural factor in mind while developing plans for entering into the e-commerce industry. Language One of the major attributes, and at the same time, drawback of e-commerce industry is its borderless and virtual existence on the internet. However, such characteristic often becomes an obstacle, and often becomes critical success factor. Due to such borderless presence, language is one of the issues that confront both buyers, as well as sellers on the internet. Researchers (Bakos, pp. 1613-30, 1997) have indicated astonishing statistics in which, non-English users on the internet are in the double figures as compared with users speaking English language as the first language. However, majority of the e-commerce websites exist in only English language, another critical factor that is affecting the performance of e-commerce industry globally (Laudon & Laudon, pp. 19-27, 2002). In this regard, it is evident that e-commerce developers will have to put efforts to cater non-English users as well that will be very significant in increasing the number of online consumers on the internet. From this aspect, language is an external key success factor that is affecting the spread of e-commerce. CONCLUSION In conclusion, the paper has identified, analyzed, and discussed some of the significant key success factors that are affecting the spread of e-commerce worldwide. In the introduction, the paper included brief understanding of the e-commerce industry that has now become one of the biggest commerce industries globally; however, the discussion included a number of studies that identified various external and internal factors that are facilitating or obstructing the process of developing e-commerce worldwide. Finally, it is anticipation of the researcher that discussion and analysis of this paper will be beneficial for students, and particularly, stakeholders of the e-commerce industry in understanding different factors that are in relation with e-commerce significantly. REFERENCES Amoroso, D. (2001). “E-Business Success Factors.” Working Paper, San Diego State University. Amoroso, D. 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