Impact of E-Commerce and E-Business on Retail Industry of Singapore - Research Proposal Example

The impact and implementation of e-business and e-commerce to support small and medium size retail industry in Singapore Table of Contents Introduction 2 e-Commerce and e-Business in Trade and Business 3 Singapore Retail Industry and Importance of e-Commerce and e-Business in Retail Sector 5 e-Commerce and e-Business: Issues and Prospect in Singapore small and medium size retail industry 9 Conclusion and Recommendation 10 References 13 Introduction Technological advancements in human life have brought significant changes in the society as well as in human activities. Internet is one of the major evolutions for the growth and development. Besides, the increasing complexities of human activities necessitate the importance of technologies. Trade and business is the one of the major areas which has experienced a significant development in recent years. Globalization and technological advancements are the two major factors behind such rapid growth. In order to compete with others and to increase market shares, the business organisations implement multiple technologies for shaping their core competencies and for achieving cost effectiveness. In this respect, e-commerce and e-business are two technological advancements which plays very significant role in shaping modern trade and business. It has helped the managers in managing and controlling the challenging tasks of business activities. “According to Andersen Consulting, 80% of European top managers recognise the importance of e-commerce for their competitive edge – not only for marketing and sales, but also for purchasing and procurement” (Kidd, 2000, p.51). This paper will attempt to deal with e-commerce and e-business in trade and business activities. More specifically, this paper will focus on the use of e-commerce and e-business in retail industry of Singapore. The primary objective of this is to evaluate the impact of e-commerce and e-business to support the retail industry of Singapore and to provide a set of plausible recommendations. In this respect, at first, this paper will present a brief explanation and background of e-commerce and e-business. This section will provide a definitions and differentiations of the two term ‘e-commerce’ and ‘e-business’. Next section will include the importance and use of e-commerce and e-business in trade business by figuring out its multiple applications for retailing business activities. The third section will describe various issues and prospects of e-commerce and e-business for small and medium retail industry of Singapore. Finally, based on the analyses and findings from literature review, set of relevant recommendation will be offered for the retail industry of Singapore. The overall discussions and evaluation and will concentrate the on the thesis statement of this paper which is, ‘the use of e-commence and e-business will the small and medium retail industry of Singapore’. e-Commerce and e-Business in Trade and Business In the global business, the scope of e-commerce and e-business has been expanded tremendously. This has been possible due to increasing popularity and awareness regarding information technology and internet. “With developments in the Internet and Web-based technologies, distinctions between traditional markets and the global electronics marketplace-such as business capital size, among others are gradually being narrowed down” (Kumar, 2009, p.38). These web-based information technologies are very important management tools in strategic positioning which help the business organisations to identify and grab the underlying opportunities. This is also very important for optimal utilization of human skills and other resources (Andam, 2003). In the business activities, e-commerce and e-business are very important for strategic positioning. e-Commerce and e-business are interrelated with other but there are some differences between these two from the business perspectives. Therefore, in order to better understanding, it is necessary to clarify these two terms. In the words ‘e-commerce’ and ‘e-business’, the ‘e’ stands for the ‘electronics network’ which implies that these two terms focus on the web-based information technology. Moreover, the two words ‘commerce’ and ‘business’ referred to activities related to trade and business. Therefore, as per their terminology, both words involve the use of electronic networks and information technologies in trade and business activities. e-Commerce is generally referred as the utilisation of internet for buying and selling. At present, a number of companies and retail organisations offer their consumers to buy products through their websites. The websites include necessary web-based technologies that enable consumers to place their order and then, the companies deliver the ordered products to respective consumers. However, e-commerce is also very helpful for other commercial tasks like non financial activities. United States Postal Service has identified that there are two major components in e-commerce services. Firstly, the “product or services that (1) require internet to do the business and (2) generate revenue to USPS through user charges or licensing fees” (United States General Accounting Office, 2000, p.9). Gasós and Thoben have also presented the similar comments for defining e-commerce. They stated that “the purchase of goods, services or other financial transactions in which the interactive process is meditated by information or digital technology as both locally separate, ends of interchange” (Gasós and Thoben, 2003, p.48). In case of internal business process, e-business is very important as it is very helpful for the managers in controlling the operational activities. Primarily, it deals with internet process for managing different business activities like procurements, supply chain, manufacturing, marketing etc. Unlike e-commerce, e-business does not deal with the buying and selling and it is broader concept than the former. The primary objective of e-business is to bring efficiencies in business operation by utilizing the web-based technologies (Wright, 2002). McKay and Marshall (2004) has defined that “e-business is the use of the Internet and other information technologies to support commerce and improve business performance” (Turban, 2010, p.46). It is very helpful in serving the stakeholders and for conducting the e-learning and e-transaction within an organisation. Therefore, both web-based technologies (e-commerce and e-business) are useful for trade and business activities and hence, internet and information technology plays very crucial role in this respect. Many global leading companies have successfully implemented e-commerce and e-business in their business model that helps them in achieving their organisational goals and objectives. For example, Wal-Mart is the world’s largest retail chain who offers fast moving consumers products. It has introduced the on-line shopping through its websites which is an example of e-commerce. Besides, in order to bring efficiencies in its supply chain and logistic related activities, it has implemented Radio Frequency Identification (RFID) which is example of implementation of e-business in supply chain activities (State University Drive, Los Angeles, 2004). These technologies have enabled Wal-Mart to make its operational activities cost effective. Besides, many manufacturing companies have also implemented e-commerce and e-business in their business and operational activities. Singapore Retail Industry and Importance of e-Commerce and e-Business in Retail Sector The above section has explained the importance of implementing e-commerce and e-business for business organisations to achieve higher efficiency level and competitive advantages. In case of developing countries, the importance of such technologies is greater for bringing growth and development in trade and business activities. As this paper deals with the impact of electronic network in retail industry of Singapore, it is necessary to understand the present situation of Singapore’s retail industry. Singapore is one of the fastest emerging economies in Asia. After the free trade policy, many international companies have entered in this market as economic condition of people are enhancing gradually. Singapore’s real growth rate of GDP was 14.6% and per capita GDP was $62,200 in 2010 (CIA, 2011). With this developing economy, the disposable income of people has increased significantly that leads to enhance the purchasing power of Singapore consumers. These two major factors are very important for a retail industry and hence, there have been improvements in retail industry of Singapore. Besides, higher availability of skilled and unskilled labours for services sectors is also another major reason for growth in retail industry. Nearly 68.9% of the total workforce is employed in service sectors (U.S. Department of State, 2010). During 2008, Singapore retail industry has experienced growth in terms of profitability and establishments. The following table presents the key indicators of retail industry of Singapore for 2007 and 2008. Table 1: Key Indicators of Singapore Retail (Source: Singapore Department of Statistics-a, 2008) The above table shows that, during 2008, the retail industry of Singapore grew at a higher rate as total establishments increased by 4.4% and total operating receipts raised by 6.4%. However, in spite of higher rate of establishments and higher operating receipts, overall operating surplus was negative i.e. -0.2%. This implies that Singapore retailers are unable to manage their business cost effectively. During 2009 and 2010, the retailer stared to implement information technologies in their business to achieve the cost efficiency. As per the latest data, Singapore retail has grown by 2.4% in November 2010 comparing to November 2009 and sales were up by 5.4% (excluding motor vehicle) (Singapore Department of Statistics-b, 2010). The retail sectors of Singapore are constantly growing but it also needs further developments in terms of technological advancements. The above data and key figures have disclosed that there are higher opportunities in Singapore retail sectors and hence, the retail organisation must implement latest web-based technology for further enhancements. With growth of trade and business, the complexities in retailing business have increased. In order to manage these complex tasks, technologies play very significant role. In retailing business, data management is very important that stems the significance of technology in retail. Data or information is very useful for making decisions in retailing business. It is very necessary to generate and manage relevant data at proper time. For example, in a departmental store or supermarket chain, it is necessary to record all the information relating to sales and product. In this process, communication and transparency is very important with the cross functional teams and with the suppliers and consumer groups. In this respect, e-commerce and e-business related technologies facilitated the management teams (Pradhan, 2006, p.364). Specifically, there are four major areas of complexities in retailing business and these have been discussed below. Product Related Complexities: Generally, retail organisations have to deal with a basket of products and with large numbers of suppliers. Hence, they have to manage a number of store keeping units. Challenges in Supply Chain: As the retail organisations have to store a large number and varieties of products, they have to deal with multiple suppliers. They also have to manage various outlets, channels, and huge amount of inventories. Higher rate of transactions: Retail industry offers final products to retail consumers and therefore the frequency of transaction is very high. They have to deals with hundreds of consumers every day and it is necessary to manage all records regarding their transaction with each consumers. Complex process: The retail value chain is more complex at it includes a number players like manufacturers, suppliers, employees, suppliers etc. Proper coordination is very necessary for planning and controlling (Syntel. 2005). e-Commerce and e-Business: Issues and Prospect in Singapore small and medium size retail industry Implementation of e-commerce and e-business strives to facilitate retailing business as it helps to achieve higher operational activities and cost effectiveness. The use of electronic commerce in Singapore increased the scope of trade and business. However, The Singapore retail industry remains neutral for in implementing e-commerce for trade activities (Kam and Ping, 2004). In case of a small and medium retailing business, there are certain issues in implementing e-commerce and e-business. Some of the key challenges in managing IT in small and medium retail sectors are discussed below. Higher IT cost and lower profitability: small and medium retail organisations have limited resources and hence, these retail organisation are unable to incur higher cost for IT implementation. Revenue growth of Singapore retail industry is much slower that hinders effective implementation of e-commerce and e-business. Lack of standardization: the small and medium retail sections are not highly organised as large scale retail organisations. There is a lack of integration within the organisation and they are not always ready to change for bringing proper standardization. Maintenance cost: In case of a business operated with the help of e-commerce and e-business requires high maintenance cost, and it becomes difficult for small and medium scale business to afford such high maintenance cost. Skilled employees: In order to manage an IT backed operations and business activities, skilled man power is required. The skilled employees with IT background are costlier is a major issues for small and medium scale retailers in Singapore. Lack of awareness and understanding: The small and medium retailing organisations of Singapore have not been able to understand the value of technologies for growth of their business. Lack of regulatory support: In order to technological advancements in retail industry, support from regulators and government is vital. However, small and medium scale businesses including the retail sectors are neglected in Singapore. Government must encourage them to introduce latest technologies in their business activities by offering them subsidies and other cost benefits. Conclusion and Recommendation With constant developments in technology, the modern trade and business have been advancing gradually and progressively. Information and communication technology is a boon for the growth and development of modern trade and business. The implementation of e-commerce and e-business in business has facilitated the management tasks. This paper has focused on the impact of e-commerce and e-business on small and medium retail industry of Singapore. Singapore is an emerging country with a large number of consumers that attract a number of foreign players in this market. Retail industry of this country is one of the major industries. The modern retailing business requires advance technological implementations like e-commerce and e-business. However, the above discussion has shown that due to certain negligence, the small and medium retail industry is unable to successfully implement web-based technologies in their daily business activities like supply chain, inventory management, internet selling etc. The growth of small and medium retail sector of Singapore is lower comparing to large retailers. This situation defines that small and medium retailer should develop an efficient operational process backed by technology. Based on the major areas of concern for implementing e-business and e-commerce some relevant recommendations have been given below. Small and medium retail organisation must realize the importance of technology for their business benefit. In this respect, awareness and proper information is very necessary. They need to understand the multiple benefits of electronic commerce like cost reduction, efficient management, consumer relation etc. Implementation of e-commerce and e-business requires capital investment which may increase the financial burden for small and medium retail organisation. Besides the maintenance cost and procurement of skilled employees are also a matter of higher expenses. However, electronic networks and web-based technologies strive to increase the profitability by reducing unnecessary costs. Hence, retail organisation must invest for long term success by arranging necessary fund. They also need to standardise their business model for successful implementation of e-commerce and e-business. Modern business models like balance score card or value based model are very helpful in standardising the business models. Role of governments and other regulators is also very pertinent for encouraging small and medium retail organisation to introduce information and communication technologies in their business model. The legal framework for information technology must strive to bring benefits for small and medium enterprises. References Andam, Z. R. (May 2003). e-Commerce and e-Business. Retrieved on January 24, 2010. http://www.apdip.net/publications/iespprimers/eprimer-ecom.pdf. CIA. (January 12, 2011). The World Factbook: Singapore. Retrieved on January 24, 2010. https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html. Gasós, J. and Thoben, K. D. (2003). E-business applications: technologies for tomorrow's solutions. Springer. Kam, W. P. and Ping, H. Y. March 2004. E-Commerce in Singapore: Impetus and Impact of Globalization. Retrieved on January 25, 2010. http://www.crito.uci.edu/papers/2004/Singapore_GECIII.pdf. Kidd, P. T. (2000). E-business: key issues, applications and technologies. Brian Stanford-Smith. Kumar, R. (2009). Information and Communication Technologies. Laxmi Publications, Ltd. Pradhan, S. (2006). Retailing Management. 2nd ed. Tata McGraw-Hill. Singapore Department of Statistics-a. 2008. Retail Trade. Retrieved on January 24, 2010. http://www.singstat.gov.sg/pubn/business/essretail2008.pdf. Singapore Department of Statistics-b. (November 2010). Retail Sales Index. Catering Trade Index. Retrieved on January 24, 2010. http://www.singstat.gov.sg/news/news/mrsnov2010.pdf. State University Drive, Los Angeles. (August 24, 2004). E-Business and E-Commerce. Retrieved on January 24, 2010. http://www.calstatela.edu/faculty/msabet/c04_Turban_0471705225.pdf. Syntel. (October 26, 2005). Retail’s Complexity: The Information Technology Solution. Retrieved on January 24, 2010. http://www.syntelinc.com/uploadedFiles/Syntel/Digital_Lounge/White_Papers/Syntel_RetailComplexity.pdf. Turban, E. (2010). Electronic Commerce: A Managerial Perspective 2006. 4th ed. Pearson Education India. United States General Accounting Office. (September 07, 2000). U.S. Postal Service : postal activities and laws related to electronic commerce : report to congressional requesters. DIANE Publishing. U.S. Department of State. (October 29, 2010). Background Note: Singapore. Retrieved on January 24, 2010. http://www.state.gov/r/pa/ei/bgn/2798.htm. Wright, K. (November 11, 2002). E-Commerce vs. E-Business. Retrieved on January 24, 2010. http://scm.ncsu.edu/public/lessons/less021127.html. Read More