E Commerce Marketing Fad or Fiction - Research Paper Example

E-Commerce and E-Business and Information Technology Introduction Among the major issues that businesses strive to be competent at in the modern world include access to Internet and growth. As such, it would be critical to evaluate various secondary sources to give insights into web-based business transactions, differentiating between e-commerce and e-business and evaluating their varied models. According to Bill Gates, 2001 had over 400 million people log into various websites and spent over half a trillion dollars in purchasing goods and services online (Darby, Jones & Madani, 2003). More countries continue to adopt e-commerce approaches in their business with countries such as the United Arab Emirates, UAE shifting focus from the core trade on oil to capitalize on investing in adequate Information Technology infrastructure to propagate e-commerce. Indeed, this paper focuses on Tejari, an online marketplace in UAE that has leveraged on the nation’s developed information technology to advance its e-commerce strategies. The benefits accrued from this adoption would be analyzed and the associated challenges articulated. Recommendations would be made based on this evaluation. Literature Review Electronic commerce, popularly referred to as e-commerce has been in existence for more than forty years since its maiden application during the 1948 Berlin airlift to transmit messages. During these early developments, e-commerce involved the use of electronic data interchange, EDI for the transfer of standardized finance, transportation and purchasing data between industry groups. The Internet leveraged on the limitations on cost of EDI application giving rise to e-commerce which introduced electronic trading of goods and services, provision of electronic services such as support and electronic collaboration among companies. E-commerce refers to “sharing business information, maintaining business relationships and conducting business transactions by means of telecommunication networks” (Tassabehji, 2003, p.4). It involves the buying and selling of products and services through computer networks and the Internet. In as much as the terms e-commerce and e-business would be commonly used interchangeably, the two refer to two distinct concepts. While e-commerce refers to the process of conducting business over the Internet, e-business describes the reengineering of the business model to be incorporated into a network enterprise based on the Internet (Gharegozi, Faraji & Heydari, 2011). The difference lies on the degree in which an organization would transform its practices using the Internet. Of the two, e-commerce would be simpler to implement as it encompasses only three integration types: vertical integration applied to the front-end website applications on the transaction systems; cross-business integration of the organization with other relevant websites such as customers, intermediaries or suppliers; and technology processes integration for purchasing, order handling or customer service. E-business presents a more difficult implementation as it would involve four integration types: vertical integration, lateral integration with companies, customers and partners, horizontal integration with resource planning systems and downward integration. Nonetheless, both of these concepts reward by making processes more efficient, lower cost, create new value chains in organizations and utilize technology infrastructure including application servers, legacy systems, systems management and databases (Manzoor, 2010). E-commerce has been classified by Tassabehji (2003) according to the transacting partners. According to this scholar, business-to-business, B-to-B would involve the exchange of information, services and products between business entities. This includes e-procurement, information sites and support to business and direct selling. In a retailing context, there could also be the exchange of information, products and services between businesses and consumers, referred to as business-to-consumer, B-to-C. Manzoor (2010) gives examples of US’ dell.com and amazon.com and UK’s lastminute.com in this category. Online exchange of information, products and services between business entities and agencies of the government would be described as business-to-government, B-to-G, e-commerce. These encompass e-procurement services, virtual workplace and rental of online databases and applications. As of 2001, The UK’s Department of Trade and Industry had 90% of its routine procurement being traded electronically (Reynolds, 2010). Napster provides an example of Business-to-Peer Networks, B-to-P that involves providing peer networks with software, hardware and other relevant services. Individuals who sell services to businesses provide an appropriate example of consumer-to-business, C-to-B e-commerce involving individuals exchanging their information, products and services with businesses. Consumer-to-consumer, C-to-C involves the direct interaction between consumers exchanging information on opinions and expert knowledge. Consumers could provide services to the government in a consumer-to-government, C-to-G scenario. When the opposite happens and government provides to consumers, then e-government, or government-to-consumer, G-to-C would describe the process. Between governments, it would be described as government-to-government, G-to-G such as the one linking nations comprising the European Union. Others include peer-to-peer network, P-to-P, peer network-to-consumer, P-to-C and peer network-to-government, P-to-G. E-commerce provides varied benefits to individuals, organizations and the society at large. To organizations, it expands the marketplace internationally, saves on operational cost, offers mass customization, lowers telecommunication cost, eliminates the 24-hour operation constraints and enables digitization of processes and products (Tassabehji, 2003). Other than enjoying round-the-clock services, consumers gain from a competitive environment, acquire easy price comparison capability and enjoy improved processes of delivery. E-commerce improves the society by connecting people, facilitating the delivery of public services and makes working practices more flexible (Gharegozi, Faraji & Heydari, 2011). Nonetheless, it leads to wastage of resources due to rapid changes, disadvantages the developing countries known to have poor Information Technology infrastructure and propagates social division. Consumers would be disadvantaged with the additional cost for internet access, computing equipment, threat to personal information security and decreased physical contact. E-commerce puts organizations under the pressure to be innovative, increases competition from rivals and insecurity associated with web-based approaches to business (Manzoor, 2010). Case Analysis and Discussion Tejari was established in the year 2000 in UAE with the aim of being the “first e-commerce choice in the GCC market” (Microsoft, 2012). It covers Kuwait, Bahrain, Oman, UAE and Saudi Arabia, serving about 18.7 million Internet users as of 2010 in the Gulf Co-operation Council, GCC market. With the anticipation of $15 billion worth of revenue from e-commerce by 2015, the organization aimed to attract shoppers in Dubai’s SMEs through its online shopping mall, eMall. The UAE has for long been focused on its oil reserves as a tool for economic development. Being an emerging economy, it provides enormous opportunities for business operations with technology driving the economy of the seven emirates making up the nation (Michael, 2007). With the expertise of Microsoft Inc., Tejari developed B-to-C e-commerce model which has seen it enter into partnership with various organizations. According to Reynolds (2010) and Tassabehji (2003), the B-to-C e-business involves the exchange of information, products and services between organizations and consumers. Being a B-to-C platform has enabled these organizations engage the customers in selling their products online. Teraji has reaped various benefits from the adoption of this model of conducting business including proving a one-stop-shop for its customers. Through its agreement with the Department of Economic Development, DED, Tejari would have the capacity to offer its affiliate organizations the ability to sell their products online through Tejari’s portal (Kemp, 2008; Michael, 2007). Its customers such as the Dubai Tea Trading Centre, DTTC have benefited from increased sales. Despite the benefits that organizations in UAE could reap from e-commerce, Reynolds (2010) acknowledges that the perception of complexity and cost of developing e-commerce infrastructure as being high which would call for massive investment and longer repayment periods. The challenge of securing the system for its users against online fraud also looms. But Teraji found effective approaches to dealing with their business environment. According to Microsoft (2012), the organization engaged a technical and strategic advisor and potential partners, of which Microsoft Inc. became one of them. UAE provides a great opportunity for growth of e-commerce and indeed e-business due to its elaborate IT infrastructure, a requirement for e-commerce growth and sustainability. Dehkordi, Shahnazari and Noroozi (2011) particularly cite the Dubai Internet city as a major factor which makes the nation favor Information Technology development. About 75.9% of UAE citizens have regular access to the Internet as a result. Conclusions and Recommendations E-commerce is one of the outcomes of Information Technology revolution in the world economy and the most visible way in which Information Technology contributes to the economic growth. It replaces the traditional marketing function of organizations due to the increased demand from the market. Through e-commerce and e-business, organizations have been able to service their customers through online portals as customers likewise enjoy the capabilities of the Internet to interact online with business organizations through the various available models. Among the beneficiaries of e-commerce include the society, organizations and individual consumers. But these categories of beneficiaries also experience diverse challenges associated with online trading. Evaluating the case of Teraji, an e-commerce entity in UAE, the organization has been instrumental in leveraging on the functionality of the Internet to provide a platform where organizations transact with consumers and consumers transact with the organizations. The UAE provides a great potential for growth of e-commerce and e-business. In spite of the numerous benefits that could be realized due to adoption of e-commerce and e-business in an economy such as UAE, this technology poses challenges on basic principles of business transactions thus the demand for specialized approach. The nation has majority of consumers of e-commerce being skeptical of the technology as increase in cyber crime threatens the industry. It has been noted that majority of consumers and organizations shun from their involvement in e-commerce due to the fear of identity theft. E-commerce and e-business websites gather massive information on the consumers through registration, feedback questionnaires and order-replacement procedures. This has had customers express their concerns on the security of such data from hackers and any other unauthorized persons. As such, Reynolds (2010) advocates for placement of effective safeguards for protecting customers against attacks. E-business organizations should demonstrate their ability to successfully operate within safe and secure environment in a way that would build trust among their customers. Failure to observe this would damage the image of established businesses and further hinder the efforts geared towards spreading e-commerce technology. E-business has also been associated with high cost with Reynolds (2010) appreciating that major corporations spend over $140 million to develop online retail websites, excluding the cost of operation and maintenance cost which total to over $10 million annually. These costs would vary considerably with the context of operation, but would be generally high. To cut on these costs, organizations should hire experts who would help in making the best choices, not only in terms of cost but also functionality. While considering cost savings, organizations involved in e-commerce should be careful to ensure that the portals do not lose their sense of attraction which Eisingerich and Kretschmer (2008) indicate as being critical in the facilitation of brand associations and attachments. To ensure relevance, it would be critical, as indicated by these scholars, to conduct polls regularly on the portal so as to get customer feedback. Corporate performance would give an appropriate indication of the success of e-commerce. References Darby, R., Jones, J. & Madani, G. (2003). E-commerce marketing: Fad or fiction? Management competency in mastering emerging technology. An international case analysis in the UAE. Logistics Information Management, 16(2), 106 – 113. Dehkordi, L. F., Shahnazari, A. & Noroozi, A. (2011). A study of the factors that influence the acceptance of e-commerce in developing countries. Interdisciplinary Journal of Research in Business, 1(6), 44 – 49. Eisingerich, A. B. & Kretschmer, T. (2008). In e-commerce, more is more. Harvard Business Review. Retrieved 19 February 2013 from http://hbr.org/2008/03/in-e-commerce-more-is-more/ar/1 Gharegozi, A., Faraji, E. & Heydari, L. (2011). The study of information technology effect on e-commerce growth. 2011 International Conference on Advancements in Information Technology. Singapore: IACSIT Press. Kemp, L. (2008). Tejari.com, “The Middle East online marketplace,” Under the leadership of Sheika Lubna Al Qasimi, International Journal of Leadership Studies, 4(1), 22 – 37. Manzoor, A. (2010). E-Commerce. Saarbrucken, Germany: LAP LAMBERT Academic. Michael, I. (2007). E-portals in Dubai and the United Arab Emirates. In A. Tatnall (Ed.), Encyclopedia of portal technologies and applications (pp. 364 - 367). New York: Idea Group Inc. Microsoft (2013, July 25). Case studies: Tejari. Retrieved 19 February 2013 from www.microsoft.com Reynolds, G. (2010). Information Technology for managers. Boston, MA: Cengage Learning. Tassabehji, R. (2003). Applying e-commerce in business. New Delhi: Sage. Read More