Improving the Acceptance of E-Commerce in Saudi Arabia - Research Paper Example

Improving the Acceptance of E-Commerce in Saudi Arabia Contents Contents 2 Background 3 Aims and Objective 3 Research Question 4 Purpose of study 4 Literature Review 5 Methodology 7 Ethical Consideration 9 Work Plan 10 Risk Register 10 Reference List 12 Background The e-commerce business in Saudi Arabia has improved quite strongly over the past few years and it is expected to hit SR50 billion by 2015. The number of online purchasers is increasing regularly and more than 70 million visits on e-commerce pages are visited by purchasers every month. However, it has been observed that most of the customers still rely on cash on delivery as they are unsure about trusting online mode of payments. It has been observed that in most of the developed countries have unique street addressing systems which make it easier to locate addresses, houses, shops, hospitals and schools. Geo-coding and location of addresses can be considered as an integral part of smooth development of e-commerce as it would ensure that the merchandise that is being purchased by the customers can be easily delivered to their home addresses. Over the past few years, geo-coding has become an important aspect of e-commerce because it helps in the prevention of credit card fraud, digital rights management and online target marketing. In e-commerce, when an online transaction is being made then the geo-intelligence vendor compares the geographic location of the buyer based on the IP address with the ship 0r state. This helps the business to construct confidence interval regarding the legitimacy of the credit card transaction. This system is not very well developed in Saudi Arabia which can restrict the development of e-commerce. The purpose of this paper is to discuss the problems pertaining to this issue. Aims and Objective The aim of this research can be explained in two parts. The first part deals with the understanding of the present street address locating mechanism in Saudi Arabia and the problems it poses to the purchasers of e-commerce. This is expected to reveal the existing issues in the system of delivery of the present method. The second aim of this research is to obtain an understanding about the geo-coding systems used in other countries to understand the benefits from them and suggest an alternative mechanism for address system in Saudi Arabia. In order to accomplish the research aim, the research objective that is to be used in this research can be put up in the following manner. To critically study the existing literature regarding geo-coding system used in different countries that helps of e-commerce customers. To understand the current system of locating addresses in Saudi Arabia and understand the inherent weakness in the system. The solution to this problem can be in the form of building a prototype website that can be accessed by consumers, entrepreneurs and companies alike to locate address in Saudi Arabia.. Research Question The research questions that are framed in line with the research aims and objectives can be stated in the following manner. Is the lack of geo-coding system in e-commerce impacting the consumers adversely? Is the present system of delivery mechanism of Saudi Arabia effective? What are the possible ways of improving the mechanism of address system to provide a boost to the e-commerce in Saudi Arabia? The research questions will directly help to answer the existing problem of geo-coding in Saudi Arabia by studying the systems which are present in other developed countries. This will also help in the identification of the possible recommendations to solve the current problem and help in the development of an alternative address system for Saudi Arabia. Purpose of study The previous decade had experienced excessive growth of retail and other sectors based on innovative and technological services offered by the internet. This process has been observed both in the developing and the developed countries. A number of research has been conducted in the past regarding the system of delivery issues in e-commerce which is mainly undertaken from the perspective of consumers. The chief issues of e-commerce relating to delivery includes the duration, cost of delivery and also the ability to deliver merchandize to the correct locations once the purchase has been made by the consumers. Saudi Arabia is one of the developing countries which have modest level of delivery system in practice. However, in comparison to the developing countries like United States and United Kingdom, the level of delivery mechanism is weak. Research in this field have shown that aspects of delivery system like time of delivery and the ability to deliver products at proper destinations have direct impact on the purchasing behaviour of the customer mostly in case of purchasing expensive and sensitive items (Eid, 2012). Therefore it can be expected that improving these system will help in improving the quality of service to the customers and instil their confidence in the e-commerce. This research wants to incorporate the factor of geo-coding to improve the system of delivery of merchandise purchased online in Saudi Arabia. Although this topic has been dealt with in previous research works not much has been done regarding this in Saudi Arabia. Therefore this research is expected to add to the existing literature which has dealt with similar topic. This research wants to establish an alternative method of developing an address location system that is likely to improve the delivery system in e-commerce in Saudi Arabia. Literature Review The meteoric rise of e-business began in U.S.A. between 1995 to2000. This trend has soon been followed by European countries (Ackerman, 2002). Over the years a number of research works have been conducted to find the basic factors that promote e-commerce in different countries. The main factors that have been identified include robust development of ICT infrastructure, rate of adoption of disruptive technology and web based services, stage of broadband use of the country and legislations adopted by the country (Albadr, 2003). In regard to Saudi Arabia, the research of Aladwani has shown that the biggest factor which contributes to the unimpressive development of e-commerce in Saudi Arabia is the lack of individual house address and unclear legislations regarding the protection of parties involved in the transaction. Till 2005 the country had no unique house address for its tenants and for this reason mails could not be delivered to the houses or offices (Aladwani, 2003). Another research conducted in Saudi Arabia regarding penetration of internet has shown that though 41% of the population uses internet but broadband penetration rate is slow in the country. It has been found that Western countries like United States have already divided their entire city into four sections depending on the grid system (Trost, 2009). Another popular system of dividing the cities is called the district system which divides regions according to districts and this has been adopted in United Kingdom. In these countries the street addressing systems have been used which mainly consists of two parts namely numbering of the streets and numbering of the houses. It is the availability of addressing systems in this digital format in these countries which have led to the adoptability of geo-coding in these countries (Kubbara, 2010). Geo-coding can be described as the process of matching address of customers with the geographic locations based on latitudes or longitudes or local census data. Due to the proliferation of internet based business the amount of data that is being collected by business organizations have increased by a large amount. The existing literature points out that geo-coding is an effective way of locating address systematically and it helps in the reduction of the number of errors in the locating correct destinations. This is because manually operated street addressing systems may often cause errors in locating correct addresses and wrongly located address is bound to create delays in delivery of products by the e-commerce companies. Sweden for example has adopted this system of geo-coding by dividing the countries according to counties and municipalities to improve the process of finding address. The municipalities use street numbers to make it easier to locate addresses. Similarly Canada has also used the system of geo-coding in its city planning. The country uses a host of abbreviations to make it easier for the courier companies to locate addresses easily. Other developed countries like Australia have also adopted similar measures which have contributed to the postal delivery system (Siksnans, 2012.). The non-English speaking countries have adopted either of these two measures but they have not been very successful for a number of reasons. Linguistic problem and other socio cultural differences of these countries have acted as a barrier to the development of correct street location in these countries. In case of Saudi Arabia it has been observed that Saudi Postal Corporation has taken a major step regarding solving the issues of postal address in Saudi Arabia. This had been a successful effort that has been able to improve residential and mailing address of the country (Alrawi, and Sabry, 2009). The 13-digit address system introduced has been able to solve some of the problems regarding finding correct addresses. This new process that has been introduced is helping to improve the delivery system of e-commerce. However, the late introduction of this system has slowed down the pace of e-commerce development. The study conducted by AlGhamdi, et al. (n.d.) focused on the several factors that constrain the development of e-commerce in Saudi Arabia. The study from their research has shown that despite the fact that the country has one of the fastest growing IT markets, e-commerce activities have often failed to keep pace. In general it has been found that online retailing in the country has not grown as strongly as other developed countries. The root cause which prevents the Saudi retailers to adopt e-commerce are delivery issues, resistance to change, insufficient e-commerce experience, less confidence on online transactions and habit of people (AlGhamdi, et al., n.d.). In order to improve the system of e-commerce in the country the Ministry of Commerce had created a committee of e-commerce. The primary objective of this committee was to develop the overall level of e-commerce development of Saudi Arabia. This committee had identified few weak areas in Saudi Arabia which required immediate attention from the government like improvement of payment and security systems, improving the delivery system and making the legislations transparent. Finally the research conducted by Saudi Communication and Information Technology Commission has revealed that the awareness of consumers regarding e-commerce activities in Saudi Arabia and its implementation. Results from their study has shown that only 9% of the commercial business organization implemented e-commerce and only 4 out of 10 companies in the private sector have their own website. Only 43% of the consumers had knowledge about e-commerce but only a fractional segment conducted online purchases (CITC, 2007). The existing body of literature has studied the problems of e-commerce faced by retailers in Saudi Arabia. However, a direct study of geo-coding and correct location of address has not been taken specifically. Therefore this topic will help to incorporate the problem of correct location of address along with other broader factors that contribute to the proper development of e-commerce in Saudi Arabia. Methodology This research helps in creating a website that is an early model expected to solve the problem. It will be a useful way in which users can register themselves and companies can use it as a database to find the addresses. If this is found to be successful then it can be built on a wider platform for general use. The website is built on an experimental basis so that it can be used by the user to register information relating to his address like street number, house number and so on. This website can also be used by the companies to locate the address of the customers to make the process of delivery easier. The website designed in this paper is according to the idea used by Behr, Rimayanti and Li (Behr, Rimayanti and Li, n.d.). Design Phase The first task will be to identify the current address system in Saudi Arabia by conducting a questionnaire survey. External sources of data need to be identified to build the address database. The third step in the design process will be framing the architecture with validation from reference data. Finally, open-source software will be used to implement the geocoding application. This will also help in locating the potential problems in the implementation phase. Data used as reference information The internet can be used as a source for collecting addresses and used as reference data set. Data to be used for this project is stored in MySQL database format. The following can be used as sources of data: Place names with coordinates and bounding boxes from website http://www.geonames.org/. List of cities in Saudi Arabia from http://en.wikipedia.org/wiki/List_of_cities_and_towns_in_Saudi_Arabia. Functional Aspects Users who are registered can submit their address with their coordinates. In order to prevent spamming the entered data can be compared to the existing data on province and city level. Users can use web map to digitize their location. This data can be saved in the MySQL database only after proper validation. The geocoding application can be created on the basis of a REST based website. This application has the power to convert a raw address into a formatted address. It not only assigns coordinates to the database but also establishes a connection between addressing database and formatted address. The geocoding system is bound to be effective because it does not rely only on the internal database filled by the user and stored in the database. Inability to process an address makes the geocoding system pass the request to other external databases. Figure 1: Parameters for geocoding service request (Source: Behr, Rimayanti and Li, n.d.) Development The application was checked multiple times and the bugs were eliminated. As users can enter their address in any pattern so the application is tested in multiple ways to run validity check. Problems occurring within the development phase were eliminated. Public access to the application was provided on www.opengeocoding.org. Users can share their views about the website on a common platform. This was confirmed by using MyBB developed in PHP and MySQL. Technologies Used This application uses the technology of AJAX, JavaScript and Google API. MySQL developed by SUN Microsystems, Inc is used as the database management software. PHP has also been used as a scripting language to develop webpages, geocoding application and database access. Ethical Consideration This research will take the consent of all the respondents taking part in the research and will protect their identity. The information will be held confidential and will only be used for the purpose of academic research. Consent from the respondents will be taken before they are interviewed for this research. This research involves human respondents in the research and divulging their identity may include risks to them. In order to prevent this risk it is important to protect their identity in every way. The identity of respondents from the e-commerce company is also to be protected so that they are not under any stress from their employers. Work Plan Risk Register Factor Risk Mitigation Ethical Divulging the identity of the clients. Unable to protect clients from mental stress. Maintaining anonymity on the part of the researcher and protecting the respondent’s identity. Legal The data provided by clients to be used for any unethical practices. The researcher will ensure that a clause is signed by the respondents who provide their address are doing so willingly and the researcher will also sign a legal clause of not divulging the address to third parties without consent. Professional Disturbing the respondents without prior information. The researcher will ensure that a strict professional relationship is to be maintained with the respondents. Reference List Ackerman, J., 2002. American promotional road mapping in the twentieth century. Cartography and Geographic Information Science, 29, pp. 175-191. Aladwani, A. M., 2003. Key Internet characteristics and e-commerce issues in Arab countries. Information and Management, 16(1), pp. 9-20. Albadr, B. H., 2003. E-commerce. Science and Technology, (65), pp. 14-19. AlGhamdi, R., Nguyen, N., Nguyen, J. and Drew, S., n.d. Factors influencing e-commerce adoption by retailers in Saudi Arabia: A quantitative analysis. International Conference on Internet Studies, pp. 8-10. Alrawi,K. W. and Sabry, K. A., 2009. E-commerce evolution: a Gulf region review. Int. J. Business Information Systems, 4(5), pp. 509-526. Behr, F. J., Rimayanti, A. and Li, H., No Date. Opengeocoding.Org – A Free, Participatory, Community Oriented Geocoding Service. [pdf] University of Applied Sciences Stuttgart. Available at: [Accessed 17 July 2014]. CITC, 2007. Internet Usage Study in the Kingdom of Saudi Arabia. [pdf] Communications and Information Technology Commission. Available at: [Accessed 26 June 2014]. Eid, A., 2012. Delivery issues in E-commerce: The case of Saudi Arabia. [online] Available at: [Accessed 26 June 2014]. Kubbara, F. S., 2010. The universal street address. [pdf] Annual Conference for GIS Professionals. Available at: [Accessed 26 June 2014]. Saunders, M., Lewis, P. and Thornhill, A., 2012. Research Methods for Business Students. Harlow: FT/Prentice Hall. Siksnans, J., 2012. A geocoding information system for Greenland. [pdf] Technical University of Denmark. Available at: [Accessed 26 June 2014]. Trost, R., 2009. Practical intrusion analysis: prevention and detection for the twenty-first century. New York: Pearson Education. Read More