E-commerce in Arab Countries, What are the Benefits - Article Example

E-commerce in Arab countries, what are the benefits? Table of Contents 3 Аim To StudyRelevant Rеѕеаrсhеѕ 3 Comparison between Arab Countries & UK 4 The obstacles to e-commerce in Arab counties 7 Асknоwlеdgеmеnt 10 References 12 Bibliography 13 Abstract The term ‘e-commerce’ is one of the most widely used and investigated terms in the last decade in the global business environment. Several researches have been conducted in order to examine e-commerce more closely. This research deals with e-commerce, but it is different from other researches on e-commerce as its primary focus is on e-commerce in Arab countries. The current situation of e-commerce of a particular country can be analysed by finding out the total value of e-commerce, number of people using e-commerce platform, number of people using internet in that country. Since there are several countries in the Arab region, data related to e-commerce and internet usage in some of the important Arab countries like Saudi Arabia, UAE, Kuwait, Egypt etc. will be mentioned and interpreted in the research report. Once a clear idea is obtained about the e-commerce in Arab countries, the findings will then be compared with the present situation of e-commerce in UK. After this comparative analysis, the research will aim at finding various obstacles to e-commerce in Arab countries. In addition to that research will also endeavour to find out the basic concepts and the major benefits of e-commerce. Apart from some general benefits of e-commerce, there are certain specific benefits associated with the present situations of Arab countries. The research report includes both types of benefits. The report will also include an acknowledgement section where the names of all those people and institutions that have helped in preparing this report will be mentioned. Аim To Study Relevant Rеѕеаrсhеѕ The major aim of this research is to gain an insight of current situation prevailing in Arab countries regarding the e-commerce. The current situation can be evaluated by finding out the total value of e-commerce in these countries, number of users, extent of involvement of people and business house etc. Furthermore the research also tries to analyse the present e-commerce situation in UK for comparing it with the situation in Arab countries. In addition to it, this research also aims to identify the factors that act as obstacles in Arab countries. E-commerce has several benefits which are expected to have significant effects on the people and the economy of a particular country. This research is conducted with the purpose of identifying the benefits of e-commerce and their effects on Arab countries. This is the major objective of this research paper apart from the others that are mentioned above. Comparison between Arab Countries & UK The situation of e-commerce in Arab countries can be better understood when compared with the present situation of e-commerce in UK. United Kingdom is one of the most developed countries in the world. Hence it is expected that the use of advanced information and communication technology like internet will be more in this country. It is found that almost 79.4% of the total population in UK use internet for performing various activities. It can easily be predicted from such data that there are large number of people in UK who are involved in e-commerce. It must be noted that various researches have been conducted to gather relevant data to support this prediction. According to UK Government’s Office of National Statistics in 2008 almost 9.8% of all sales took place over the internet. However this figure is calculated without taking into account the financial sector in the country. This figure is higher than the previous year’s figure by almost 7.7%. The total value of sales that took place through e-commerce platform in 2008 is found to be approximately 222.9 billion Euros whereas it was only 163.2 billion Euros in 2007 (Office for National Statistics, 2009). On the other hand in Saudi Arabia, which is one of the most important Arab countries, the total value of online transactions that took place in 2007 was only 3.28 billion dollars. In other Arab countries like Lebanon, Kuwait and UAE the value of internet based commerce was also found to be very low as compared to the value in case of UK. The total value of B2C e-commerce that took place in 2007 in these three countries was found to be little more than 0.59 billion dollar. This is mainly because the number of people using internet in Saudi Arabia is significantly lower than that of in UK. According to World Bank only 29.2% of total population of Saudi Arabia use internet, whereas the figure is almost 79.4% in case of UK. In Kuwait only 33.8% of total population used internet in 2007. The figure is found to be 38.3% in Lebanon. However in UAE, the number of internet users has increased rapidly over the past few years. In 2007 only 51.8% of UAE’s total population was found to be the users of internet, but in the next year the figure rose to almost 86.1% (The World Bank, n.d.). Such a dramatic increase in the number of internet users is expected to increase the total value of commerce that takes place over the internet. Another country, Egypt, is also showing considerable improvement in the using pattern of internet. According to the government of Egypt, in 2000 only 1% of the country’s total population used internet, but in 2008 almost 17.2% of total population (13 million) was found to be using internet. Despite such significant increase in internet usage, the government believes that the country still lacks a strong e-commerce culture. It is a very disappointing fact for the country that only 0.44% of total internet users are involved in commercial transactions over the internet. According to a report presented by World Bank, in 2008 there were only 1.1 servers per million Egyptians, whereas the figure is found to be at least 1.8 with any country where most of the people fall in middle income group (Axelrod et al., 2010). Research has revealed that in 2008 almost 15.2% business organisations in UK have used internet for selling their products and services. According to UK government, in 2008 use of advanced information and communication technologies in the workplaces has increased significantly. Almost 7.5 million people have used internet from their work places in 2008. On the other hand in Arab countries most of the organisations prefer the traditional method of buying and selling the products and services though the number of organisations using e-commerce platform is rising continuously. This increase is more prominent in the countries like Egypt, UAE and Saudi Arabia. It has been predicted by the international analysts that there exists a huge potential to earn revenue from B2B e-commerce platform in Arab countries. However this requires better infrastructure, technical expertise and increased readiness to accept the modern technologies like internet. As far as B2C e-commerce is concerned prospects are not found to be as good as in case of B2B. According to experts this is mainly because of the lack of infrastructure. As far as UK is concerned there is hardly any problem regarding the infrastructure required for e-commerce. Every year government spends huge amount of money to create new infrastructure and maintain the existing facilities. Most of the people are educated enough to understand the technical and managerial complexities of e-commerce. They are very much internet savvy, as a result they spend huge amount of time and money in buying and selling products and services over the internet. On the other hand in Arab countries, people were not very technology loving. However now a days they have become internet savvy. Infrastructure is another problem in Arab countries and this is one of the main reasons behind the late and slow adoption of internet as a tool to do business. However the governments of most of the Arab countries have realised the importance of e-commerce. They have found out that it is very important to promote the internet based trade in order to stay ahead in the global competition. If the figures pertaining to e-commerce and internet usage in most of the Arab countries are compared with those of UK, it can easily be said that UK is far ahead of almost all the Arab countries. The main reasons that can be attributed to such results are that the people in UK are technology loving people and availability of advanced infrastructures. The obstacles to e-commerce in Arab counties There are several factors that hinder the growth of e-commerce in Arab countries. Major obstacles include weak electronic infrastructure, lack of awareness among people, weak technological culture, lack of trained personnel etc. Among them, the lack of proper infrastructure is the primary one. High speed internet connections are still unavailable in most regions of the Arab countries. Proper door-to-door postal service is essential as the products purchased over internet are needed to be delivered to the customer through postal service. Some of the Arab countries do not have efficient and fast postal service provider and infrastructure. Moreover it is found that there are countries that do not allow services like Skype which is an important program for calling online (Lutz, n.d.). Lack of awareness of e-commerce among common people is another crucial factor. People in Arab countries are not enough exposed to the modern technologies and modern ways of doing business. Opportunity of improving the knowledge regarding e-commerce is also found to be very little. Some governments intentionally do not allow any such education that make the people aware of modern technologies. They want to keep their citizens away from western cultures and they believe one way of doing that is to shun modern technologies. The lack of awareness has also resulted in the lack of trained people. In the Arab countries, the use of e-commerce is limited among the local trading companies or between the trading companies and local suppliers. Lack of requisite experience to do business online also deters the growth of e-commerce in the Arab countries. Moreover, shortage of capital has further aggravated the problem. It has been found that many entrepreneurs cannot implement their innovative ideas regarding various e-commerce projects simply because of lack of required capital. Governments are not always found to be cooperative enough towards the entrepreneurs who want to do business online. Government policies are often found to be acting as obstacles to e-commerce in Arab countries. Moreover there are several legal issues that make the situations very complicated for any start up organisation. First of all there is a lack of strong laws regarding internet based commerce. It is often found to be very difficult to prove a website as an intellectual property or exclusive property of a specific individual or organisations. Moreover customers are needed to be convinced that it is a safe way to do business and all their personal information will be properly protected. The lack of such provisions often an e-contact unreliable and false. (Admin, 2010). Credit card poses as another big challenge. Credit card is an essential while making payment over the internet. However in most of Arab countries it is difficult to find a person who possesses a credit or debit card. This problem is very acute in countries like Egypt. It is observed that only 10% of Egypt’s total population has accounts in bank. People in this country are found to be more interested in opening an account in post office rather than in a bank. This information is further supported by the fact that almost 45% of the country’s total population falls under the age limit of 18. As a result they are not eligible to own a bank issued card. It is a disappointing fact that only 2% of total population has credit cards whereas only 4% own debit cards. This information is mainly provided by RNCOS, a market research organization (Axelrod et al., 2010). Ziad Hunaiti et al made a research on e-commerce in the developing countries. His research reveals three different types of obstacles that are hindering the e-commerce in developing countries like Arab. According to them these three are economic, cognitive and socio-political. Various economic obstacles include unavailability of credit and debit card, low tele-density, poor postal service, lack of availability of bandwidth, slow internet connection, lack of purchasing power, poor supply of electricity etc. Cognitive obstacles include poor knowledge of computer and English, lack of websites in local languages, lack of awareness in e-commerce and lack of belief on service providers. Finally there are socio political obstacles which include governmental regulations on security and privacy, business laws on e-commerce, social preferences etc. All these obstacles are from the consumer point of view. If obstacles are considered from the business level, then various economic obstacles are poor financial system, poor economies of scale, and unavailability of minimum infrastructure. Cognitive obstacles at business level include the tendency of avoiding risk, lack of knowledge regarding the use of information and communication technology, profitably and lack of employees having the minimum knowledge of e-commerce (Hunaiti, et al. 2009). All these obstacles along with those that are found at the consumer level have resulted in the slow adoption of e-commerce system especially in the Arab countries. [Source: IBIMA Business Review] Асknоwlеdgеmеnt Though this research is conducted and the final report is prepared by me, but there are some people without whom it would have been possible to complete this project. I would like to thank all those people who have helped me to make this project a success. I would like to thank all my friends and colleagues who have helped me in collecting the data. I would like to thank my respected teachers who have guided me in preparing the final report. Finally I would like to thank my parents who have supported me continuously in various possible ways. They have always encouraged and motivated me in my endeavour. References Admin, Feb 06, 2010. E-commerce in UAE to hit $36bn by 2010, Best Of Wordpress E-Commerce, [Online] Available at: http://wpecommerce.us/e-commerce-in-uae-to-hit-36bn-by-2010.html/ [Accessed on April 5, 2010]. Axelrod, M. et al. March 01, 2010. e-Commerce in Egypt, Finance and Investment, [Online] Available at: http://knowledge.wharton.upenn.edu/arabic/article.cfm?articleid=1209 [Accessed on April 5, 2010]. Lutz, M. No Date, Arabic Language Internet is Coming of Age, Arab Detroit, [Online] Available at: http://www.arabdetroit.com/news.php?id=1237 [Accessed on April 5, 2010]. Hunaiti, Z. et al. 2009, Electronic Commerce Adoption Barriers in Small and Medium-Sized Enterprises (SMEs) in Developing Countries: The Case of Libya, Ibima Business Review, [Online] Available at: http://www.ibimapublishing.com/journals/IBIMABR/volume2/v2n5.pdf [Accessed on April 5, 2010]. Office for National Statistics, November, 2009. E-commerce and information and communication technology (ICT) activity, 2008, Statistical Bulletin, [pdf] Available at: http://www.statistics.gov.uk/pdfdir/ecom1109.pdf [Accessed on April 5, 2010]. The World Bank, No Date, Internet users (per 100 people), Data Finder, [Online] Available at: http://datafinder.worldbank.org/internet-users [Accessed on April 5, 2010]. Bibliography Anonymous, No Date, Foreign legal and regulatory landscape its effect upon the development and growth of e-commerce, DIANE Publishing Goel, R. 2003. Computer Applications in Management. New Age International. Goel, R. 2007. E-Commerce. New Age International Kuzic, J et al. 2002, Electronic Commerce Benefits, Challenges And Success Factors In The Australian Banking And Finance Industry, [Online] Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.97.1497&rep=rep1&type=pdf Korper, S. & Ellis, J. 2001, The E-commerce book: building the E-empire, Morgan Kaufmann My Own Business, No Date, E-commerce Overview, Internet Business & Search Engine Marketing, [Online] Available at: http://www.myownbusiness.org/s9/#1 Oxford Business Group. 2008. The Report Saudi Arabia 2008. Oxford Business Group. Plotkin, M. E. et al. 2003, E-commerce law and business, Aspen Reynolds, J. 2004. The Complete E-Commerce Book: Design, Build & Maintain a Successful Web-Based Business. Focal Press. Thanasankit, T. 2003, E-commerce and cultural values, Idea Group Inc (IGI) US Census Bureau, 2009, E-commerce 2007, E-Stats, [Online] Available at: http://www.census.gov/econ/estats/2007/2007reportfinal.pdf Whiteley, D. 2000, E-commerce: strategy, technologies and applications, McGraw-Hill Read More