E-COMMERCE AND RETAIL BUSINESS IN NIGERIA: CHALLENGES AND PROSPECTS

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

E-commerce is more than just electronics and commerce added together. It represents an entirely new way of doing business over a medium that changes the very rules of doing business. It is therefore, far more about strategy and business management than it is about technology (ILO, 1999). E-commerce and the internet, if correctly utilized for development, can be instruments for ensuring future sustainable economic growth through the promotion of retail businesses in Nigeria. Throughout the world, the profound impact of electronic commerce in the economics and societies of the globe will no doubt improve economic efficiency, competitiveness, and profitability (for those engaging in e-commerce) and, therefore result in the development of the information society. E-commerce and the new emerging digital technologies and services can be tools for development and help improve the livelihood of millions across the globe, by linking up remote regions and bringing together scientist, administrators development professionals, managers, and people into projects and programmes to promote economic and social development (Goldsmith & McGregor, 2000). The general category of e-commerce can be broken down into two parts which are E-merchandize and E-finance.

E-merchandise is area that concerns the retail business and the focus of this study. E-merchandize involves selling goods and services electronically and moving items through distribution channels, for example through internet shopping for groceries, tickets, music, cloths, hardware, travel, book, flower or gifts.

Ahmed (2001) reported that the enormous flexibility of the internet has made possible what is popularly called e-commerce, which has made inroads in the traditional method of business management. All facets the business tradition with which we are accustomed in physical environment can be now executed over the internet including online advertising, online ordering, publishing, banking, investment, auction and professional services.

E-commerce involves conducting business using modern communication instrument: telephone, fax, e-payment, money transfer systems, e-data inter-change and the internet. E-commerce is not only a new technology and a new frontier for global business and trade, it is also still evolving. It is essential, therefore for Nigerians to understand in detail what is e-commerce, what are their challenges, and opportunities it holds, lastly what can be done to harness the benefits from e-commerce. All these are being focused upon in this study.

It is important to elaborate on the definitions of e-commerce as that will help determine the scope of the technology and how it can be applied into retail business. E-commerce has been simply defined as conducting business on-line. The organization for economic cooperation and development (OECD) defines electronic commerce as a new way of conducting business, qualifying it as business occurring over network which use nonproprietary protocols that are established through an open standard setting process such as the internet (OECD, 1999). This definition distinguishes it from electronic data interchanges (EDI) type proprietary based networks or intranets that were not based on an open (and therefore, not cost effective information infrastructure) like the internet. In the WTO work programme on electronic commerce, it is understood to mean the production, distribution, marketing, sales or delivery of goods and services by electronic means. A commercial transaction can be divided into three main stages; the advertising and searching stage, the ordering and payment stage and the delivery stage. Any or all of these may be carried out electronically and may, therefore, be covered by the concept of electronic commerce. Broadly defines electronic commerce encompasses all kinds of commercial transaction that are concluded over an electronic medium or network, essentially, the internet.

1.2   STATEMENT OF THE PROBLEM

E-commerce is not limited to the purchase of a product, it include, beside e-mail and other communication platform, all information or services that a company may offer to its customers over the net, from pre-purchase information to after sale service and support. These are essentially two major uses of e-commerce. The first is to use it to reduce transaction cost by increasing efficiency in the use of both time and procedure, and thus lowing cost. The other is to use it both as a marketing tool to increase sales (and customer services) as well as to create new business through it for example, information technology enabled business, call-centers, software maintenance services etc. It is thus a tool for both existing business as well as an opportunity for new business, both for existing companies as well as for new entrants. E commerce provides consumers the ability to purchase, distribute, communicate, explore, and research from virtually anywhere an Internet connection can be obtained. This study is examining challenges and prospects associated with e-commerce and retail business in Nigeria.

1.3   OBJECTIVES OF THE STUDY

The following are the objectives of this study:

1.  To examine the challenges of e-commerce in retail business in Nigeria.

2.  To examine the prospects of e-commerce in retail business in Nigeria

3.  To identify the approaches to e-commerce in retail business in Nigeria.

1.4   RESEARCH QUESTIONS

1.  What are the challenges of e-commerce in retail business in Nigeria?

2.  What are the prospects of e-commerce in retail business in Nigeria?

3.  What are the approaches to e-commerce in retail business in Nigeria?

1.5   RESEARCH HYPOTHESIS

H₀:   There is no significant challenge of e-commerce in the retail business in Nigeria.

H₀:   There is a significant challenge of e-commerce in the retail business in Nigeria.

1.6   SIGNIFICANCE OF THE STUDY

The following are the significance of this study:

1.  Findings from this study will educate managers on the effect on e-commerce on retail business.

2.  This research will be a contribution to the body of literature in the area of the effect of personality trait on student’s academic performance, thereby constituting the empirical literature for future research in the subject area.

1.7   SCOPE/LIMITATIONS OF THE STUDY

This study will cover the challenges and prospects of e-commerce in retail business in Nigeria using Jumia online store as a case study.

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

 Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work