The purpose of this thesis is to examine
the impact of the adoption of third party electronic commerce platforms
on small and medium enterprises (SMEs) companies in Nigeria. This
thesis describes the drivers for e-commerce adoption and investigates
the barriers and benefits to the companies when starting the process of
implementation. A qualitative research was performed and an adductive
approach was used, where the research findings and the theoretical
background were connected by going back and forward in the process of
analysis. Questionnaires were distributed to registered merchants who
have electronic store fronts in the three major e-commerce platforms.
This study shows that the adoption of
e-commerce is extremely low compared to what obtains in Asia and Western
nations. The decisions for e-commerce adoption are dependent on the
knowledge of the owner /manager. Main benefits of e-commerce adoption
are higher profit as a result of the expanded market share, improved
internal efficiency and increased information exchange. The results
suggest that companies value less than before the cost factor and
consider the lack of knowledge as a main barrier.
The most significant benefits derived
from third party electronic commerce adoption and usage were the huge
direct marketing planning and implementation it lifts off the shoulders
of the merchants, improved quality of information and communicating with
e-commerce site partners. Regarding barriers, awareness and technical
know-how appeared to be the biggest barrier.
Keywords: Electronic commerce, third-party e-commerce, storefront, retail business, TAM, Perceived Ease of Use (PEOU),
TABLE OF CONTENT
Table of Contents
Chapter One – Introduction
1.1 Background to the Study.
1.2 What Is Third Party E-commerce?
1.3 How did Third Party E-commerce come about?
1.4 Statement of the Problem
1.5 Objective of the Study
1.6 Research Questions
1.7 Research Hypothesis
1.8 Scope and Limitation of the Study
1.9 Significance of the Study
Chapter Two – Literature Review
2.2 Conceptual Framework
2.2.1 The Concept of Third Party E-commerce
2.2 2 History of E-Commerce
2.2.2 Your website versus third-party ecommerce platform
2.2.3 The Role of Third Party E-commerce
2.2.. TAM And E-Commerces
2.2. Comparison of Traditional Commerce and E-Commerce
2.2. E-Commerce and Value Chain
2.2. Classification of E-Commerce
2.2.4 Models Of Third Party E-commerce
2.3 Theoretical Framework
2.4 Empirical Analysis
Chapter Three – Research Methods
3.2 Research Design
3.3 Population of the Study
3.4 Sample Size
3.6 Data Collection
3.8 Data Analysis
Chapter Four – Data Presentation, Analysis and Discussion Of Findings
4.2 Data Presentation and Analysis
4.3 Distribution of Socio - Demographics Data
4.4 Test Hypothesis for the Study
Chapter Five – Summary Of Findings, Conclusion And Recommendations
5.2 Summary Of Findings
5.5 Suggestions for Further Studies
We live in the most astounding time when
it comes to marketing resources and potential. Not too long ago, a
small business had very limited reach and it sometimes took years before
their marketing reach is able to go beyond their local community.
However, in today’s environment, all that is fast changing.
A small business can be launched today
and literally reach around the world with their product or service same
day...a marketing miracle courtesy of the internet. The internet is all
about the speed of information dissemination. How you gather, manage and
use information, according to Gates, Bill, (1999) will determine
whether you win or lose in business.
While that may be an oversimplification
of the process, it is not an exaggeration. Granted, certain
infrastructural components need to be put in place before the marketing
reach can be effectively achieved. But the reality is that you no longer
have to be a giant company with a huge marketing budget to have a
worldwide marketing footprint.
Several terms are used in the virtual
world for promoting businesses. They include online marketing, internet
marketing, webvertising, web marketing, e-marketing, social media
marketing, e-commerce marketing… and the list goes on and on. The name a
company chooses to call it does not matter. The important fact remains
that a business, no matter its size, will be losing out a reasonable
percentage of its potential market share, if it fails to implement it as
a part of their marketing efforts.
One does not even need to have a formal
academic background in online marketing to be able to implement it in a
business. In fact, one of the interesting things about the digital age
is that the very successful online marketing practitioners are
self-taught or accomplished through informal or semi-formal training
methods like seminars and workshops.
In recent years there has been a
proliferation of online marketing training programmes, aimed at finding
individuals that will pay a web-based company, to be trained in the art
of online marketing through a series of training modules. In other
words, people have made a great deal of money training others both
online and offline to become digital media marketing experts. These
group of experts now go by different professional titles ranging from
Digital Marketing Strategist, Digital Brand Specialist, Online Marketing
Manager, Social Media Marketing Consultant, Digital Media Expert, and
the list goes on and on..
It would be an understatement to say
that internet marketing can become complex, confusing, and ever
changing. What is written about internet marketing today may become old
news in a matter of months. New services are always in the horizon and
the next magic application is usually lurking around the corner. Yet,
there are some consistent strategies that have stood the test of time as
business owners ride the wave of the constantly evolving cyber world.
Further discussion of these strategies is in order here.
Taking a business online requires
commitment and funding. A business owner must see his foray into the
cyber space as an investment and not an expense, which will eventually
make a return on investment, when effectively implemented. Where the
need arises, a sizeable percentage of your traditional marketing budget
can be deployed for online marketing campaigns. This is fast becoming
the practice in corporate circles these days.
The rate at which electronic
(e)-commerce is adopted by the small business sector has remained
relatively slower than anticipated (Van Akkeren and Cavaye, 1999;
Walczuch, Van Braven and Lundgren, 2000; Stockdale and Standing, 2006;
Lowry, Singh and Scollary, 1999 and Pease and Rowe, 2003a). This is
despite the fact that small and medium enterprises (SMEs) were the first
companies to embrace web-based commerce (Turban, King, Viehland and
Lee, 2006) and have been noted for their ability to respond to new
opportunities and innovations more quickly than larger enterprises, that
tend to be slower in their adoption of innovations as a result of
management beaurocratic bottlenecking. (Lomerson, McGrath and Schwager,
In addition, the sluggish adoption rate
is despite the significant benefits and opportunities, which can be
realised by SMEs, which adopt and use e-commerce (MacGregor and
Vrazalic, 2004 and Bolongkikit, Obit, Asing and Tanakinjal, 2006).
However, the ability of SMEs to successfully adopt and utilize
e-commerce is fundamental in ensuring their stability and success
(Ramsey, Ibbotson, Bell and Gray, 2003 and Stansfield and Grant, 2003a).
Growing evidence suggests that
e-commerce adoption is not optional for growing SMEs but a prerequisite
for competing well in markets (MacGregor and Vrazalic, 2005a and Payne,
nd). Henceforth, SMEs must quickly embrace e-commerce technologies or
they will succumb to their competitors (Pease and Rowe, 2003b) while in
the long run the Internet might affect their productivity, market access
and competitiveness (Walczuch et al, 2000).
Financial institutions, having being in
the forefront of adoption of internet technology to enhance service
delivery to their customers, have not relented their effort in that
direction. They are not just looking at leveraging ICT to directly
enhance their return on investment, but putting structures in place for
their customers to take advantage of. The implication of this is that,
if the customers adopt ecommerce and declare bigger profits at the end
of the day, the bank automatically becomes richer as a result of their
customers who have adopted ecommerce and now make bigger profits as a
This is exactly the case with Nigeria’s G
T Bank. This vision has resulted in G T Bank setting up the
SMEMarketHub, a fully functional e-commerce marketplace for its teaming
customers. It can be safely assumed that apart from the mutual financial
benefits accruable to both parties, the SMEMarketHub is also a
marketing strategy as an increasing number of retailers are opening
accounts with G T Bank in other to take advantage of the marketplace.
1.1 AIM AND OBJECTIVES OF THE STUDY
While much of the research regarding the
diffusion and assimilation of e-commerce in retail businesses has been
conducted in developed countries, little or no research has been carried
out in developing countries. The aim of this research is to investigate
the benefits and barriers of e-commerce adoption in small size retail
businesses in Nigeria. In order to do this, the following tasks will be
performed: This study therefore endeavours to fill this apparent gap by
investigating electronic commerce benefits and adoption barriers in
retail businesses within the context of a developing country like
In view of this background, the following research aims/objectives were formulated to:
• explore the awareness and usage level of e-commerce applications among Retailers.
• examine the importance of perceived benefits in the adoption and usage of e-commerce.
• identify the important barriers of e-commerce adoption in Retailers.
1.2 RESEARCH QUESTIONS
The following research questions would have to be asked in order to guide this study.
To what extent are retail business owners aware of third party e-commerce?
What are the barriers hindering retailers from adopting third-party e-commerce?
What benefits do retailers derive in adopting third party e-commerce?
1.3 SCOPE OF THE STUDY
E-commerce though a relatively new
business concept has different models and has continued to expand in
scope at an ever increasing speed dictated by advancement in information
and communication technology, ( ICT). Most of these different models
require a merchant planning to have an online presence, to build and
upload a website in cyberspace. This approach presents a challenge
because of the technicalities involved in building and maintaining an
As a result, this study is deliberately
narrowed down to focus on third party e-commerce where a potential
e-commerce merchant does not have to bother with the technicalities and
cost of building a website. Instead, he partners with a marketplace that
provides an e-commerce platform where goods are displayed and sold and
the portal owners paid a commission whenever a product is sold. In some
cases, the website owner is paid what could be termed an advert fee for
providing retail merchants with e-store fronts in his e-commerce portal,
just the same way a merchant buys space in a newspaper or magazine for
advert placement or pays rent for his traditional business space.
Still on this third party e-commerce
model, there is yet another group where an e-commerce portal owner does
not charge fees in order for retailers to display their products on his
website. The question here would be, “how does this kind of e-commerce
portal owner make money to maintain his website and make profit?’ The
answer is that because of the buying and selling that take place on the
website and the traffic generated in the process, owners of big search
engines like Google place adverts there, for which they pay..
This model raises questions as to
whether a merchant is better off financial and otherwise when he hosts
his own stand-alone e-commerce storefront or better compensated when he
partners with a third party marketplace, a comparison of the pros and
cons associated with each, either in the short or long term. Or would a
combination of both be in the best interest of the merchant. All of
these boil down to management of the business, fulfillment of orders,
payment processing, shipping and questions about customer data base,
opportunities for repeat orders and branding.
Other issues that are looked into
include the category of products that are shipped cost effectively,
either by the third party market place or on the stand-alone e-commerce
A major limitation for this study has to
do with fact that, though significant research work has been carried
out in the developed nations of the world on e-commerce, the same cannot
be said for West Africa especially Nigeria. Therefore sourcing for
relevant literature from Nigeria and West Africa proved to be a
Secondly, tracking managers of
third-party marketplaces and getting them to submit to interviews proved
challenging. They appeared very busy and unwilling to be engaged in any
extended periods to provide exhaustive answers to the researcher’s
questions. They were not willing to volunteer a list of retailers on
their platforms so that the researcher would hand out questionnaires to
1.5 THE SIGNIFICANCE OF THE STUDY
The significance of this study on the
opportunities and challenges associated with the adoption of third party
e-commerce marketplace as against traditional advertising and marketing
approaches for a regular brick and mortars business is not only to
advance the frontiers of knowledge for academic purposes. This study
will serve as a reliable reference material for the benefits of
entrepreneurs, practitioners and social media consultants who are
contemplating leveraging e-commerce to extend the marketing reach of
either their companies or that of their clients for higher profits and
This study will provide answers to
business management issues, third party marketplaces as against
stand-alone e-commerce storefront, fulfillment of orders, payment
processing, shipping and branding.
For the retailer gearing up to adopt
e-commerce to extend his marketing reach and garner higher profit
margins, this study will provide him with the detailed information to
guide his decision.
The scholar, on the other hand, will not
only see this as an addition to the body of knowledge but also a
fertile ground from which he could generate more research topics such as
;E-commerce and Logistics, E-commerce and Branding, E-commerce and