As Internet is becoming more widely used, e-commerce is also growing tremendously. As many businesses are attempting to globalize their sales, Internet becomes the primary means of advertising and selling their products or services worldwide.
Many businesses are creating web pages in addition to their retail stores, and many start their businesses with online stores alone. Online store is the number one remote shopping method that consumers use nowadays, on top of phone orders, mailing, etc.
E-commerce is the business that focuses on selling goods by virtual interface (online- shopping, on the internet) and consumer rights.
The aim of our research is concerned in why Arab community still prefers traditional business than e-commerce. What are the barriers that make Arab community hesitate dealing with e-commerce. And what are the solutions that can reduce this problem and motivate the consumer to use online shopping.
To fulfill these needs we are going to follow a certain procedure, By distributing a survey among different levels and standards in Bahrain society.
Based on the results of the questionnaire and customers opinions that will be analyzed, solutions and available choices can be considered to improve and motivate our distributors to deal with e-commerce in Bahrain.
"People think e-commerce is just people browsing, but there's more to it than that. More and more people are using programs and agents to shop for the best deal, and that's how they're going to be getting to your site." (Tim Berners-Lee, 2009)
"We wanted to build a shopping experience toward convenience-oriented buyers who wanted to buy new items and make the purchases really quickly. We think it'll attract those who have never tried eBay before because it's more of a traditional e-commerce site" (Brad Williams, 2009)
So, e-Commerce is about doing business electronically and encompasses many diverse activities both in the business-to-business market and in the business-to-consumer market. Activities include electronic trading of goods and services, online delivery of digital content, electronic fund transfers, electronic share trading, commercial auctions, collaborative design and engineering, online sourcing, public procurement, direct consumer marketing, and after-sales service. It involves both products (e.g. consumer goods) and services (e.g. information services, financial and legal services).
Electronic commerce relate to commercial transaction of goods and services conducted between parties electronically mainly through open Internet based systems i.e. the parties interact electronically rather than by physical exchange or contact. A wide range of communication technologies including e-mail, EDI, Internet, Intranet and Extranet can be used to support electronic commerce.
Electronic commerce includes commercial transactions such as electronic trading of goods and services, on line delivery of digital content, electronic fund transfers, electronic share trading, electronic bills of lading, collaborative design and engineering, on line sourcing, public procurement, direct and consumer market. The potential for the application of electronic commerce will continue to expand. (Kobimar, 2004)
E-commerce is can be further categorized into the following:
- Business-to-Business (B2B)
- Business-to-Customer (B2C)
- Consumer-to-Business (C2B)
- Consumer-to-consumer (C2C)
Business to businessis one in which a company deals with another company for business and exchanging of goods, products, services. Some of the examples of b2b e-commerce sites are a company's official site, brokering sites etc.
Business to customeris one where the company sells its goods to the customer or trades with the customers. This is electronic retailing and called as e-tailing in common. One of the best examples is amazon.com.
Consumer to businessis when a customer works for a certain company for business and the company buys it, here the consumer has to price the trade. Example for such a site is priceline.com
Consumer to consumeris more like auctioning, bartending, etc... where a consumer places bid and other buys it. Here the websites acts an intermediate for the business Example for such sites is eBay.
E-Commerce provides advantages to both the Business provider, consumers. For the business it is provides easier way to market a particular product at low cost and also the product easily reaches the global market. For the consumers they can buy products from home, so no tedious work in buying and they can trade any time. E-commerce thus is a greater benefit provided it has ultimate security. (Vikas S, 2009)
History of e-Commerce:
History of ecommerce dates back to the invention of the very old notion of "sell and buy", electricity, cables, computers, modems, and the Internet. Ecommerce became possible in 1991 when the Internet was opened to commercial use. Since that date thousands of businesses have taken up residence at web sites.
At first, the term ecommerce meant the process of execution of commercial transactions electronically with the help of the leading technologies such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) which gave an opportunity for users to exchange business information and do electronic transactions. The ability to use these technologies appeared in the late 1970s and allowed business companies and organizations to send commercial documentation electronically.
Although the Internet began to advance in popularity among the general public in 1994, it took approximately four years to develop the security protocols (for example, HTTP) and DSL which allowed rapid access and a persistent connection to the Internet. In 2000 a great number of business companies in the United States and Western Europe represented their services in the World Wide Web. At this time the meaning of the word ecommerce was changed. People began to define the term ecommerce as the process of purchasing of available goods and services over the Internet using secure connections and electronic payment services. Although the dot-com collapse in 2000 led to unfortunate results and many of ecommerce companies disappeared, the "brick and mortar" retailers recognized the advantages of electronic commerce and began to add such capabilities to their web sites (e.g., after the online grocery store Webvan came to ruin, two supermarket chains, Albertsons and Safeway, began to use ecommerce to enable their customers to buy groceries online). By the end of 2001, the largest form of ecommerce, Business-to-Business (B2B) model, had around $700 billion in transactions.
According to all available data, ecommerce sales continued to grow in the next few years and, by the end of 2007, ecommerce sales accounted for 3.4 percent of total sales.
Ecommerce has a great deal of advantages over "brick and mortar" stores and mail order catalogs. Consumers can easily search through a large database of products and services. They can see actual prices, build an order over several days and email it as a "wish list" hoping that someone will pay for their selected goods. Customers can compare prices with a click of the mouse and buy the selected product at best prices.Online vendors, in their turn, also get distinct advantages. The web and its search engines provide a way to be found by customers without expensive advertising campaign. Even small online shops can reach global markets. Web technology also allows to track customer preferences and to deliver individually-tailored marketing.
History of ecommerce is unthinkable without Amazon and eBay which were among the first Internet companies to allow electronic transactions. Thanks to their founders we now have a handsome ecommerce sector and enjoy the buying and selling advantages of the Internet. Currently there are 5 largest and most famous worldwide Internet retailers: Amazon, Dell, Staples, Office Depot and Hewlett Packard. According to statistics, the most popular categories of products sold in the World Wide Web are music, books, computers, office supplies and other consumer electronics. (E-commerce Land, 2004)
Trust in the Business Environment
The finding of Griffith et al. (2000) demonstrated that higher level of external trust than manager from Asian. National culture is discussed in these studies (Strong and Weber, 1998; Griffith et al., 2000). Since there are hundreds of countries in the world, there must be a proper way to put hundreds of different types of cultures into some categories to allow for comparison.
Cultural Difference of Trust
Inspired by the fundamental piece of Fukuyama's (1995) Trust, later trust studies focus mainly on the different propensities of organizational trust and inter-organizational trust in different countries. Specifically, the cultural background usually affects the way people trust. Different ethnic groups have different trust propensities regarding whom they consider trustworthy and how well they can put trust in others.
Strong and Weber adopted Hofetede's framework and used individualism (individualism/collectivism) and power distance (small/large) as independent variables. Griffith et al. (2000) assigned the United States and Canada as Type 1 culture with an "individualistic-small power distance-weak uncertainty avoidance" type of culture to contrast with Type 2 culture countries (Chile and Mexico) with "collectivistic-large power distance-strong uncertainty avoidance" characteristics. This study did discover that Type 1 culture has a higher possibility to form a trusting relationship with other Type1 culture countries rather than with other Type 2 culture countries. This study will extend this finding into trust in e-commerce context.
Research Model and Hypotheses
This model comprises a wide range of the antecedents affecting trust as confirmed by previous studies on trust in e-commerce: Privacy (Miyazaki and Fernandez, 2001), disposition to trust (McKnight and Chervany,2002), familiarity (Gefen, 2000), presence of a third party seal (Kimery et al, 2002), web site reputation (Doney and Cannon, 1997). This model is designed to indicate that these antecedents have a significant impact on trust in e-commerce and each arrow in the model refers to the fact that each antecedent is associated with trust in e-commerce/trust in an e-tailer (See Figure 1).
E-Commerce versus Traditional business:
A simple comparison between e-commerce and traditional business shopping can give us an over view about the differences:
- Need high capital investment/setup cost,
- Need to source for a good/strategic location, do up the renovation and pay rental/leasing cost.
- Need to keep inventory/stock, for are selling goods,
- Hire employees to carry out the work, unless it's a one-man show,
- Need huge investment amount of advertising/marketing cost, but not knowing what the outcome will be.
- Need full-time job that demands almost 100% of waking time to run the business, yet without knowing if the business will succeed or fail.
- Due to high initial capital investment, business may take a couple of years before it breakeven. There is no guarantee of success even after the breakeven mark is reached.
Online/internet business can be vastly different. It is a setup that:
- Normally does not require a physical office, hence no need to incur rental/leasing cost. This means there will be a huge savings, as the work can be done from home.
- The setup cost can be as low as only a few tens of dollars.
- Depending on the nature of your business, most of the online/internet business do not required to keep inventory/stock of any kind at all. For example, affiliate marketing,
- As it is a simple setup, a one-man show and own 100% of the profits earned. There is no need to pay salaries for hiring helpers. Nor is there a need for partnership.
- The advertising cost incurred for internet publicity is much lower than traditional advertising media such as television commercials, newspaper, magazines, etc.
- It can be done online/internet business as a freelance or a side job. There is no need to quit the current full-time job. This offers security and continual income until the online/internet business is stable and churn out good profits.
- In case if run out of business ideas, it can be find ideas easily in the internet; it's full of opportunities, information and resources and most of these are free.
Monitoring the internet business performance online and take immediate actions to switch from low profit-making products/services to other business ideas very quickly, hence minimizing the loss before it burns a big hole in your pocket. (Melinda Ng, 2009)
For commerce from business to consumer (B2C), electronic commerce does not have a physical point of sale (a store), but sells over the Internet.
The seller saves money on rent and salaries, and can reach a much larger potential customer base. For example a physical bookstore can only attract customers in the local area, whereas an electronic bookstore like Amazon can sell to anyone with access to a payment card and a browser almost anywhere in the world.
The buyer potentially gets the benefit of a wider selection of goods than any local store can afford to keep in stock, and possibly lower prices from economies of scale.
Commerce by mail order catalog works by pretty much the same general logic as electronic commerce, but by making the "catalog" electronic (i.e. a website), printing and distribution costs go down and potential customer reach is increased even further.
Drawbacks of electronic B2C commerce, from the customer standpoint, are the same as for mail order catalogs: You don't get to see or try out the goods before you buy, and delivery time is longer than if you bought it at a local store.
For commerce from business to business (B2B), electronic commerce tends to mean placing orders and exchanging various data electronically rather than by phone, courier or postal mail.
There are no clear drawbacks to electronic B2B commerce - the businesses are doing commerce anyway, according to an existing (non-electronic) agreement, and the electronic part is mostly a way to cut down on the paperwork involved in ordering, shipping, accepting delivery and paying. (Wikianswers.com, 2009)
- Convenient: Online shopping allows consumers to shop at the convenience of their own home, and to save traveling time to retail stores and spend their time on other important tasks and hobbies. In addition to ease of finding products online and shopping time reduction, consumers can shop without time limitation with 24-hr access at their convenience because the World Wide Web never closes. Also, consumers can exchange information online through chatting and discussion forums to help them make wise consumer decisions.
- No need for vendors and no pressure to buy: Online shopping benefits both the society as a whole and individuals. The society can save human resources when consumers help themselves by browsing freely online instead of asking for assistance from vendors. In addition, consumers are freed from the pressure to buy from the vendors and can spend more time to make wise purchase decisions.
- "Infinite shelf space" available: Consumers desire a variety of products because they look for the right product that will fully satisfy them. There is infinite variety of products available online because online shopping allows consumers to browse through products that are made all around the world without geographical boundaries.
- Able to compare product price and features: With the online tools that enable product comparison, consumers can compare product prices and features to make a better decision with less effort. (Online shopping, 2005)
- Enjoyment of retail shopping lost: Many enjoy shopping with others and it is often a good way to make social connections. When shopping independently online, the enjoyment is lost.
- Privacy and security issues: Privacy is the number one reason that non-online shoppers do not shop online. Also, many customers do not trust the privacy of the Internet and are concerned with their credit card funds, unwanted solicitation, and use of their information for other purposes. Security of Web sites is not the top concern because many shop on Web sites that they trust so that other factors appear to be more important than security.
- Access to the Internet and computer necessary: Because one needs money to buy a computer and to have internet connection, online shopping seems to be limited people of reasonable amount of income. Also, since it is harder to learn computer at an older age, the elderly people tend shop at traditional retail stores.
- Product category risk: Product category risk is related to functional products such as apparel, perfume, and electronics that have functions that cannot fully be experienced online. Online shoppers are worried that the products will not be what they have expected by viewing online.
Apparels in particular had negative rating in online shopping because of it is difficult to feel and see the texture of color online that is incomparable to going to a retail store, even with magnifying tools online. Also, one cannot try on clothing before buying it online, so it would be very inconvenient if the size did not fit the person and he/she had to return it.
Too many choices: Although having access to a very large number of products is highly desirable, consumers have limited cognitive resources and may simply be unable to process the potentially vast amounts of information about these alternatives. Online stores need to provide the variety in an organized way that will facilitate shopping online. (Online shopping, 2005)
The problems of e-commerce:
Time for delivery of physical products. It is possible to visit a local music store and walk out with a compact disc, or a bookstore and leave with a book. E-commerce is often used to buy goods that are not available locally from businesses all over the world, meaning that physical goods need to be delivered, which takes time and costs money. In some cases there are ways around this, for example, with electronic files of the music or books being accessed across the Internet, but then these are not physical goods.
Physical product, supplier & delivery uncertainty. When you walk out of a shop with an item, it's yours. You have it; you know what it is, where it is and how it looks. In some respects e-commerce purchases are made on trust. This is because, firstly, not having had physical access to the product, a purchase is made on an expectation of what that product is and its condition. Secondly, because supplying businesses can be conducted across the world, it can be uncertain whether or not they are legitimate businesses and are not just going to take your money. It's pretty hard to knock on their door to complain or seek legal recourse! Thirdly, even if the item is sent, it is easy to start wondering whether or not it will ever arrive.
Perishable goods. Forget about ordering a single gelato ice cream from a shop in Rome! Though specialised or refrigerated transport can be used, goods bought and sold via the Internet tend to be durable and non-perishable: they need to survive the trip from the supplier to the purchasing business or consumer. This shifts the bias for perishable and/or non-durable goods back towards traditional supply chain arrangements, or towards relatively more local e-commerce-based purchases, sales and distribution. In contrast, durable goods can be traded from almost anyone to almost anyone else, sparking competition for lower prices. In some cases this leads todisintermediationin which intermediary people and businesses are bypassed by consumers and by other businesses that are seeking to purchase more directly from manufacturers.
Limited and selected sensory information.The Internet is an effective conduit for visual and auditory information: seeing pictures, hearing sounds and reading text. However it does not allow full scope for our senses: we can see pictures of the flowers, but not smell their fragrance; we can see pictures of a hammer, but not feel its weight or balance. Further, when we pick up and inspect something, we choose what we look at and how we look at it. This is not the case on the Internet. If we were looking at buying a car on the Internet, we would see the pictures the seller had chosen for us to see but not the things we might look for if we were able to see it in person. And, taking into account our other senses, we can't test the car to hear the sound of the engine as it changes gears or sense the smell and feel of the leather seats. There are many ways in which the Internet does not convey the richness of experiences of the world. This lack of sensory information means that people are often much more comfortable buying via the Internet generic goods - things that they have seen or experienced before and about which there is little ambiguity, rather than unique or complex things.
Returning goods.Returning goods online can be an area of difficulty. The uncertainties surrounding the initial payment and delivery of goods can be exacerbated in this process. Will the goods get back to their source? Who pays for the return postage? Will the refund be paid? Will I be left with nothing? How long will it take? Contrast this with the offline experience of returning goods to a shop.
Privacy, security, payment, identity, contract.Many issues arise - privacy of information, security of that information and payment details, whether or not payment details (eg credit card details) will be misused, identity theft, contract, and, whether we have one or not, what laws and legal jurisdiction apply.
Defined services & the unexpected. E-commerce is an effective means for managing the transaction of known and established services, that is, things that are everyday. It is not suitable for dealing with the new or unexpected. For example, a transport company used to dealing with simple packages being asked if it can transport a hippopotamus, or a customer asking for a book order to be wrapped in blue and white polka dot paper with a bow. Such requests need human intervention to investigate and resolve.
Personal service. Although some human interaction can be facilitated via the web, e-commerce can not provide the richness of interaction provided by personal service. For most businesses, e-commerce methods provide the equivalent of an information-rich counter attendant rather than a salesperson. This also means that feedback about how people react to product and service offerings also tends to be more granular or perhaps lost using e-commerce approaches. If your only feedback is that people are (or are not) buying your products or services online, this is inadequate for evaluating how to change or improve your e-commerce strategies and/or product and service offerings. Successful business use of e-commerce typically involves strategies for gaining and applying customer feedback. This helps businesses to understand, anticipate and meet changing online customer needs and preferences, which is critical because of the comparatively rapid rate of ongoing Internet-based change.
Size and number of transactions.E-commerce is most often conducted using credit card facilities for payments, and as a result very small and very large transactions tend not to be conducted online. The size of transactions is also impacted by the economics of transporting physical goods. For example, any benefits or conveniences of buying a box of pens online from a US-based business tend to be eclipsed by the cost of having to pay for them to be delivered to you in Australia. The delivery costs also mean that buying individual items from a range of different overseas businesses is significantly more expensive than buying all of the goods from one overseas business because the goods can be packaged and shipped together. (knowledge exchange, 2009)
The main problem that will be discussed in our research paper is
Why consumers still feels uncomfortable dealing with electronic commerce?
In a typical e-commerce environment, a high level of trust is required for both the buyer and the seller because of lower identification they can get from each other during the exchange. Trust has become one of the most critical factors that determine whether an e-retailer will be successful in the e-commerce environment.
Trust is a valuable contributor to intentions to shop online (Jarvenpaa and Tractinsky 1999; Gefen 2000; Mutz 2005), particularly because online shopping presents a less verifiable and less controllable business atmosphere and, thus, more uncertainty and risk than the traditional brick-and-mortar shopping environment. Consumers simply do not trust Internet merchants enough to develop exchange relationships with them, because of the physical distance to Internet merchants, the absence of salespeople, and the separation between consumers and products on the Internet .Moving Internet users to the purchase click, thus, is proving to be difficult because of the fundamental lack of trust between most businesses and consumers.
Samples and Procedures
Data for this study will be collected in this spring 2009 from a self- administered survey for (60-70) persons from several people in Bahrain community. The sample consisted of variable level of people ,based on in education level, job position levels ,household income level, age and ...etc., this study used community samples because they facilitate sample comparability across cultures in Bahrain.
The results will be held at the end of this project.
Results and Analysis of SPSS
No statistically significant differences between male and female in lack of trust in e-commerce, where the value of (t) = -0.518 and degree of freedom (df) = 66 and the significant (2-tailed) = 0.606.
Since our survey is related to Bahrain community, as it shows in the table above that there are no differences in opinions regarding lack of trust in e-commerce between male and female. The main reason for that can be the closure of educational level and the way of thinking and decision making for both genders due to the government services that is provided.
No statistically significant differences between the different levels of age in lack of trust in e-commerce, where the value of (f) = 1.504 and the significant = 0.222.
We can refer the reason behind that for the majority of the distributors of our survey were in the age of 20-29 (55.9%) and as it seems to be that this age category shares the same knowledge and background about using e-commerce.
No statistically significant differences between the different education levels in lack of trust in e-commerce, where the value of (f) = 1.876 and the significant = 0.111.
Although the majority of our distributors are bachelor degree carriers as it can be shown in the figure above (58.8%), but the fear surrounding them regarding dealing with e-commerce. The reason behind that is their awareness from online shopping hackers, bank account robberies and online imaginary companies.
No statistically significant differences between the different income levels in lack of trust in e-commerce, where the value of (f) = 1.505 and the significant = 0.222.
As it seems from both diagrams shown above of the monthly income of our distributors and their welling of spending to purchase goods online we can conclude that most of them (60%) have an average monthly income (BD 400-699) and lowest amount in buying online (BD 50-100). These two facts can push distributors to avoid risks such as debts and bankrupt.
No statistically significant differences between people with different occupation in lack of trust in e-commerce, where the value of (f) = 1.973 and the significant = 0.083
Although the majority of our distributors are occupied and using the internet, but still they avoid using e-commerce to purchase products online. The reason behind that might be psychological issues that make them reject the idea of buying things without seeing and touching them physically.
No statistically significant differences between male and female in lack of trust in e-commerce, where the value of (t) = -1.360 and degree of freedom (df) = 12 and the significant (2-tailed) = 0.199.
In our survey lots of our samples carries credit cards (66.2%) added to that all banks of Bahrain have converted the normal ATM cards into VISA or Master cards that provide electronic services. Although distributors have this service but still they prefer paying in cash and require more security.
As we conclude from our research paper that no matter how different the people in their ages, incomes, gender, education level or even jobs, still they don't have the full confident to deal with online shopping, even though they are few percentage uses e-commerce in a daily bases, but the majority of our distributors still feels that dealing with traditional shopping is more safe and comfortable.
Also we saw that credit card carriers from our distributors are more than half, but still they fear using it online, the most fear was spreading the private information of the customers online also the hackers and imaginary fraud companies.
As the online shopping is still in its beginning steps in our communities and still didn't gain the highest degree in reputation but still there are ways to attract consumers to deal with e-commerce like:
As Jakob Nielson writes in E-Commerce User Experience, "Trust is hard to build - and easy to lose.
- Have a Professional Website
- Tell them about yourself
- Build on the trust customers have for existing companies
- Give Complete Information About the Product
- Give Them Security
- Respect Their Privacy
- Have a Good Refund / Return Policy
- Let Them Contact You.
A professional website is to an e-commerce website what a suit is to a salesman. Also important to keeping trust (and clients) is making sure that each page loads quickly, not giving them time to get bored and leave.
Show detailed company information, normally in the form of an "About Us". Users also like to see that you have your address, phone number and even a company history on the site, even if they are never going to make use of them.
Customers, understandably, want to know as much as they can before giving their credit card details away. Give them everything they want to know about the product, including quality photos that show it in detail, availability, and extremely importantly, the full and correct price.
Security of information is very important to people who trade on the Internet, especially those who don't really understand the technical side. Make sure that you are using a secure server for your transactions, and that the customer knows and trusts in that. Also, make alternative ordering - through fax, phone or mail available, simple and easy-to-access.
The issue of personal privacy is extremely important on the Internet. Try not to make people give you sensitive information if they really don't want to.
Fulfilling these aspects can lead at the end to gain better trust to customers and can make them easily accept the though of buying products online no matter how different they are in their society standards.
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- Kobimar.(2004). What is e-commerce, http://www.kobimar.com/en/eticnediren.html, 12 November 2009.
- Vikas S. (2009) Introduction of e-Commerce, http://ezinearticles.com/?Introduction-to-E-Commerce&id=2529080, 23 December 2009.
- E-commerce Land.(2004). History of E-commerce, http://www.ecommerce-land.com/history_ecommerce.html, 13 November 2009.
- Melinda Ng.(2009). Attributes Of An Online or Internet Business Over A Traditional Business Setup, http://ezinearticles.com/?Attributes-Of-An-Online-or-Internet-Business-Over-A-Traditional-Business-Setup&id=999868, 15 November 2009.
- Wikianswers.com.(2009).what are the differences between traditional commerce and electronic commerce. http://wiki.answers.com/Q/What_are_the_differences_between_traditional_commerce_and_electronic_commerce, 16 November 2009.
- Online shopping.(2005).Online shopping/advantages & disadvantages, http://www.ocf.berkeley.edu/~jinnie/advantage.html, 16 November 2009.
- The knowledge exchange.(2009), an introduction into e-commerce, http://marcbowles.com/sample_courses/amc/ec1/ec1_3.htm, 16 November 2009.
- Young Hoon Kim and Dan j.Kim.(2003), the impact of cultural differences on trust in e-commerce, research report, Department of telecommunication, Michigan State University.