CHAPTER ONE

INTRODUCTION

1.1   Background of the Study

The internet revolution is really about customers, suppliers, groups, organisations, government, and the general public. It has created fundamental shift of market power from the seller to buyer taking into considerations provisions guiding business transaction on the internet. In the new economy customers expectations are very different than before. A company understanding of this difference and its ability to capitalise on it will be the key to success. The web, the internet and emerging computing and communication technologies have redefined traditional boundaries of business in relation to time, geography and creating new virtual communities of customers and suppliers with new demand for products and services. Electronic commerce (EC) has been recognized globally particularly in the developed markets as a mechanism for business organisations to reach global markets and guiding a wide spread of customers in different geographical locations.

The adoption of e-commerce is widespread and also regarded as an essential tool for the efficient administration of any organisation and in the delivery of services to its clients. According to Laudon and Laudon (2013) the trend of e-commerce began in 1995. It requires the digital goods for carrying out their transactions. Digital goods are goods that can be delivered over a digital network. E-commerce is rapidly transforming the way in which enterprises are interacting among each other as well as with consumers and governments. As a result of changes in the landscape of ICTs, e-commerce is now growing rapidly in several emerging markets and developing economies (UNCTAD, 2015).

E-commerce has been hailed by many as an opportunity for developing countries to gain a stronger foothold in the multilateral trading system. E-commerce has the ability to play an instrumental role in helping developing economics benefit more from trade (WTO-2013). The growing use of the Internet, tablet devices, and smart phones coupled with larger consumer confidence will see that e-commerce will continue to evolve and expand. The adoption of e-commerce in Nigerian business organisations has increased since the users of internet in Nigeria has grown from 0.1% in 2000 to 29.5% of its population in June 2010 and still has the potential to grow higher (Ayo, Adewoye and Oni, 2011). According to Tunde, (2013) Nigeria recorded an estimated 25 per cent growth in online shopping with revenues valued at N62.4 million in 2011.

E-commerce refers to the use of communications technology particularly the internet to buy, sell and market goods and services to customers. The Internet has brought about a fundamental shift in national economies that are isolated from each other by barriers to cross-border trade and investment; isolated by distance, time zones and language; and isolated by national difference in government regulations, culture and business systems (Mohammad, 2004).

Electronic commerce has facilitated the emergence of new strategies and business models in several industries in developing countries, Nigeria inclusive. Significant changes are happening in supermarket retailing with the introduction of online shopping, especially in terms of channel development and coordination, business scope redefinition, the development of fulfillment centre model and core processes, new ways of customer value creation, and online partnerships. In fact the role of online supermarket itself has undergone some significant changes in the last few years (Irene Yousept, 2004). The electronic commerce segment of the retail market has witnessed tremendous growth in terms of participation in the Nigerian economy in the last one year (Adewale, Ayo-Oyebiyi and Adebayo, 2013).

According to Johnson (2012) over 100 firms both local and foreign have shown greater interest in the sector alleged to worth over $50 billion annually. She said the industry has no doubt opened doors for the coming generation of young Nigerian entrepreneurs. Electronic commerce industry has no doubt increased the percentage of local content in products and services as well as increased utilization of local capacity. Hence, this research study seeks to examine the impact of e-commerce on emerging markets with a particular reference to Jumia Nigeria Ltd and Koga.com.

1.2   Statement of the Problem

Organisations operating in emerging markets like Nigeria cannot compete solely on past record of success in today’s rapidly changing business environment that is characterized by boundary blurring, disintermediation and hyper competition. To move ahead of their rivals they need to seek innovation constantly at every level of activities. Their ability to generate successful business models and strategies as well as new products, will be the key for their survival in the 21st century. The first step of such innovation is internet, which made the traditional commerce to evolve in to e-commerce trend. It is surprising however, to note that despite the enormous benefits derived from e-commerce in the field of business, trade, industry and commerce, in emerging markets like Nigeria, it is widely speculated by business analysts and stakeholders that most organisations and business operators hardly embrace the immeasurable advantages of e-commerce in their businesses.

The present system of business transaction in most organisations in Nigeria is slow as a result of the manual processes that have become a drawback to operational efficiency as customers are asked to wait indefinitely on queue or come back another day because of the slow manual process or sometimes. One wonders what a customer in desperate need of medical attention in the government hospital could do in such a situation.

Despite advances in computer systems and the acceptance of such technologies by organisations in the developed economies or markets, the same level of adoption is not evident among several organisations in developing economies or emerging markets like Nigeria, its adoption is very slow and characterized by infrastructural problem, government policies issue and so on. It is against this background that this research study is being carried out to investigate the impact of e-commerce on emerging markets with a particular reference to Jumia Nigeria Ltd and Koga.com.

1.3   Objectives of the Study

The main objective of this study is to assess the impact of e-commerce on emerging markets. Other specific objectives are as follows:

§  To examine the impact of e-commerce on rate of sales turnover.

§  To identify the relationship between e-commerce and business profitability.

§  To explore the significant impact of ICT on operational efficiency.

§  To assess the influence of e-commerce in organisational profitability.

1.4   Research Questions

The study will be guided by the following research questions:

     i.        What is the impact of e-commerce on rate of sales turnover?

   ii.        Does e-commerce has any significant impact on business profitability?

  iii.        To what extent will ICT have a significant impact on operational efficiency?

  iv.        Is the use of e-commerce a significant predictor of organisational profitability?

1.5   Research Hypotheses

The following research hypotheses will be tested:

1)   Ho:    There is no significant relationship between e-commerce and     sales turnover rate.

Hi:     There is a significant relationship between e-commerce and       sales turnover rate.

2)   Ho:    E-commerce has no significant impact on business profitability.        

Hi:     E-commerce has a significant impact on business    profitability.

3)   Ho:    There is no significant relationship between e-commerce and    operational efficiency.

          Hi:     There is a significant relationship between e-commerce and                          operational efficiency.