Factors Influencing Growth Potential of E-Commerce in Emerging Economies.

To achieve competitiveness in the rapidly changing environment of e-business, business executives need to react immediately and sufficiently by converting their traditional business strategies to e-commerce processes. In doing so, they must assess opportunities and threats by examining closely the economic, demographic, political, cultural and technological factors that affect businesses trading online.

Technology has made a huge impact on businesses today. It has made business processes more effective and efficient while at the same time narrowing the gaps for competitive advantages. Use of internet in purchasing and selling products of the business is one of those areas where technology has had an immense impact (Eid, 2011, p. 81). Software and websites that facilitate these processes have been developed so as to improve the delivery of services while at the same time it serves as one of the factors that enhance the competitiveness of the firm or company. However, the way e-commerce is managed within various firms can serve as either a success factor or the cause of failure to the firm. In this regard, firms must be very careful when dealing with issues to do with technology applications within its operations. Past studies on e-commerce revealed several factors that can aid efficient implementation of e-commerce project as well as some critical factors that must be considered to ensure significant contribution to business performance measures such as profitability and sales (Eid, 2011, 87). This study assesses some of the factors that can lead to the success or failure of e-commerce.
Electronic commerce (e-commerce) refers to the buying and selling of items over the internet. In this way, e-commerce involves digital money transfer and business transactions between businesses, individuals and governments over the internet. According to past studies, e-commerce was found to have huge benefits for the businesses in terms of cost efficiency and wide market reach. Additionally, these studies revealed that e-commerce enhanced the competitiveness of businesses (Agarwal & Wu, 2015, p. 205). In this regard, firms have invested in robust e-commerce platform that consists of product distribution, marketing, sale and goods delivery. In this case, e-commerce is generally defined as all those business activities in which transactions are prepared and conducted online. Despite these obvious benefits of e-commerce, firms, especially in the emerging economies, are still faced with issues regarding trust, accessibility, security, privacy, awareness and quality of the services conducted online (Agarwal & Wu, 2015, p. 206). Due to these factors getting people to embrace this platform is challenging and can hence lead to failure of the business process. The study categorizes the factors into two divisions. First, internal factors refer to those that the firm has control over and second, external factors refer to the political, economic, social and demographic factors that the firm cannot control. However, both of these factors have a significant impact on the success of the e-commerce firms.
Internal factors
SWOT analysis of e-commerce reveals threats such as security and safety of online transactions as one of the challenges of online transactions (Colla & Lapoule, 2012, p. 867). In e-commerce, the relationship between the seller and buyer is informal since all transactions are done with the aid of the internet. Some studies suggest that there must be sufficient incentive for the customer to trust this arrangement (Gumussoy, Eris & Calisir, 2011, p. 9). This is because e-commerce puts one party to the contract in a position where he/she is vulnerable to the actions of the other party (Gumussoy, Eris & Calisir, 2011, p. 12). Therefore, the incentives for e-commerce should enhance the commitment of consumers to the product, improve customer loyalty and aim at building a long-term relationship between the customer and the business. On the other hand, the business gains in terms of competitiveness as a result of the enhanced customer loyalty and commitment. In addition, security and fraud are other concerns raised by consumers in regard to e-commerce. According to Colla and Lapoule (2012, p. 870), e-commerce involves surrendering some vital personal information if not handled properly can be used by fraudsters for their activities. As a result, consumers are usually wary of these online transactions. For a business to succeed with their e-commerce plan, they must have an assurance that the platform is safe.
Technological capacity of the firm is another critical factor that can determine failure or success of the strategy (Dogerliogl & Cosgun, 2012, p. 1668). Technological capacity refers to the skills and knowledge to the project from within the firm and the outsourced IT support. According to recent studies, technological capacity of the firm or organisation influences its ability to integrate technology with the customer’s needs and expectations. For instance, a good e-commerce platform ensures that the customers are able to maximize their utility from the product by transacting online. In this regard, the design of the platform must clear all the doubts by the customers such as privacy issues, security, and convenience and most importantly respond to customer’s perceived quality expectation. In addition, lack of sufficient skills and experience internally can lead to the failure of the innovation to take off. Studies show that the success of IT adoption within a firm is positively associated with the IT skills and experience it has internally. However, IT outsourcing have been found to be cost efficient (Kabango & Asa, 2015, p. 62). Outsourcing allows firms with little IT experience to access and adopt latest technology developments. For e-commerce to succeed in the case of firms with limited IT skills and experience, the management must prioritize training and sales support to ensure effective adoption.
Lastly, management support for e-commerce will be very vital in determining whether it succeeds or fails. Ding (2014, p. 150) noted that the management influences how such programmes are included within the firm’s strategy. For instance, management of the firm is the designers of the firm’s strategy and, therefore, they must clearly show in their strategic plan the need to adopt e-commerce for the firm. Furthermore, e-commerce requires injection of funds, and it is the role of the management to persuade the shareholders of the need to adopt new innovations (Thatcher & Zhu, 2010, p. 60). Without positive vibe from the management, such programmes are deemed to fail from the start.
External factors
Accessibility, quality and awareness of this service by the consumers are other factors that can impact hugely on its success. Past research outlines that customers will use e-commerce if they find it useful and convenient to them. For example, in most countries such as India consumers have continued to ignore online banking services despite their presence due to lack of awareness on how these services can enhance their convenience (Dogerliogl & Cosgun, 2012, p. 1672). Another factor that can hinder operationalization and adoption of online transactions by various groups of consumers is the fact that it depends entirely on internet connectivity. In most countries especially the emerging economies, internet connectivity is unreliable or not available. Studies on Turkish economy and opportunities for e-commerce revealed technical impossibility in certain areas (Gumussoy, Eris & Calisir, 2011, p. 21). For a firm to succeed with their plans to adopt e-commerce, there must first confirm that the internet infrastructure within the region is sufficient for such a venture. Lastly, the perceived quality of the services offered online is another critical factor that will determine the success of e-commerce. Perceived quality of the product in this sense originates from the customers belief in the quality of information available about the product on the website (Thatcher & Zhu, 2010, p. 62). Any breach of this belief may be counterproductive to the firm. In this regard, the information about the product on the internet must be sufficient and true to aid the customer in making a good decision about the product.
Environmental factors such as government involvement, market dynamics and perceptions and industry pressure and competition are also very important towards the realization of the success of e-commerce (Ding, 2014, p. 152). The government must show commitment by coming with a policy that aims at enhancing the internet infrastructure within the country. Additionally, the laws and regulations governing cyberspace and cyber crime must be clear and should not serve as a hindrance to the expansion of this service (Kabango & Asa, 2015, p. 62, Karunasena & Deng, 2012, p. 80). Market dynamics refer to the consumer needs and expectations from the product while market perception refers to the perceived benefits those consumers expects to gain from the product. The product must, therefore, answer all consumer concerns in order to develop trust upon which such a product depends on (Dixit & Datta, 2010, p. 7). Lastly, industry pressure can serve as a motivating factor in the adoption of e-commerce. That is, e-commerce has been identified by most researchers as a competitive factor. In the United Kingdom market, most firms have adopted e-commerce. In such a case failure to adopt e-commerce may put the firm in a position of disadvantage (Thatcher, & Zhu, 2010, p. 68). In addition, in an industry that has embraced e-commerce, the possibility of an e-commerce platform for a new firm succeeded is high.

This paper sought to determine some of the success factors in regard to e-commerce as indicated from the past studies. The author found that for e-commerce strategy to succeed, it must be timely, accessible, convenient and of high quality. In this regard, factors such as trust, security, and management support, technological capacity of the firm, quality and accessibility of the service among other environmental factors were found to weigh heavily on whether the strategy will succeed or fail.

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Kabango, C., & Asa, A. (2015). Factors influencing e-commerce development: Implications for the developing countries. International Journal Of Innovation And Economic Development, 1(1), 59-66. Retrieved from http://researchleap.com/factors-influencing-e- commerce-development-implications-for-the-developing-countries/
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Thatcher, S., & Zhu, L. (2010). National information ecology: A new institutional economics perspective on global e-commerce adoption. Journal Of Electronic Commerce Research, 11, 53–72.

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