Factors Influencing E-Commerce Adoption by SMES

Electronic commerce (e-commerce) is the process of buying, selling, transferring or exchanging products, services and/or information via computer networks, including the internet. It has to do with how IT is used by an organization in order to improve interaction quality with and between all its stakeholders. E-commerce provides benefits to organizations, individual customers and society. Several benefits of e-commerce are global out-reach, cost reduction, 24/7 business, rapid time-to-market, increased speed, improved customer services, improved information availability, just-in-time business decisions, and less importance of geography. E-commerce can be a benefit to organizations of all sizes, particularly to the small-business sector. It is an effective instrument for administering business processes, specifically marketing and selling products and services around the world. It can bring about company’s advantages through aforementioned benefits which at the end expand market penetration, optimized operations, and ultimately boosting revenue through its careful and selective continuous implementation in firms. Small and Medium-Sized Enterprises (SMEs) are those business organizations which is considerably small in scale, which often are family-run companies and lack of networking. Financial institutions tend to overlook their financial potential due to considerably their inadequate assets. In fact, experience shows that SMEs are the type of firms which has the strongest immune system against global financial turbulence and the most rapid growth. Economist believes that they are one of the strong holes and pillar for industrial development and drives national and regional economic growth. Thus, SMEs are more adaptable and elastic compare to their relatively larger firms when dealing with market changes or global economic turbulence. They are relatively faster in adopting opportunities for innovations and changes in market strategies. They have an ability to immediately recognize a change in the environment though they have insufficient resources. Those are the key factors which ensure their strategic position in promoting economic development.

Factors Influenced E-commerce Adoption

Based on literature review above, in this paper, we proposed the factors influence e-commerce adoption by SMEs. Six factors are perceived usefulness, perceived ease of use, relative advantage, perceived risk, perceived trust, compatibility. The factors are discussed separately.

we concentrate on the role of the macro-environmental forces using the widely used SLEPT framework. Often, these factors are known as the PEST factors, but we use SLEPT since it is useful to stress the importance of the law in influencing Internet marketing practices. The SLEPT factors are:

• Social factors – these include the influence of consumer perceptions in determining usage of the Internet for different activities.
• Legal and ethical factors – determine the method by which products can be promoted and sold online. Governments, on behalf of society, seek to safeguard individuals’ rights to privacy.
• Economic factors – variations in economic performance in different countries and regions affect spending patterns and international trade.
• Political – national governments and transnational organizations have an important role in determining the future adoption and control of the Internet and the rules by which it is governed.
• Technological factors – changes in technology offer new opportunities to the way products can be marketed.

The ‘waves of change’ shows how fluctuations in the characteristics of different aspects of the environment vary at different rates through time.

• Managers have to constantly scan the environment and assess which changes are relevant to their sphere of influence.
• Changes in social culture and particularly pop culture tend to be very rapid.
• Introduction of new technologies and changes in their popularity tend to be frequent, too.
• Governmental and legal changes tend to happen over longer timescales but new laws can be introduced relatively fast.
• The technological and legal factors are most important to managing e-commerce, so we focus on these

Environmental scanning: The process of continuously monitoring the environment and events and responding accordingly.

Behavioral ad targeting Advertisers target ads at a visitor as they move within or between sites dependent on their viewing particular sites or types of content that indicate their preferences.

Malware Malicious software or toolbar, typically downloaded via the Internet, which acts as a ‘trojan horse’ by executing unwanted activities such as keylogging of user passwords or viruses which may collect email addresses.

Topic: Factors governing e-commerce service adoption

Chaffey et al. (2009) suggest that the following factors are important in governing adoption of any e-commerce service:

1. Cost of access. This is certainly a barrier for those who do not already own a home computer. The other main costs are the cost of using an ISP to connect to the Internet and the cost of using the media to connect. Free access would certainly increase adoption and usage.
2. Value proposition. Customers need to perceive a need to be online – what can the Internet offer that other media cannot? Examples of value propositions include access to more supplier information and possibly lower prices.
3. Ease of use. This includes the ease of first connecting to the Internet using the ISP and the ease of using the web once connected.
4. While this is only, in reality, a problem for those who shop online, the perception may be that if you are connected to the Internet then your personal details may not be secure. It will probably take many years for this fear to diminish.
5. Fear of the unknown. Many will simply have a general fear of the technology and the new media, which is not surprising since much of the news about the Internet will concern pornography, fraud and privacy infringements

Understanding users’ access requirements

Understanding users’ access requirements to fully understand online customer propensity to use online service we also need to consider the user’s access location, access device and ‘webographics’. ‘Webographics’ is a term coined by Grossnickle and Raskin (2001), which includes:

Usage location (from home or work)

• Access device (browser and computer platform including mobile devices)
• Connection speed – broadband versus dial-up connections
• ISP
• Experience level
• Usage type
• Usage level

Competition in the marketplace amongst broadband providers has caused a great increase in the Internet access options available for consumers and small businesses.

Consumers influenced by using the online channel

Online buyer behavior: an assessment of how consumers and business people use the Internet in combination with other communications channels when selecting and buying p

To help develop effective online services, we need to understand customers’ online buyer  behavior and motivation

• Each organization needs to capture data about online influence in the buying process for their own market.
• Managers also need to understand how different types of media, intermediary and influencer sites that influence consumers; for example, are blogs, social networks

Motivation for use of online services

Psychographic segmentation: a breakdown of customers according to different characteristics.

Marketers can also develop psychographic segmentations which help explain motivation. Specialized psych demographic profiles have been developed for web users.

The revised Web Motivation Inventory (WMI) identified by Rodgers et al. (2007) is a useful framework for understanding different motivations for using the web. The four motives which cut across cultures are: research (information acquisition), communication (socialization), surfing (entertainment) and shopping, and these are broken down further below.

1 Community

• Get to know other people
• Participate in an online chat
• Join a group

2 Entertainment

• Amuse myself
• Entertain myself
• Find information to entertain myself.

3 Product trial

• Try on the latest fashions
• Experience a product
• Try out a product.

4 Information

• Do research
• Get information I need
• Search for information I need.

5 Transaction

• Make a purchase
• Buy things

 Purchase a product I’ve heard about.

6 Game

• Play online games
• Entertain myself with Internet games
• Play online games with individuals from other countries.

7 Survey

• Take a survey on a topic I care about
• Fill out an online survey
• Give my opinion on a survey.

8 Downloads

• Download music
• Listen to music
• Watch online videos.

9 Interaction

• Connect with my friends
• Communicate with others
• Instant message others I know.

10 Search

• Get answers to specific questions
• Find information I can trust.

11 Exploration

• Find interesting web pages
• Explore new sites
• Surf for fun.

12 News

• Read about current events and news
• Read entertainment news.

Web advertisers and site owners can use this framework to review the suitability of facilities to meet these needs.