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E-commerce
has become of paramount importance in changing the economy and the way business
is conducted globally and, it has had a positive impact on people’s lives. Chen.
Q and Zhang. N (2015) highlight that, the emergence of electronic commerce
changes the previous traditional business model and, it expands the marketing
channels for enterprises and reduces the operational costs of enterprises. Electronic
business operations strengthen the coordination between the upstream and
downstream enterprises in the supply chain and promote cooperation between
enterprises, hence allowing companies to find new ways in which to expand their
markets in different environments in which they operate, so as to attract and
retain customers. To date, e-commerce is one of the greatest weapons that
companies in the retail industry can use so as to gain a sustained competitive
advantage.

 

This
research is therefore an attempt to explore and build a better understanding as
to how businesses in the retail industry can develop and implement e-business
strategies that contribute to increased profitability, particularly in
Zimbabwe. This chapter
introduces the subject substance to the reader of this research on the
investigation of how the adoption and use of e-commerce can help retailers gain
a sustained competitive advantage. It comprises of the background of the study,
statement of the research problem, research objectives, research questions and
implications of the study, delimitations and limitations of the study,
definition of terms and the chapter summary.           

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1.1          
Background of the study

Electronic commerce (e-commerce), refers to the economic
activities that occur online for example, retail shopping, banking, investing
and rentals, it can also be any transaction that is solely completed through
electronic measures. According to Niranjanamurthy et al. (2013), electronic
commerce draws on technologies such as mobile commerce, electronic funds transfer,
supply chain management, Internet marketing, online transaction processing,
electronic data interchange (EDI), inventory management systems, and automated
data collection systems. E-commerce continues to grow with, new technologies, new innovations,
thousands of businesses entering the online market and also its convenience to
customers is greatly improving since its inception. The Internet has created the
potential for unlimited information flows within and between organizations and
their supply chain partners and, according to the statistics portal (2017), in
2016, retail e-commerce sales worldwide amounted to USD 1.86 trillion and
e-retail revenues are projected to grow to USD 4.48 trillion a year by 2021.

 

1.1.1    
E-commerce
in Zimbabwe

 

In
developing countries companies are facing significant barriers to e-commerce
adoption compared to their counterparts in the developed world. Although
internet access continues to grow in Zimbabwe, e-commerce adoption is perhaps
yet to reach measurable levels and falls far from expectations even though it
offers companies a viable and practical solution for the achievement of a sustained
competitive advantage. The figures below show how internet penetration has
grown over the years in Zimbabwe, this however shows general internet access by
the Zimbabwean population despite the reasons for the access. Internet access
could be for educational purposes, business purposes or, for entertainment
reasons.

 

Table 1.0 Internet penetration in
Zimbabwe

Year

Internet Users**

Penetration
(% of Pop)

Total
Population

Non-Users
(Internetless)

1Y User
Change

1Y User
Change

Population
Change

2016*

3,356,223

21 %

15,966,810

12,610,587

4.1 %

130,689

2.33 %

2015*

3,225,534

20.7 %

15,602,751

12,377,217

6.4 %

193,134

2.34 %

2014

3,032,401

19.9 %

15,245,855

12,213,454

10 %

276,254

2.33 %

2013

2,756,147

18.5 %

14,898,092

12,141,945

10.7 %

266,906

2.28 %

2012

2,489,241

17.1 %

14,565,482

12,076,241

11.2 %

251,113

2.17 %

2011

2,238,128

15.7 %

14,255,592

12,017,464

39.3 %

631,130

2.02 %

2010

1,606,998

11.5 %

13,973,897

12,366,899

3.1 %

48,293

1.84 %

2009

1,558,705

11.4 %

13,720,997

12,162,292

1.3 %

20,223

1.67 %

Source: Internet Live Stats (www.InternetLiveStats.com)

 

The above figures show that there
has been a continuous increase in internet penetration although, e-commerce
adoption by companies is yet to reach measurable levels. The figures show
Zimbabwean internet user statistics on the first of July each year in
consideration. Internet penetration is derived from dividing internet users by
the total population and multiplying the answer by hundred percent. Percentage
of one year user change is calculated by the difference between the users in
the current year in question and the users in the previous year divided by the
total number of users in the previous year. A youthful population that
is familiar with internet technologies like email, WhatsApp, Instagram, Skype
and Facebook and, a vibrant diaspora that wants to stay in touch with
Zimbabweans back home has led Zimbabweans in Zimbabwe to use the internet thus
leading to the increases in the number of users over the years.`

 

The
first point of access to e-commerce is email, it is the most widely used
means of authenticating registrations and communicating with e-commerce
websites. The fact that, over a million Zimbabweans are owners of email
accounts means that, that proportion of the total population can access local
e-commerce websites if they are made available to them. If e-commerce websites
will serve a need, be convenient, useful, and even easy to use and be readily
and easily accessible, they will certainly be successful. Over the years since
the introduction of the multi-currency system, a lot of Zimbabweans have
imported vehicles from Japan using the Be Forward website hence, the fact that
one transacts or transacted online, even using internet banking, shows that
they are likely to buy online and are most disposed to buying online. Surely
all the above hints at a society that is more than ready for e-commerce and
online shopping.

 

1.1.2    
The retail industry in
Zimbabwe

 

The
retail sector, similar to other sectors, has adversely been affected by the
softening aggregate demand in the economy, its profit margins remain under
pressure as the current fragile consumer demand has seen most players recording
negative revenue growth rates. The retail business has always been a low margin
business, as such additional margin pressure, could result in lower profits or
even losses being recorded. According to RBZ deputy governor, Kupukile Mlambo,
the retail sector is expected to experience a 1.9% decline to 0.8% growth in
2017 compared to this year because of the low demand and a prolonged deflationary
period. Retailers are now also competing with a growing informal sector that is
attracting consumers due to the cheaper prices and consumers are now turning to
low-priced goods and low cost outlets have taken advantage of this change in
consumption patterns and are thriving at the expense of established retailers
like OK and TM supermarkets.

 

Zimbabwe also
has a shortage of cash, which could work in the favour of e-commerce,
established retailers like OK Zimbabwe Ltd, pay a lot in terms of rentals, utilities
and also need adequate staff which, could be avoided upon adoption and use of
e-commerce. To retailers, the entry of new players implies the greater need to
differentiate themselves against peers in the fight for every dollar in the
consumers’ pocket, price competition is becoming one focus area whereby prices are
reduced as a way of attracting more consumers.

 

This
report will therefore seek to explore how the adoption of e-commerce by companies
can help them gain a sustained competitive advantage and help them to transform
themselves into viable businesses of the future and also, how companies that
have already adopted e-commerce can shift their focus from building a customer
base to increasing revenue growth and profitability, re-evaluating their current
business strategies, if any, and develop strategies that provide a clear path
to profitability.

1.2  Statement of the problem

E-commerce adoption in developing
countries is quite low, with the majority of the population shunning the use of
modern ICT in their transactions and banking. Zimbabwe has psychological
barriers as the major hindrance to e-commerce adoption, some businesses,
academics and workers do not trust electronic transactions and have held on to
traditional old transaction methods. To companies that have adopted e-commerce
in the retail industry, they suffer due to the poor numbers of users that
access their websites. OK has maintained its leading position in
retailing due to price advantages and aggressive marketing campaigns however,
the presence of Pick n Pay in Zimbabwe through the acquisition of shares in the
domestic retailer TM and the presence of Choppies Supermarket has resulted in
solid competition in the retail market. In conducting promotional campaigns,
OK Zimbabwe Ltd has invested in top of the range cars such as Ford Rangers,
stoves and other products that are offered as promotional prizes so as to
increase its market share. This
report therefore sought to explore how companies can use e-commerce so as to
gain a sustained competitive advantage and how e-businesses can
re-evaluate their current business strategies and develop strategies that
provide a clear path to profitability rather than focus on building a customer
base.

 

1.3  Purpose of the study

This research was aimed at achieving
the following objectives:

§ 
To establish the impact that e-commerce has on McCarthy’s four
marketing mix and Porter’s five competitive forces.

§ 
To assess strategies that can be derived from
the four marketing mix that will affect the five competitive forces thereby
bringing a competitive advantage to e-commerce.

§ 
To
establish the various merits or demerits that come with the use of e-commerce
during the trading and facilitation of trading of goods and services in
Zimbabwe and, its effectiveness as a competitive tool for business performance.

§ 
To
suggest feasible recommendations to firms in the retail industry using e-commerce
basing on research findings and derive lessons for Zimbabwe from other
international experiences.

 

1.4  Research questions.

This research was based on finding
solutions for the following main research questions:

§  What impact does e-commerce have on McCarthy’s four
marketing mix (product, price, promotion and place) and Porter’s five
competitive forces (the threat of new entrants, rivalry among existing firms, the
threat of substitutes, the bargaining power of suppliers, and the bargaining
power of buyers)?

§  What
strategies can be derived from the four marketing mix that will affect the five
competitive forces and thereby bring a competitive advantage to e-commerce?

 

Sub
questions

§  What are the merits that come with the use of
e-commerce during the buying and selling of goods and services?

§ 
What
are the business risks associated with the use of e-commerce and how can
companies mitigate those risks?

§ 
Should
companies expend time, effort and resources in the adoption of e-commerce and is
the adoption of e-commerce by firms in the retail industry associated with
economic sustainability?

§ 
What
are the determinants inhibiting ICT adoption in Zimbabwe
which, also prevent retail companies from considering e-commerce in Zimbabwe?

 

 

1.5          
Significance of the study

To the researcher

§ 
By
conducting this research, the researcher expected to obtain increased knowledge
on the use of E-commerce by various firms in Zimbabwe.

§ 
The paper would bring a sense of academic
development and achievement to the researcher as other researchers and
academics will refer to the research project on issues of the use of
E-commerce.

§ 
The
writer would also gain improved communication skills in carrying out the research
through, interacting with people in the collection of data to come up with
research findings.

To the University

§ 
If
research findings are acceptable, the University can use the research findings
as literature for related topics.

§ 
The researcher hoped that the research
would open avenues for further study for other students and members of staff,
who may want to carry out researches on e-commerce.

To the retail industry

§ 
The writer hoped that the recommendations
from this research would help foster stability and improve efficiency in the
Zimbabwean retail industry.

 

 

1.6          
Underlying assumptions of the
study

The
researcher carried out the research under the following assumptions:

§ 
There
is no significant difference in the technological and economic characteristics
of cities and towns in Zimbabwe.

§ 
The
research environment would remain conducive to undertake the research within
the given time frame.

§ 
OK
Zimbabwe Ltd is interested in using ecommerce as a tool to gain and maintain a
competitive advantage over competitors.

§ 
There are immense benefits to be derived
from the use of e-commerce and OK Zimbabwe Ltd has full knowledge or is aware
of the benefits derived from its use thereof.

§ 
There
would be full cooperation from respondents and, they would be literate enough and
have a clear understanding on the adoption and the use of ecommerce by OK
Zimbabwe, so as to answer all questions.

§ 
Information
to be collected by the researcher would be accurate and relevant thus, it can
be relied on.

 

1.7Delimitations of the study

§  The research focused on how
companies in the retail industry can use e-commerce as an effective tool of
maintaining a sustained competitive
advantage compared to their competitors despite,
the existence of a significant number of ecommerce barriers which companies
face.

§  The subjects of the study are drawn from a survey
conducted on OK Zimbabwe Ltd owned shops in Harare.

§  Respondents
were drawn from the database provided by OK Zimbabwe Ltd’s management.

§  The
study ignored the kind of opportunities that are presented by broad band and
mobile access to the ecommerce services and focused on PC based internet access
despite the provider of the internet.

 

1.8Limitations of the study

§  Information
limitation: Confidentiality
is a cause for concern
during the research period, some interviewees did not disclose some information
as it was considered confidential by the management of various departments
visited by the researcher. One particular problem in obtaining
data from these experts was that they were mostly inaccessible. Most of the
time they were out of their offices and when they were in, they were said to be
busy with very important assignments.

§  Limitation
of time: since the
researcher only carried out the research while she was on industrial
attachment, there was limited time to obtain required information across the
city since, time had to be shared between the research and the assigned duties
on industrial attachment hence, it was not possible to look at all the factors
that affect ecommerce adoption.

§ 
Change in technology: the ICT industry in Zimbabwe is still
young and dynamic and, the rapid inventions and innovations occurring in this
industry almost on a daily basis may make the results of this study
inapplicable in the course of time as new areas of ICT business applications
are found or as the ICT sector grows and reaches maturity.

 

1.9Definition of terms

E-commerce: Zwass (1996), defines e-commerce as, the
sharing of business information, maintaining business relationships, and the
conducting business transactions by means of telecommunications networks. It is
the use of electronic and digital communications and digital information
processing technology in business transactions to create, transform and
redefine relationships for value creation between or among organisations, and
between organisations and individuals (UNDP, 2004).

Competitive advantage: It is the
ability gained through attributes and resources to perform at a higher level
than others in the same industry or market (Porter 1980 cited by Chacarbaghi
and Lynch 1999, p.45).

Market leader: It is
a company that sells more of a particular product or service than most of its
competitors do. According to the Business dictionary, it is a brand,
product, or firm that has the largest percentage of total sales revenue (the
market share) of a market.

 

 

1.10     
Chapter Summary

In this chapter,
the purpose or objectives of the research were revealed, it started with an
introduction of the topic under consideration and the key result areas that the
researcher had a look at. The researcher went on to look at the background of
the problem and how the problem was identified and effort was made to expose
the problem itself. Finally, the researcher looked at the delimitations of
study, limitations of study, definitions of terms and summary.

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