EFFECT OF ELECTRONIC COMMERCE ON BUSINESS COST AND PRODUCTIVITY

Abstract

This study was on effect of electronic commerce on business cost and productivity. Three objectives were raised which included: To find out the effect of electronic commerce on business cost, to find out the effect of electronic commerce on business productivity and to find out the challenges of electronic commerce in Nigeria. The total population for the study is 75 selected staffs of Konga and Jumia. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. The data collected were presented in tables and analyzed using simple percentages and frequencies. Electronic commerce organizations should focus on developing mobile-compatible websites and applications. This would allow customers to log on to easy-to-access platforms and browse e-Commerce websites on their mobile devices. They also need to focus on innovation to tackle challenges arising from low credit and debit card penetration

Chapter one

Introduction

1.1Background of the study

E-commerce is simply described as business done over the Internet. It could be buying or selling or a combination of both. It could be product, service or a combination of both. E-Commerce is an innovation which has emerged in parallel to the development of communication and computer technologies. It has the potential for revolutionizing the whole structure of retail merchandizing the shopping. Although it is a new concept, it does not only suggest an alternative to the conventional commerce but also acts as a method that currently complements and facilitates commerce

The widespread use of the Internet has made a lot of things in the world simple, and it appears that the world has shrunk considerably. Beyond just communication and information sharing, so-called electronic commerce defined in its most basic form as the act of buying and selling over the Internet appears. It has given several benefits, including the reduction of prices, which has been a major issue for many businesses. where it was possible for people with tiny amounts of capital to easily enter the world of commerce and invest. Depleting and non-depleting expenses are offered where applicable ( Dhillon, 2002)

Electronic commerce give permission to firms to establish a market presence, or to enhance the already market position, by providing a cheaper and more efficient distribution chain for their products or services. Electronic commerce is a way of conducting business over the Internet. Though it is a relatively new concept, it has the potential to alter the traditional form of economic activities. Already it affects such large sectors as communications, finance and retail trade and holds promises in areas such as education, health and government Archer, N., &Gebauer, J. (2002).

The largest effects maybe associated not with many of the impacts that command the most attention (i.e. customized product, elimination of middlemen) but with less visible, but potentially more pervasive, effects on routine business activities (i.e. ordering office supplies, paying bills, estimating demand). The buying and selling of products and services by businesses and consumers through an electronic medium, without using any paper documents. Electronic commerce is widely considered the buying and selling of products over the internet, but any transaction that is completed solely through electronic measures can be considered e-commerce. Other than buying and selling many people use Internet as a source of information to compare prices or features of the latest. Electronic Business is sometimes used as another term for the same process. More often, though, it is used to define a broader process of how the Internet is changing the way companies do business, of the way they relate to their customers and suppliers, and of the way they think about such functions as marketing and logistics. For the purpose of this study e-commerce is taken to mean doing business electronically. (Lindsay P., 2002) Other terms that are often used

when talking about e-commerce are B2B and B2C, shorthand for business to-business, where companies do business with each other, and business-to consumer, where companies do business with consumers using the Internet.

An eCommerce business is able to reduce labor and other costs in many areas, including: document preparation, reconciliation, mail preparation, telephone calling, data entry, overtime and supervision expenses. EBusiness can help manage operating costs in many areas, thereby reducing the cost of individual transactions.

E-commerce, reported Garret (2007), grew exponentially and was still growing at an annual rate of 25 percent. The unique features include ubiquity – Web technology available everywhere (at work, home, anytime, anywhere); market place removed from geographical locations to become “market space”. Another is global reach across national and cultural boundaries with market space involving billions of consumers and millions of businesses worldwide. It builds on traditional commerce by adding flexibility and speed offered by electronic communications. This can facilitate improvement in operations leading to substantial cost savings as well as increased competitiveness and efficiency through the redesign of traditional business methods. It is not just about using new technologies. It will involve creating more effective external interactions with customers, clients, collaborators and suppliers, but it can also mean improving internal business efficiency and even the emergence of new products and services. Thus, the effective use of e-commerce is expected to improve on the organization’s performance. The major goal of every organization is to improve on profitability through quick delivery of products and improved customer satisfaction. E-commerce has become such a tool to achieve this goal.

Statement of the problem

In the present globalization scenario, information technology is the most important and controversial term. Despite the global reach of e-commerce, not all countries have taken advantage of or benefited from e-commerce. There is a big gap in internet and e-commerce adoption between the developed and developing countries; thus creating a digital divide. A lot of researches have been conducted in the developed countries to examine the level of penetration of e-commerce and its effect on organizational performance. E-commerce impacts the performance of organisations. The research is inclined to explore the opportunities provided to businesses through Ecommerce and how they may optimise on such opportunities to augment their overall performance. The purpose is to further establish the significance of E-commerce and its implications in the contemporary environment along with identifying the challenges associated with it and understanding the related dynamics

Objective of the study

The main objective of the study is to investigate the effect of electronic commerce on business cost and productivity in Plateau state, Nigeria. The specific objectives are;

1. the effect of electronic commerce on business cost

Research Question

The following research questions are formulated;

1. the effect of electronic commerce on business cost?

Research Hypotheses

The following null hypotheses are formulated to guide the study

H1: There is no effect of electronic commerce on business cost

H2: There is no effect of electronic commerce on business productivity

H3: There are no challenges of electronic commerce in Nigeria

Significance of the study

The study will be beneficial to students, lectures and the organizations that operate electronic commerce business. The study will educate the on the business cost and the productivity of the organization due to electronic commerce. The study will also educate them on the challenges electronic commerce organizations are facing and finding solutions to it. The study will also serve as a reference to another researcher that will embark on the related topic.

Scope of the study

The scope of the study covers effect of electronic commerce on business cost and productivity. The study will be limited to electronic organization like Konga and Jumia in Plateau state

Limitation of the study

Limitations/constraints are inevitable in carrying out a research work of this nature. However, in the course of this research, the following constraints were encountered thus:

1. Non-availability of enough resources (finance): A work of this nature is very tasking financially, money had to be spent at various stages of the research such resources which may aid proper carrying out of the study were not adequately available.
2. Time factor: The time used in carrying out the research work is relatively not enough to bring the best information out of it. However, I hope that the little that is contained in this study will go a long way in solving many greater problems.

Definition of terms

Electronic commerce: Ecommerce or electronic commerce is the trading of goods and services on the internet. It is your bustling city center or brick-and-mortar shop translated into zeroes and ones on the internet superhighway

Business cost: The Business Cost includes all the costs (fixed, variable, direct, indirect) incurred in carrying out the operations of the business. It is similar to the real or actual costs that include all the payments and contractual obligations along with the book cost of depreciation on both the plant and equipment.

Productivity: Productivity is commonly defined as a ratio between the output volume and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output.

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