Abstract
There is a revolution transforming the global economy. Web technology is transforming all business activities into information-based. The rate of technological change is so rapid that electronic commerce (eC) is already making fundamental changes in the electronic land-escape. eC over the Internet is a new way of conducting business. It has the potential to radically alter economic activities and social environment and it has already made a major impact on large sectors such as communications, finance, and retail-trade. eC has also been hailed as the promise land for small and medium sized enterprises. Therefore, it will no longer be possible, operationally or strategically, to ignore the information-based virtual value chain for any business. eC promises that smaller or larger companies as well as developed or developing countries can exploit the opportunities spawned by eC technologies and compete more effectively. The introduction of the Internet for commercial use in 1991 had created the first real opportunity for electronic markets. It offered a truly global publicly available computer network infrastructure with easy and inexpensive access. After nearly three decades of notfor- profit operations, the network was transformed into a worldwide digital market place practically overnight. This shift from physical market place to a digital one had contributed a great deal to cost reductions, speeding up communication, and provision of users with more timely information (Shaw, Gardner, & Thomas, 1997; Timmers, 1999).
TopIntroduction
There is a revolution transforming the global economy. Web technology is transforming all business activities into information-based. The rate of technological change is so rapid that electronic commerce (eC) is already making fundamental changes in the electronic land-escape. eC over the Internet is a new way of conducting business. It has the potential to radically alter economic activities and social environment and it has already made a major impact on large sectors such as communications, finance, and retail-trade. eC has also been hailed as the promise land for small and medium sized enterprises. Therefore, it will no longer be possible, operationally or strategically, to ignore the information-based virtual value chain for any business. eC promises that smaller or larger companies as well as developed or developing countries can exploit the opportunities spawned by eC technologies and compete more effectively.
The introduction of the Internet for commercial use in 1991 had created the first real opportunity for electronic markets. It offered a truly global publicly available computer network infrastructure with easy and inexpensive access. After nearly three decades of not-for-profit operations, the network was transformed into a worldwide digital market place practically overnight. This shift from physical market place to a digital one had contributed a great deal to cost reductions, speeding up communication, and provision of users with more timely information (Shaw, Gardner, & Thomas, 1997; Timmers, 1999).
It is, then, clear that eC is still a phenomenon that is waiting to happen in any big way. Companies are optimistic about its future impact, as long as issues regarding skills development and technological and managerial constraints of existing systems can be alleviated. These are the conclusions of recent independent pieces of research which largely agree with each other that although the Internet is widely used for finding information, it is still at an early stage in terms of real business benefits and has not started to make its mark on the bottom line through either reduced costs or increased sales as it has been indicated by McLean-Smith (2000).
The Internet is growing so fast to the extent that (although figures may differ in different studies) there were 150 million online users worldwide in 2001 and the number is expected to increase to 500 million by 2005 (Kamel & Hussein, 2001). Among those users are companies, which believe that the Internet is an attractive means to do business and attract customers.
Despite the failure of hundreds of eC businesses since the dot-com crash in 2000, companies are still investing and operating in digital economy. A recent study reported in Teo and Ranganathan (2004) expects that global B2B eC will reach $2.77 (US) trillion by 2004. The main benefits identified by the research are the reduced costs, mentioned by 57% of the respondents in the study, with 66% crediting their Websites for bringing in new customers.
eC is the use of new information systems such as the Internet to conduct business. eC applications include new ways of conducting business between and across organizations (Applegate, Holsapple, Kalakota, Raddemacher, & Whinston, 1996). However, eC requires advanced technology, management approaches and informed customers.
This chapter reports on the results of an exploratory study of B2C eC development in developing countries drawing on data collected from Syria and Sudan. It investigates the development and use of B2C eC applications in Syria and Sudan and reflects upon management approaches, employees’ skills level, and problems that hinder eC development.
The study concludes with future strategies and directions of B2C eCommerce in the developing countries and suggestions for future research.
Key Terms in this Chapter
Collaboration Platforms: These models provide a set of tools and an information environment for collaboration between enterprises. This model can focus on specific functions, such as collaborative design and reengineering, or in providing project support with a virtual team of consultants. Business opportunities are in managing the platform, and in selling the specialist tools. Examples are in the products and projects spun off from the global engineering network concept (Rethfeldt, 1994).
E-Shop: This is a Web marketing of a company or a shop to promote the company and its goods or services or both. This business model is kind of incorporating the traditional version of eC with eC. Both customers as well as the company benefit from this model. Benefits for the customer include lower prices, wider choice, better information and 24-hour availability. Benefits for the business include increased demand, and cost reduction in sales and promotion.
E-Mall: An electronic mall, in its basic form, consists of a collection of e-shops, usually enhanced by a common umbrella, for example a well-known brand may be enriched by a common granted payment method. The e-malls operators may not have an interest in an individual business that is being hosted. Instead the operator may seek benefits in enhanced sales of the supporting technologies (e.g., IBM with World Avenue). Alternatively benefits are sought in services (e.g., Barclays with BarclaysSquer), or in advertising space and/or brand reinforcement or in collective benefits for the e-shops that are hosted such as traffic, with the expectation that visiting one shop on the e-mall will lead to visits to neighboring shops.
Third Party Marketplace: This is an emerging model that is suitable in case companies wish to leave the Web marketing to a 3rd party (possibly as an add-on to their other channels). Several additional features like branding, payment; logistics, ordering, and ultimately the full scale of secure transactions are added to the 3rd party marketplace. Revenues are generated on the basis of one-off membership fee, service fees, transaction fee, or percentage on transaction value. Examples of 3rd party marketplace providers are Citius (Jellasi & Lai, 1996), and Tradezone (tradezone.onyx.net).
Value Chain Service Provider: These specialize on a specific function for the value chain, such as electronic payment or logistics, with the intention to make that into their distinct competitive advantage. A fees or a percentage is the basis for revenues. Examples of value chain service providers are FedEx or UPS Web-based package shipping support.
Virtual Communities: The ultimate value of virtual communities is coming from the members who add their information into a basic environment provided by the virtual community company. The membership fees as well as advertising generate revenues. A virtual community can also be an important add-on to other marketing operations in order to build customer loyalty and receive customer feedback. An example of a virtual community is Amazon.com for books. Virtual communities are also becoming an additional function to enhance the attractiveness and opportunities for new services of several of the business models (e.g., e-mall or 3rd party).
Value Chain Integrators: These focus on integrating multiple steps of the value chain, with the potential to exploit the information flow between those steps as further added value. Revenues come from consultancy fees or possibly transaction fees.
E-procurement: This is an electronic tendering and procurement of goods and service. Large companies or public authorities implement some form of e-procurement on the Web. Benefits for the buyers include a wider choice of suppliers to choose from which in turn leads to lower costs, better quality, and reduced cost of procurement. The benefits for suppliers, however, include more tendering opportunities, lower cost of submitting a tender, and tendering in parts. An example is Japan airlines.
E-Auction: Electronic auctions offer an electronic implementation of the biding mechanism known from the traditional auctions. E-auctions can be accompanied by multimedia presentations of the goods. They also include integration of the bidding process with contracting, payments and delivery. Benefits for suppliers and buyers are increased efficiency, timesaving, and global sourcing.