adopting electronic commerce as a platform to sell products and services in the united arab...
TRANSCRIPT
Adopting Electronic Commerce as a platform to sell products and services
in the United Arab Emirates. The retailer’s perspective.
Prepared By:
Anil Nair
Registration No: 101677901
Program: MSc IBM - Marketing
Heriot-Watt University Dubai Campus
Superior: Dr. Dr. UmmeSalma
March 2013
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Abstract
Electronic commerce is become an increasingly important initiative amongst many
organizations around the world. E-commerce had revolutionized the word "trade" and has
reduced the gap between businesses and consumers . This study focuses on identifying the
benefits and challenges that are associated with adopting an e-commerce platform to sell
products and services in the United Arab Emirates (U.A.E.). The study also investigates the
retailer's perspective on the e-commerce sector in U.A.E. and identifies their readiness to
utilize e-commerce in business operations. The researcher has divided the study into five
separate sections each dealing with a specific field related to the study.
The literature review of this study introduces e-commerce to the reader with its background.
In this section the researcher discusses the impact of e-commerce to the economy of a
country. This chapter also develops the foundation of the study by highlighting various
benefits and challenges that are linked to adoption of e-commerce. In the following chapter
the researcher discusses the methods that was utilized to carry out the primary research for
this study. In the fourth chapter the raw data collected from the survey is transformed into
meaningful information and interpreted with the help of tables and charts. The findings of the
research identifies the low e-commerce penetration amongst retailers in the U.A.E. and
validates the benefits and challenges of e-commerce mentioned in the literature review.
The research findings also inform readers of the best business categories that can adopt e-
commerce in U.A.E., it highlights that cost is the key element in the decision making process
before utilizing e-commerce and that majority of the retailers were confident and geared with
teams to support e-commerce application in the company as they foresee the growing market
in the U.A.E. The final chapter provides readers with valid and valuable recommendations
that would assist in promoting e-commerce in the region.
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Acknowledgements
First and foremost I would like to thank Dr. UmmeSalma my dissertation supervisor who has
supported, guided and encouraged me through the study. I would also like to thank all the
respondents in the survey, without their contribution and cooperation this research would not
have materialized. I sincerely thank my parents Pratap Nair and Kamala Nair for their wisdom and
continuous prayers through the journey of my dissertation. Finally a special thank you to Jovanka
Baptiste who contributed critical comments to my works, Sasha, Preeti, Anup, Duncan, Jiadi, Patricia
and Shahaan for their moral support extended at times of need.
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Contents Chapter 1 - Introduction .......................................................................................................................... 7
1.0 Introduction ................................................................................................................................... 7
1.1 Research aims and objectives ....................................................................................................... 7
1.2 Problem Statement ........................................................................................................................ 8
1.3 Dissertation Structure .................................................................................................................... 9
Chapter 2 - Literature review ................................................................................................................ 10
2.0 Introduction ................................................................................................................................. 10
2.1 The Internet ................................................................................................................................. 10
2.2 History of electronic commerce .................................................................................................. 10
2.3 Electronic commerce .................................................................................................................. 11
2.4 The different forms of electronic commerce ............................................................................... 11
2.5 Electronic commerce trends across the globe ............................................................................. 12
2.5.1 Facts about the big online players ........................................................................................ 12
2.5.2 E-commerce in Egypt........................................................................................................... 13
2.5.3 E-commerce in Ghana .......................................................................................................... 14
2.5.4 E-commerce in London ........................................................................................................ 14
2.5.5 E-commerce in the Middle East ........................................................................................... 15
2.6 The United Arab Emirates .......................................................................................................... 15
2.6.1 Political analysis .................................................................................................................. 15
2.6.2 Social analysis ...................................................................................................................... 15
2.6.3 Economic analysis................................................................................................................ 16
2.6.4 Technological analysis ......................................................................................................... 16
2.7 Facts about e-commerce in U.A.E .............................................................................................. 17
2.8 Benefits and challenges of e-commerce in the U.A.E ................................................................ 18
2.8.1 Benefits of e-commerce for businesses in the U.A.E ........................................................... 18
2.8.2 Challenges of e-commerce for businesses in the U.A.E ...................................................... 19
2.9 E-commerce for consumers in the U.A.E ................................................................................... 20
2.10 Simplifying the shopping process ............................................................................................. 21
2.11 Online stores versus traditional brick-and-mortar stores .......................................................... 22
2.12 Challenges consumers face with online shopping .................................................................... 24
2.13 Who is selling online in the U.A.E? .......................................................................................... 24
2.14 The mechanism of group buying websites in the U.A.E ........................................................... 24
Chapter 3 - Research methodology ....................................................................................................... 27
3.0 Introduction ................................................................................................................................. 27
3.1 Research Methodology ............................................................................................................... 27
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3.2 Research design .......................................................................................................................... 28
3.3 Data collection process ............................................................................................................... 29
3.3.2 Primary data collection option ............................................................................................. 29
3.4 Questionnaire .............................................................................................................................. 30
3.5 Sample......................................................................................................................................... 31
3.6 Equipment and tools required to carry out the research .............................................................. 32
3.7 Limitations of the proposed data collection method ................................................................... 32
3.8 Data processing and analysis ...................................................................................................... 32
3.9 Activity Timetable ...................................................................................................................... 33
3.10 Questionnaire for Retailers ....................................................................................................... 34
Chapter 4 - Research findings and data analysis ................................................................................... 39
4.0 Introduction ................................................................................................................................. 39
4.1 Section B ..................................................................................................................................... 40
Chapter 5 - Conclusion and recommendation ....................................................................................... 79
5.0 Introduction ................................................................................................................................. 79
5.1 Research objective ...................................................................................................................... 79
5.2 Problem Statements .................................................................................................................... 79
5.3 Research Findings ....................................................................................................................... 80
5.4 Recommendations ....................................................................................................................... 84
5.4.1 Website ................................................................................................................................ 84
5.4.2 Third party e-commerce website .......................................................................................... 85
5.4.3 Social Media Marketing ....................................................................................................... 86
5.4.4 Increasing awareness amongst consumers ........................................................................... 87
Bibliography ......................................................................................................................................... 89
List of tables
Table 1: Different forms of electronic commerce present today .......................................................... 11
Table 2: Retailers that possess and do not possess a website ............................................................... 40
Table 3: E-commerce application amongst survey participants ........................................................... 42
Table 4: Importance of selling products and services online ................................................................ 44
Table 5: Retailers selling their products and services on other e-commerce websites ......................... 46
Table 6: Representation of lost sales and brand awareness opportunity ............................................... 47
Table 7: Retailers that have an IT team to build and maintain an e-commerce website ....................... 49
Table 8:Retailer's confidence of selling products and services online in the U.A.E............................. 51
Table 9: Retailer's perceived notion on the expense to build and maintain an e-commerce website ... 53
Table 10:Retailer's that think e-commerce is advantageous over traditional retail outlets ................... 55
Table 11:Advantages of adopting e-commerce in U.A.E, the retailer's perspective ............................. 57
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Table 12: Disadvantages of adopting e-commerce in U.A.E, the retailer's perspective ....................... 60
Table 13: Best business categories that can adopt e-commerce............................................................ 63
Table 14:Elements to consider before developing an e-commerce website ......................................... 65
Table 15: Increase usage of e-commerce amongst consumers of U.A.E. ............................................. 67
Table 16: E-commerce eliminating the middleman of trade ................................................................. 69
Table 17: Future of e-commerce in the U.A.E ...................................................................................... 71
Table 18:Recommendation to promote e-commerce in U.A.E. ............................................................ 73
List of figures
Figure 1: The logo of Amazon.com displaying the A to Z guarantee ................................................... 12
Figure 2: The above figure displays the shopping process involved in online purchase transactions .. 22
Figure 3: Elements of retail convenience ............................................................................................. 23
Figure 4: Google search performed ...................................................................................................... 68
Figure 5: Representation of SEM campaign on search engine "Google". ............................................ 85
Figure 6: Representation of elements to boost consumers’ confidence to shop online ....................... 85
Figure 7:Representation of STAEDTLER Malaysia on Social media. Making pencils look lively ..... 86
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Chapter 1 - Introduction
1.0 Introduction
With the discovery of the World Wide Web (www) and the developments of Information
Communication Technology (ICT), many businesses around the world are adopting
electronic commerce (e-commerce) as a channel to build technological bridges between
consumers, other businesses and the government (Ilesanmi, 2007). E-commerce is defined as
the exchange of products, services and information via various means of telecommunication
networks (Clegg, Gholami and Al-Somali, 2011) .
Today, an increasing number of businesses around the globe are adopting e-commerce
solutions in order to access new markets, increase market share and reach out to potential
new customers around the globe. Many companies also noticed the competitive advantage of
utilizing an e-commerce solution due to which they are accessing new markets and customers
at a much cheaper cost (Ilesanmi, 2007). A perfect example of this is ‘Amazon.com’, which
is accessed by millions of shoppers around the world on a daily basis to purchase products of
desire. This service would never have been possible without the Internet, web and e-
commerce.
The focus of this study will be based on identifying the levels of e-commerce retailers in the
United Arab Emirates (U.A.E) adopt to sell their products and services. Different companies
implement different forms of e-commerce to meet different business goals. These various
forms of e-commerce will be explained in depth, in the subsequent chapters. This chapter
discusses the aims of conducting research in the specified field along with its objectives and
the structure of the research.
1.1 Research aims and objectives
This research aims to evaluate the current benefits and challenges of retailers adopting an
e-commerce solution in the U.A.E. It will also explore the impact of e-commerce on the
economy of a country. In order to fulfill the aims of the research, the following objectives are
set out. They are as follows:
1. Analyze global trends in e-commerce and why it is important to the economy.
2. List out the advantages and disadvantages of adopting electronic commerce in the
U.A.E. This will be derived from the literature gathered on the topic along with the
opinions of the respondents who will be surveyed. The literature will also include
Social Media and its impact on e-commerce in the region.
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3. Examine retailers’ readiness to sell products and services via e-commerce in the
U.A.E
4. Develop a detailed analysis, conclusion and recommendation based on the findings of
the research.
1.2 Problem Statement
Michael Leighton, the senior retail consultant from CB Richards Ellis Middle East has
highlighted a very important issue with online shopping in the U.A.E., which is, consumers
prefer shopping the traditional way in malls since malls in the U.A.E. not only facilitate
shopping but also unite entertainment and dining outlets in one location (Singh, 2011).
In addition to the above issue raised by Michael Leighton, a growing concern is the number
of e-commerce websites that are launched in U.A.E. Numerous websites offering the same
product at approximately the same price has become a new crisis thereby increasing
competition for new shopping websites and possible price wars. For e.g. www.cobone.com
and www.groupon.ae (Flanagan, 2010). This not only depicts the visibility of low
government regulations for e-commerce but it also suggests that "new entrants" may find it
difficult to survive.
Businesses today primarily utilize the web for e-mail communication, internet browsing and
product/service showcasing (Ilesanmi, 2007). As per Chowdhury's report, 52% of online
shoppers in the U.A.E spend less than 5% of their monthly income online and this is mainly
because retailers are not fully embracing the potential of e-commerce to sell their products
and services (Chowdhury-Khaleejtimes.com, 2010).
In reality, e-commerce paves the way for new opportunities to broaden market share and
customer base. So why don’t all businesses engage in e-commerce? Is it because of the size
of the operation, the set up cost, lack of resources and knowledge of e-commerce or
inadequate infrastructures? To answer these questions, a list of retailers in the U.A.E will be
surveyed to identify the key issues behind the engagement of e-commerce (Ilesanmi, 2007).
There is very little trace of research conducted in the U.A.E. that explores the readiness of
retailers adopting an e-commerce solution or that investigates the benefits and challenges
linked to adopting e-commerce. The conclusion of this research will provide retailers with an
insight on e-commerce from a business perspective and the recommendations will assist
retailers to adopt e-commerce application for their business operations in the U.A.E.
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1.3 Dissertation Structure
Chapter 1 (Introduction)
This chapter briefly describes e-commerce, introduces the research aims and its objectives,
identifies the problems statement, details out the dissertation structure and the contents of
each chapter.
Chapter 2 (Literature Review)
This chapter describes the discovery of the Internet, the history of e-commerce and includes
an analysis of the global trends in e-commerce. The benefits and challenges associated with
adopting e-commerce are also detailed in this chapter, along with the introduction of the
U.A.E. and its Political, Social, Economical and Technological surroundings. It also
highlights the importance of e-commerce to the economy of a country.
Chapter 3 (Research Methodology)
This chapter discusses the research methods used in the dissertation, which will detail the
research design, sample selection, data collection process, limitations of the survey, the data
processing and analytical techniques utilized.
Chapter 4 (Research Findings and Discussion)
This chapter will discuss the key findings of the survey conducted, with the help of tables and
charts. This chapter will also provide readers with the researcher's analysis of each survey
question.
Chapter 5 (Conclusion)
This chapter will present the conclusion of the study and findings. It will be complemented
with recommendations for retailers in the U.A.E. Scope for future research will also be
highlighted in this chapter.
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Chapter 2 - Literature review
2.0 Introduction
The world of digital media is evolving at an extraordinary pace (Ryan, 2012). Technology
has changed the way consumers choose and buy products and services (Ryan, 2012).
According to the Internet World Statistics, approximately 90 million Internet users have
been recorded in the Middle East as of June 2012, which represents an estimated 40.2% of
the total Internet population (Internetworldstats.com, 2012).
This chapter will discuss the use of e-commerce in today's world with the help of conducted
research, studies and views on the topic. The focus will then be shifted to the retailers of U.A.E.
that are utilizing e-commerce in their businesses, outlining its success and drawbacks.
2.1 The Internet
Tim Berners-Lee, a British computer scientist, invented the World Wide Web, which is
commonly known as "www" today. The first web page was developed within CERN (The
European Organization for Nuclear Research) and launched on the Internet on 6th August 1991
(Ryan, 2012). In the 1990s, many entrepreneurs seized the growing opportunity of this new
channel to create an online presence. In August of 1995 there were approximately 18,957 websites
and only within one year this number grew to 342,081 (Ryan, 2012). In 1995, close to 6 million
users were connected to the Internet and after a decade, a staggering 1 billion users were recorded
using the Internet (www.bbc.co.uk, 2007). This new medium of communication had become a
growing and powerful phenomenon.
Two elements that fuelled the growth of the Internet were the discovery of Google and the
accelerated introduction of high-speed broadband to the public. People could find what they were
looking for, purchase products and services online, connect with friends and family across the
globe, plan holidays and do much more, with just a click of a button.
2.2 History of electronic commerce
e-commerce grew at a rapid pace in the mid 1990s, and continued to do so until the year 2000.
The expansion of e-commerce was described as the ‘dot-com boom’ by the media. Between 2000
and 2003, the media described e-commerce as the ‘dot-com bust’ (Schneider, 2011). Predictions
of the ‘dot-com bust’ began much ahead as industry observers noticed the rapid increase in
websites, because many wanted to reap from the benefits of the late 1990s Christmas season.
Millions of dollars was spent on aggressive advertising battles to compete with other websites;
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increased number of websites reduced the consumer attention, which thereby reduced sales. For
e.g. ‘Ourbeginning.com paid 400% of its 1999 revenue’ to advertise itself during the Super Bowl -
an American football game (www.bbc.co.uk, 2000).
In the beginning of 2003, e-commerce displayed signs of growth once again, ‘As the economy
grew, e-commerce grew also’ (Schneider, 2011).
2.3 Electronic commerce
Electronic Commerce, also known as e-commerce is primarily referred to as the buying and
selling of products and services via the Internet. However, e-commerce has many other features,
which include business-to-business trading. It is also used for many internal business processes
such as inventory management, internet marketing, planning, hiring via career portals, supply
chain management and much more (Schneider, 2011).
2.4 The different forms of electronic commerce
There are five main forms of e-commerce, which are Business to Consumers, Business to
Business, Internal Business Processes, Business to Government and Consumer to Consumer.
Category Description
Business to consumers
(B2C) Business offers products and services for sale to individual consumers
Business to Business
(B2B) Business offers products and services for sale to other business
Business Internal Process
The exchange of data between businesses to evaluate consumers,
suppliers and employees. This information is shared on secured
platforms, which help in planning the demand and supply of products
and services
Business to Government
(B2G) Business offers products and services for sale to government sectors
Consumer to Consumer
(C2C) Consumers buy and sell product from and to other consumers online
Table 1: Different forms of electronic commerce present today
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2.5 Electronic commerce trends across the globe
2.5.1 Facts about the big online players
Founded in 1995 by Jeff Bezoz, Amazon.com is a Fortune 100 company headquartered in Seattle,
Washington. It is a global leader in e-commerce today and operates in Canada, China, France,
Germany, Italy, Japan, Spain and United Kingdom (Amazon.com, 2013).
Amazon.com embarked on a journey to be the most ‘customer-centric company in the world’ and
focused on providing customers with an ‘A to Z Guarantee of 100 percent satisfaction’ which is
also visible in its logo. This was achieved by simplifying the payment methods, offering
recommendations when customers browse through categories and remember customer's
preference on return visits (Schepp, 2009).
Figure 1: The logo of Amazon.com displaying the A to Z guarantee
Today, Amazon.com services millions of customers worldwide. The website in the UK and
Germany attracted 32.7 million and 25.9 million unique visitors in the lead up to the Christmas of
2012 (comScore.com, 2012). In the fourth quarter of 2012, Amazon.com recorded a 22 % increase
in net sales, which represents $21.27 billion. This is a clear indication that the sales on
Amazon.com impacts the country's economy as facilitating such a sales volume requires staff and
therefore this increases employment within the company. In addition, Amazon.com works with
third party vendors for various products offered on the website and therefore boosts the growth of
small-medium sized companies.
Delivery is a key aspect in the process of online shopping, and delivering such an amount across
the globe requires manpower and courier companies. This again creates employment and boosts
local and international courier revenues. Jeff also announced Amazon's strategy for its success,
which is to ‘figure out what customers want and repeat that consistently’. Customers looked for
four basic elements when shopping online:
1. Safety of shopping online
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2. Credible customer service
3. Express delivery
4. Good pricing strategy
In 2006, Amazon.com approached many ‘Power Sellers’ who were in contract with their
competitors, ebay.com. Amazon went a step ahead and also approached other online websites and
offline retailers to showcase and begin selling their products online. This therefore provided
small-medium sized organizations a new platform to sell products and services, once again
impacting the economy. As per Schepp, (2009) ‘Amazon is one of the best opportunities ever
available for people who want to have their own businesses’. This is achieved by becoming a
merchant/third party seller to Amazon.com.
In 1995, Pierre Omidyar developed an experimental code, which consisted of a global market
place that would be accessible to all. He began the test by posting a ‘broken laser pointer’ for
auction on the website and this was purchased by a collector for $14.83 (ebayinc.com, 2013). The
model of the website is based on auctions. However, unlike traditional auctions, eBay's auction is
controlled by a preset clock. The highest bid procures the item at the expiry of the timeline.
In 2003, eBay promised ‘retailing will become the national pastime’ (Collier, 2012). Currently
there are more than 100 million users worldwide who are contributing to over $2,100 sales per
second on eBay (ebayinc.com/page/who, 2011). eBay today is the online market place to shop for
collectibles and lots of new products. It brings together buyers and sellers on the Internet, making
it a convenient and a safe place to shop.
What makes eBay a safe place? Sellers and buyers both have to maintain an account on eBay
through which trade can take place. Buyers today may become sellers tomorrow if they want to
sell old furniture, used electronics, etc. After making a purchase a buyer can place a review/
feedback about the seller, which other buyers can view at anytime. Viewing negative feedback
will definitely impact future trade. This therefore makes eBay a safe place to trade on without
actually meeting or feeling the products.
2.5.2 E-commerce in Egypt
An online survey performed by the ‘Arab Advisors Group’ recorded 2.36 million users utilized e-
commerce in Egypt. 22.4% of the Internet users in Egypt purchased online and carried out utility
bill payments over the Internet (Rahid, 2012). Rahid's study primarily focused on the current
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status of the utilization of e-commerce in Egypt. Some of the major findings of his study revolved
around the following obstacles:
1. Organization's that have adopted e-commerce are still building their foundation in Egypt
2. Lack of awareness among consumers
3. Low security measures over the internet
4. Language obstacles
5. Lack of credit facilities
6. Consumers in Egypt preferred purchasing goods and services from retail outlets rather
than online stores (Rahid, 2012)
Rahid's study also talks about one of the most popular e-commerce websites, i.e. souq.com, which
was established in 2005. Souq.com is one of the largest e-commerce platforms in the ‘Arab
World’ servicing in the U.A.E, Saudi Arabia, Egypt and Jordan (Rahid, 2012). The website
follows a similar concept as eBay with minimal differences.
2.5.3 E-commerce in Ghana
E-commerce is considered very important to the economy of Ghana (Iddris, 2012). The primary
reasons for adopting an e-commerce solution in Ghana is as follows:
1. To expand businesses and access international markets to increase sales via the web
2. Increase customer base by reaching out to millions of internet users around the world
3. Keeping up with competition, current trends and technology used globally
4. Offer customers a better service experience with 24/7 operational hours
E-commerce application impacts business operations. Majority of companies in Ghana use e-mail
for advertising products and services currently. There is very little trace of e-commerce in this
region and this is mainly due to initial investment to set up shop, knowledge and expertise
required to develop e-commerce websites and culture resistance to use and adapt to e-commerce
(Iddris, 2012).
2.5.4 E-commerce in London
In London during the Christmas season of 2009, close to 1,219 websites were shut down as
they sold counterfeits or did not deliver the product after purchase. Moreover, these sites
were run by fraudsters in the Asian continent (Vahl, 2009).
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2.5.5 E-commerce in the Middle East
As per a survey highlighted in Lowe's (2012) report, 56% of the population in the Middle
East mentioned that they were reluctant to shop online due to credit card fraud, 37% were
concerned about the return policy, 20% were unsure about the products and its quality since
online purchases are based on images and descriptions, 16% did not feel the shopping
experience and 9% required shopper to seller interaction to clarify product information.
2.6 The United Arab Emirates The United Arab Emirates (U.A.E.) is a federation of seven cities/Emirate formed in 1971. The
seven Emirates are Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and
Fujairah.
The U.A.E. is considered a small country in size, occupying just 82,880 square kms. The
population consisted of 180,000 people in 1971, which grew to over 5 million in 2006. The
U.A.E. is known for its oil reserves and has attracted many foreign companies since its discovery
in the late 1950s (King, 2008) (uaestatistics.gov, 2010).
2.6.1 Political analysis
Abu Dhabi is the capital city of U.A.E. Sheikh Khalifa Bin Zayed Al Nahyan is the president of
the country and Sheikh Mohammed Bin Rashid Al Maktoum is the Vice President and Prime
Minister. Each Emirate has its own ruler and its own governmental institution. The U.A.E. is also
known to be one of the first Gulf countries to carry out elections. The ruling family of each
Emirate holds a position in the Federal Supreme Council, i.e. responsible for policy building and
election of the president and the vice president for a five-year term. The U.A.E. maintains a strong
relationship with the west, especially the United States of America (Datamonitor, 2010). This has
been done strategically in order to invite foreign investments, which has been noticed in recent
years with the influx of multinational corporations headquartering their Middle East and North
Africa operations in the U.A.E. For e.g. Johnson and Johnson.
2.6.2 Social analysis
The Society of U.A.E. plays an integral part of this study, as we are able to grasp the norms and
culture of the country. As per the report published by the U.A.E. National Bureau of Statistics, an
estimated population of 8.2 million was recorded by mid 2010. 6.1 million were male and 2.1
million were female. There are approximately 947,000 nationals and approximately 7.3 million
expatriates in the country (uaestatistics.gov, 2010). Approximately 78.7 % of the population
represents the age group 15 - 64 years (indexmundi.com, 2012). The U.A.E. has low levels of
unemployment and high levels of foreign workforce. The common religion in U.A.E. is Islam and
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many trade/business decisions are made keeping the religious beliefs in mind. ‘Shopping is an art
form in the U.A.E.’ and millions of tourists from around the world visit the country for its elegant
shopping malls (uaeinteract.com, 2013).
2.6.3 Economic analysis
The currency used in U.A.E. is called the Dirham (AED), and is pegged to the US dollar. The
U.A.E. is the world's seventh largest oil producer. Free-market economies are practiced in the
country with very limited restrictions placed on trading and business activities in the private
sector. The economy of the U.A.E. has displayed remarkable resilience during the economic
turmoil of 2008. With rising oil prices the government increased spending in transport
infrastructure, tourism and trade activities (uaeinteract.com, 2013).
Top-notch companies in U.A.E. experienced successful restructuring for debt owed to stabilize the
market and to regain investor's trust. The World Trade Organisation (WTO) ranked the U.A.E. as
the twentieth biggest world exporter of merchandise in 2011. In a nutshell, the economy of the
U.A.E. is strong, which has attracted many Foreign Direct Investments (FDI) in the recent years
and therefore introduced many new brands and multinational corporations to the people of the
U.A.E. (uaeinteract.com, 2013).
2.6.4 Technological analysis
The telecommunications network is very strong in the U.A.E. Until 2006 the telecom market
was a monopoly with Etisalat as the only service provider. This meant charges for
telecommunication were high. In 2008, a new service provider by the name of Du entered the
market alongside Etisalat (Datamonitor, 2010).
Dubai Silicon Oasis also known as DSO was established in 2005. The mission of DSO was to
‘Facilitate and promote modern technology based industries’. The facility is a Free Zone and
offers various incentives and benefits to attract international technology companies. Benefits
of operating within DSO included 100% foreign ownership, no income tax, state-of-the-art
infrastructure, etc (dsoa.ae, 2013). The long-term vision of DSO is to harbor research and
development, therefore generating innovative products and services to develop the
technological infrastructure of the country (Datamonitor, 2010). With improvement in
technology the country can look forward to an increased and improvised e-commerce
penetration.
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2.7 Facts about e-commerce in U.A.E A survey conducted by Symantec Corporation in 2008 reported 75% of Internet users in the
U.A.E do not shop online. Many hesitate to shop online due to Credit Card fraud and trust
issues of product delivery. Social Media influences 43% of online shoppers in the U.A.E,
approximately 52% of online shoppers spend less than 5% of their monthly income online.
This is primarily because retailers are not embracing the full potential of the online world and
due to the low incentives offered to online shoppers. The Managing Director of the Nielsen
Company in the U.A.E, Sevil Ermin commented that online shoppers in the U.A.E. are
spending a very small portion of their income online compared to total spends globally. He
also informs us that the most common Internet transactions are carried out for airline tickets
(Chowdhury-Khaleejtimes.com, 2010).
‘The U.A.E. is missing out on the US$680 billion global e-commerce industry, with just 5%
of businesses transacting online’. A survey conducted by the Telecommunications Regulatory
Authority also known as TRA reports that very few businesses in the U.A.E. sell online, even
with a 44% penetration of computer usage amongst the employees in U.A.E., the take up for
e-commerce is very low. The report also mentioned that shoppers in the U.A.E. are using
'global sites' such as Amazon.com to make purchases due to trust and security factors
(Flanagan- TheNational.ae, 2011).
Another challenge that the e-commerce industry in the U.A.E is facing is the use of Credit
Cards online and the possibility of sensitive information being compromised to carry out
fraudulent transactions as mentioned above.
Online fraud takes place in two methods. In the first method, users make a purchase
transaction online and the company does not deliver the product to the shopper, in some cases
the online shop may request customers to input sensitive card details on a form which will
then be used at a later point to carry out a fraudulent transaction. In the second method,
'fraudsters' use 'spyware' software to capture user's credit card information to make fraudulent
transactions (Stammberger, 2005).
However, bearing all of the above in mind, the U.A.E. government is definitely paving the
path for e-commerce in the region with its initiative of developing e-portals to make
payments for road fines, Salik (toll gate system in Dubai), electricity bill payments and much
more. This is another form of e-commerce, which represents Consumers to the Government
(Lowe, 2012). Lowe's report also mentions that the sale carried out on e-commerce in the
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U.A.E. accounted for approximately 60% of the e-commerce sales in GCC (Gulf Cooperation
Council). Even though e-commerce is in its 'infant' stage in the region, it is definitely growing
at a rapid speed with the involvement of the government, new local e-retailers and the youth
of the U.A.E.'s population, who are on a constant look out for new ways to shop.
TRA also noticed the recent surge in e-commerce activities in the U.A.E and announced a
cyber security campaign "TRUSTae" to boost the confidence of retailers and shoppers online.
The campaign focuses on addressing online privacy issues, website quality and improved
accessibility (TRA.gov.ae, 2011).
2.8 Benefits and challenges of e-commerce in the U.A.E 2.8.1 Benefits of e-commerce for businesses in the U.A.E
Why should businesses in the U.A.E. adopt e-commerce? With the above statistics displaying
signs of growth in the e-commerce industry, it is only a matter of time before the giants in
businesses penetrate the online market. As informed by Cooper (2005) many companies
today are adopting an e-commerce solution to interact directly with consumers, thereby
reducing operational costs, increasing profit and reducing the end user prices for products and
services by eliminating the middle man of trade. Retailers online have low costs because ‘the
cost of renting a shop and salaries for sales employees’ are eliminated (Norman, 2008).
Online retailers have a bigger market to communicate to unlike retailers who only operate a
traditional brick-and-mortar store. Some of the benefits that justify the sales of products and
services online are:
1. Increase turnover
2. Enter new markets
3. Establish a new customer base
4. To offer a wide variety of products and services as there is no restriction of space
5. 24 hours, 7 days a week service to customers
6. Ability to target desired customers with the help of Social Media and Search Engines
7. To network with other businesses
8. Enabling a quicker and convenient process for consumers to get to their desired
products/services (Cooper, 2005).
With TRA's involvement of boosting the consumers' confidence, shopping being a primary
pastime for the people of the U.A.E., it is definitely advisable for businesses to pursue an
e-commerce solution. However, it is very important to also identify the threats of adoption.
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Sheriff Rizwan, founder of Alshop.com, shares his views of how shoppers have a wide
variety of products and services to choose from, at the comfort of their "Living room". He
further comments on the discounts offered at Alshop.com, which is more compared to offline
retailers (Jones-TheNational.com, 2012).
2.8.2 Challenges of e-commerce for businesses in the U.A.E
Why should businesses' in the U.A.E not adopt e-commerce? Some of the challenges
highlighted by Gao (2012) encountered by businesses are vital for every organization to
identify before employing an e-commerce solution. The influence of the Government in the
online environment is limited, therefore reducing the barriers for new entrants and thereby
increasing the online market competition with freedom of price wars.
Online shoppers are only loyal to online stores that offer the best prices. Since customer
service is not engaged on a face-to-face basis in the online environment, securing customer
loyalty therefore becomes a cumbersome task. Traffic to an online store heavily depends on
the investment in SEM (Search Engine Marketing), SEO (Search Engine Optimization),
online digital banners, e-mail campaigns and promotions (Gao,2012). As mentioned under
the ‘Facts of e-commerce in the U.A.E.’ one of the key issues impacting the success of e-
commerce is that of credit card fraud. According to a survey conducted by Onecard, amongst
1,000 internet users in the MENA (Middle East and North Africa) region, 56% of the
respondents claimed theft was the key deterrent from shopping online (Jones-TheNational,
2012). E-retailers in the U.A.E need to consider this big risk and may have to spend excess
capital in developing a safe and secure website for online shoppers.
In addition to the above, what a business must identify is what products or services will sell
online. In physical stores sellers are able to identify what consumers purchase from a store
with the help of the barcode system, which therefore determines the positioning of the
product in a store to optimize its sale (Gao, 2012). For e.g., if customers purchase more
Galaxy chocolates over Twix, the business is recommended to optimize Galaxy's positioning
in the store. However, in the online environment optimizing the position of products requires
the assistance of online analytical tools such as ‘Google analytics’ to identify the most visited
pages, categories, products, etc. The tool adds to the cost of the operation and may not be
employed bearing in mind a low cost model.
Another primary concern arising amongst e-retailers in the U.A.E are payment processes.
There is very limited payment options offered to e-retailers by payment gateway providers.
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Network International, Cashu, Paypal are some of the options. However, most e-retailers in
the U.A.E. prefer setting up with a local solution and will mostly opt for Network
International. However, the setup cost for the gateway is extremely expensive, as they need to
place $25,000 as a security deposit (Tohme, 2012).
Julien Pascual, CEO of emiratesavenue.com in the U.A.E. shares views on the payment
gateway issues in the country, stating that high online transactions fees reduce the margins
and therefore overall profitability. In order to avoid high transaction charges websites such as
emiratesavenue.com have opted for ‘Cash on Delivery’. This is an easy payment method
where the customer can make payments upon the delivery of the product (Jones-TheNational,
2012). This method tackles two key issues with e-commerce in the region, i.e. fraud and high
transaction fees. However, what needs to be taken into consideration is the risk of failure to
pay and if the customer is not happy with the product at the time of delivery. Such situations
will in turn increase the cost of sales due to shipping charges, which will be applied twice -
one for delivery to the customer and the second for the delivery back to the e-retailer due to
rejection.
Shoppers in the U.A.E. want products as soon as they have been charged for it, as this is
possible if the shoppers visits a store and purchases a product making payment and receiving
the product right away. Moreover, with online shopping consumers are unable to touch or
feel the product therefore creating skepticism of the quality and the actual product. Another
challenge for e-retailers in the U.A.E. is to ensure the websites are operational 24 hours, 7
days a week, which means continuous monitoring. If customers are unable to access the
website, very few will purchase and the credibility of the website is impacted (Esterline,
2006).
2.9 E-commerce for consumers in the U.A.E
Why shop online? As mentioned by Mehta (2006), shopping online is time saving,
consumers can select and view from a wide range of products at their own comfort, no travel
is required to get products or services, therefore reducing the cost of obtaining the product
(For e.g. Salik + petrol), consumers do not have to deal with crowds and slow moving queues
at store checkouts and most importantly online stores build loyalty with shoppers by
providing big discounts. Consumers are able to easily compare products and pricing and are
assisted with the comments and rating posted by previous buyers of the product thereby
making a smart purchase decision (Norman, 2008).
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2.10 Simplifying the shopping process
As recommended by Fabiola (2006) to look for online stores it is vital to use 'search engine'
portals such as Google or Yahoo. Once you find stores that you may want to visit, identify if
they are operating from the county you reside in to reduce the delivery turnaround time.
Most shopping websites have a similar pattern containing product images, description and
videos with an ‘add to cart’ button beside the product (Fabiola, 2006). On making a decision
the ‘add to cart’ button is clicked and the user is transported to a payment/checkout page
displaying customer information along with delivery and payment options to select from such
as "Pay via Credit Card" or 'Cash on Delivery".
Once the payment checkout process is completed the user is transported to a payment
gateway based on selection of payment methods in the checkout page. In the payment
gateway the user punches his or her credit card details, which is transmitted via a secure
server in an encrypted format to avoid any fraudulent activity. On payment approval, the user
receives an order confirmation.
The above process is simplified for readers in the form of an image available on the next
page.
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Figure 2: The above figure displays the shopping process involved in online purchase
transactions
2.11 Online stores versus traditional brick-and-mortar stores The comparison and resemblance between online stores and traditional ‘brick-and-mortar’
stores are well defined by Beauchamp and Ponder’s Journal ‘Perception of Retail
convenience for In-store and online shoppers’. Shoppers are always on the lookout for
convenience, whether they shop online or walk into a physical store, and this is therefore
highlighted in the retail convenience hypothesis a retailer must take into consideration the
below elements before deciding to develop a website or construct a brick-and-mortar store.
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Figure 3: Elements of retail convenience
1. Access: Is the speed with which shoppers can connect with a retailer. Customers
access retailers via the telephone, website, email, fax and a personal visit. If access is
affected, customers will not purchase products/services, therefore leading to loss of
sale. Retailers have to ensure access is made easy and convenient to the shopper,
therefore the layout of products and the design of the website should be user friendly
in order to avoid the shopper from leaving the website (Beauchamp, Ponder 2010).
2. Search: Is the speed with which shoppers can find what they are looking for. In
physical stores shoppers are assisted by signage, maps or help desks to discover what
they are looking for. However, on websites shoppers can easily find what they are
looking for by utilizing the search field available on the website. Not all websites
have a ‘search’ functionality. Bearing in mind customer's convenience, it is highly
recommended. Moreover, online shoppers access various website via search engines.
In order to obtain a good ranking on search engines, i.e. display on the first few pages,
websites have to ensure the content of their website is Search Engine Optimized
(Beauchamp, Ponder 2010).
3. Transaction: Is the speed with which shoppers make payments for their desired
purchase. The convenience of transaction is well addressed online since shoppers do
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not have to wait in queues to make their payments, unlike traditional stores
(Beauchamp, Ponder 2010).
4. Possession: Is the speed with which shoppers can obtain their product. Brick-and-
mortar stores have a competitive advantage over online retailers in this area as
delivery of products/ services is made immediately at a traditional outlet unlike an
online store where the customer waits in anticipation of delivery. This at times
becomes a key decision element when choosing to shop at a traditional outlet rather
than an online store (Beauchamp, Ponder 2010).
2.12 Challenges consumers face with online shopping
As per Norman (2008) some of the major concerns with online shopping is that consumers
have to pay for delivery based on weight and size of the product, which increases the price of
the product thereby making large products such as television sets, microwaves, fridges, etc
less attractive to purchase online. Moreover, delivery of products may take more time based
on geographical location of the shopper and lastly, consumers have to make purchase
decisions based on images and text descriptions of the products and are therefore not able to
touch and feel the product.
2.13 Who is selling online in the U.A.E?
Major companies such as Carrefour launched its 'non food' online store in 2010 (El Ajou,
2010) and Apple Inc. launched its online store during the end of 2011 (arabianbusiness.com,
2011) in the U.A.E. to get a foothold in the developing e-commerce region.
There are many local e-commerce websites that have launched in the recent past. Some of
these websites are Cobone, Groupon, Sukar, Nailthedeal and many more. The concept of
these sites is based on group buying. Group buying takes place when a select number of
customers get together and buy a specific product/service. The idea is similar to buying
products in bulk and receiving a big discount. For e.g., if a customer walks into Sharaf DG to
purchase a mobile phone worth AED 1,000, he /she may receive no cash discount since only
a single unit is purchased, however if a group of 10 visited Sharaf DG to purchase the same
mobile phone they may receive a big discount due to the collective bargaining power.
2.14 The mechanism of group buying websites in the U.A.E
Group buying websites approach new companies such as restaurants, entertainment outlets,
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electronic retailers, etc. and provide these businesses with an opportunity to create brand
awareness to groups of the society by firstly subsidizing the brand at a discounted price and
then taking a margin for the sale of every unit sold on the website. On agreement of the terms
and conditions, the group buying website places the deal online and 'ends' the deal once
desired quantity is sold. (Khuffash, 2011).
Group buying websites have become very popular in this region. However, what needs to be
identified here is that online shoppers have become accustom to big discounts. Loyalty as
mentioned previously is limited and new websites that enter the online market encounter
major competition with existing online stores. Moreover, new e-retailers have the biggest
concern of being visible online. Start up costs and operating costs of online stores are low,
however if visibility of online stores is low; very few customers may visit therefore reducing
profitability of operation, increasing long-term cost and possibilities of closure.
2.15 Integration of SEO and Social Media Marketing to increase visibility
'Search engines are constantly struggling to track e-commerce sites due to poor or obsolete
site optimization' as advised by Hanley (2010). Online shoppers mostly use the help of search
engines to discover new shopping sites on the world wide web (www) and since online
shopping is about time saving, shoppers often only view results on the first page after the
search keywords has been input. Therefore, visibility on the first page of the search engine
results is very important for online stores to compete with other stores.
Social Media Marketing is a new medium for online stores to obtain more traffic and
potential customers to carry out purchase transactions. Some of these mediums include
Facebook, Twitter, YouTube, LinkedIn and others (Hug, 2011). Online stores are using the
share option in their web design to create a buzz about their offering via social media. Social
media not only promotes the online store locally but also provides strong visibility on an
international scale, therefore creating more opportunities for meeting new business partners
and potential customers.
Scott (2011) suggests, ‘improve visibility on social media where you will find your
customers, promote your offering via the select social media channels, constantly observe
competition's strategies/offers and lastly don't just promote but create a sales opportunity’.
The above views and opinions of various authors and reporters clearly indicate the challenges
involved in developing and managing e-commerce websites in the U.A.E. We also learn of its
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impact on the economy of a country. The literature also highlights the advantages for both
shoppers and retailers online for adopting an e-solutions; it further talks about the initiatives
taken by the Government of the U.A.E. to promote e-commerce in the region. The literature
review is therefore concluded and paves the path for Chapter 3, which will detail the research
methodology used to carry out the core research for this study, and identify retailers’ benefits
and drawbacks of adopting e-commerce to sell products and service in the U.A.E.
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Chapter 3 - Research methodology
3.0 Introduction
This chapter details various techniques adopted by the researcher to fulfill the aims of the
study. As mentioned in chapter 1, the key aim of the study is to investigate, list and validate
the advantages and disadvantages of e-commerce adoption, the aim of the study also requires
the researcher to examine retailer's readiness to employ e-commerce in their business.
Chapter 1 also highlighted key issues related to adoption of e-commerce such as shoppers’
preference of shopping at brick and mortar store, the low levels of e-commerce penetration
amongst retailers in the U.A.E and the reasons that deter retailers from engaging in e-
commerce. These issues will be validated with the help of the research method employed and
the final chapter will provide recommendations to tackle these issues.
"Research is an intensive and purposeful search for knowledge" Research can also be defined
as a systematic investigation established to contribute to the existing database of knowledge
(Dr. Kumar, 2008).
E-commerce is an additional distribution channel for potential offline retailers to extend their
products and services to a new audience online, however it is imperative for retailers to
identify the pros and cons of setting up an e-commerce website in the U.A.E. before making a
decision. In 2010, the U.A.E achieved a 42% growth for online purchases in comparison to
2009, as per a MasterCard Survey conducted for online shopping (Sambidge, 2011).
There is limited study carried out for e-commerce adoption by retailers in the U.A.E., this
research will therefore contribute to the knowledge for retailers in the U.A.E. that plan to
trade online. In addition, it will also add value to Management students who wish to carry out
further research on e-commerce in the region. The research findings also project business
categories that retailers find best suitable for e-commerce in the U.A.E. It also uncovers the
perceived future growth of e-commerce in the region from a retailer's perspective. This
chapter discloses the methods used in carrying out the research.
3.1 Research Methodology
Research methodology is a method of systematically solving research problems. The
methodology is the steps taken by the researcher to study and resolve the research problem.
(Dr. Kumar, 2008). This study was conducted using a descriptive research design, which is
the combination of qualitative and quantitative methods of carrying out research. Descriptive
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research was adopted in this study rather than an analytical research because, descriptive
research primarily focuses on the "state of affairs, as it exists at present" (Dr. Kumar, 2008).
Descriptive research is also known as ex-post facto research in business as the researcher has
no direct control over the variable factors and can only report what has actually occurred or
occurring in the field of the study. The methods involved in descriptive research are
observational method, case-study method and survey method. The researcher has opted for a
survey method to carry out this study, to produce facts and to analyze data in order to provide
readers with a critical evaluation (Dr. Kumar, 2008).
The survey approach entails gathering of data, organizing the information collected, depict
findings in the form of graphs and charts and interpreting the information.
The researcher utilized quantitative method for data collection in the form of questionnaires
and analyzed the data using the qualitative approach. Ayokunle Ilesanmi too used a similar
approach in the study "Issues and barriers affecting the development of e-commerce on small
and medium enterprises (SMEs) in developing countries: a Nigerian perspective ". The
reason for selecting this approach is to carry out further investigation on the issues and to
quantify findings which assisted in formulating a solid conclusion highlighting the degree of
ecommerce adoption in the U.A.E. along with the benefits and challenges it entails (Ilesanmi.
2007: 43).
3.2 Research design
The researcher resorts to a primary data collection technique in the form of surveys for the
main research of this study. The survey is structured in the form of a questionnaire. The
researcher builds the questionnaire using a direct rather than an indirect approach, to ensure
responses are concise, which assisted in simplifying data analysis. The selection for this
method is to collect different views by using a quick and low cost approach. The
questionnaire is an easy, convenient and less complicated survey tool (Kim et al.2009:270).
This survey primarily focuses on obtaining information related to the aims and objectives of
the study. The questionnaire used for the survey included 16 closed-ended mandatory
questions for retailers with 1 open-ended question, which was not mandatory as this was only
used to obtain views on e-commerce (Kim et al.2009:270).
A pilot program was carried out consisting of 3 retailers. This was undertaken to make certain
that the questionnaire is easy to understand, concise, ensures ethical consideration and avoids
ambiguity. The pilot program assisted in estimating the time taken for each survey. It
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projected flaws with the questions framed and prepared the researcher for the final survey
(Kim et al.2009:270).
3.3 Data collection process
3.3.1 Secondary data collection
Secondary data collection involves the gathering of related information or data indirectly
from books, Chamber of Commerce, government agencies, Internet, etc. Moreover,
secondary research is always considered as the first option for a research study as it sets the
foundation for the study. The following are the advantage and disadvantage of secondary
research.
Advantages
Cheap and accessible
Often the only resource, for e.g. historical documents
Only way to examine large-scale trends
Disadvantage
Biases and inaccuracies cannot be checked
Published statistics often raise questions that cannot be answered
3.3.2 Primary data collection option
Primary data collection involves gathering of information and data directly from the source in
the forms of surveys, focus groups and in-depth interviews, which means the information
collected is current and accurate. The following are the advantage and disadvantage
Advantage
Accurate information collected
Computer code able for quick analysis
Quick and cheap if the sample is small
Disadvantage
Respondents may interpret the questions differently. This makes comparison of the
answers difficult
It is not impossible to check if participants are responding honestly
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Using a large sample can be time-consuming and expensive (Caes,1992)
The researcher has utilized primary and secondary data collection methods for this study.
Secondary data collection was used in constructing chapter 2 of this study. Various sources
such as newspaper articles, academic journals, books, past dissertations and websites were
referred to in order to identify the various benefits and challenges of e-commerce adoption in
the U.A.E. The secondary data collected also portrayed the growth of e-commerce on a
global scale and its impact on the economy. In order to validate the literature review with
respect to U.A.E. and to identify readiness of retailers in the country to adopt e-commerce,
the researcher applied primary data collection methods, which entails the active participation
of the researcher in connecting with research participants to fulfill the aims of the study.
The data collection process that was utilized during the course of this research stipulated the
ethical protocols that are related to; lack of informed agreement, offensive questions that
would invade privacy, any physical or mental harm to the research participant or deception in
data collection and data analysis. The researcher used the following communication channels
to contact participants; telephone, email or face-to-face interaction (Bryman et al.2007).
The retailer's survey was conducted in the following manner - A list of 40 retailers who
matched the mentioned sample criteria was consolidated. This took into consideration the fact
that 15 retailers were not going to respond to a meeting request or may decline to be
surveyed. A standard script and email template was prepared, which provided research
participants with an introduction of the study, followed by its purpose and an assurance of
responses provided to be used only for the purpose of the study. The first contact was carried
out via telephone to fix an appointment with the concerned person and if the attempt did not
prove successful, the research participant was emailed with the introduction template along
with the questionnaire.
If the contact person agreed for a meeting, the purpose and the details of study was reiterated
to ensure the research participant was in agreement before the survey was conducted. In
addition, the researcher assured the respondent of complete data privacy.
3.4 Questionnaire
As mentioned, surveys were utilized for primary data collection and a questionnaire was used
as the principal tool for this research. The questionnaire was divided into two sections.
Section A of the questionnaire collected information related to the company's profile such as
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business category, product/ service offered, where they catered to consumers, businesses or a
combination of both, location and period of establishment.
Section B of the questionnaire focused on the aims and objectives of the study. This section
begins with basic questions pertaining to awareness of the retailer toward e-commerce. It
went on to question retailers on the usage of e-commerce currently in the organization,
hindrance from adopting e-commerce, validating advantages of applying e-commerce in the
organization and identifying the retailers overall readiness to engage in e-commerce.
(Bolongkikit etal. 2006). The ethical protocols mentioned in the "data collection process"
section were taken into consideration at the time of questionnaire build.
3.5 Sample
The final survey for retailers employed the Simple Random Sampling (SRS) technique. SRS
is also known as ‘chance sampling’ or ‘probability sampling’ in which each and every retailer
in the population criteria has an equal chance of inclusion in the survey (Dr. Kumar, 2008).
The reason for adopting SRS was to avoid bias opinions and simplify analysis. 33 out of 40
retailers who operate in the U.A.E. were surveyed. Unlike a consumer study the researcher
had to adopt a smaller sample to ensure completion of the survey on time, moreover the
questionnaire primarily focused on prestigious businesses in the U.A.E., which meant
surveying key personnel in the organization to obtain accurate responses. Business owners,
Managing Partners and Managers were surveyed. Some of these retailers possessed an online
presence and some did not. Some of these retailers served customers, some catered to
businesses, and some to both. Only a minority of the retailers who engaged in the survey
utilized an e-commerce solution. The reason for selecting retail outlets that did not only
operate online is to gauge readiness to adopt e-commerce in the region and to identify if the
retailers in the U.A.E. are geared to develop and maintain an ecommerce platform (Chiou et
al.2011:206).
Retailer's from all Emirates/cities of the U.A.E. were included as part of the survey.
However, the majority of the responses were received from retailers based in Dubai and
Sharjah. These retailers were a mix of the following categories that serve customers and other
businesses - healthcare, jewellery, food, electronics, marketing consultancy, fashion,
automotive, networking, travel, hospitality, events and entertainment. Additional
requirements of the sample ensured that the business operated in U.A.E.
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3.6 Equipment and tools required to carry out the research
To effectively carry out the survey, the researcher utilized a laptop with Microsoft Excel and
Word enabled, a mobile phone to contact participating retailers when moving from one place
to another, hard disk with a minimum capacity of 250 gigabytes to back up all information
once digitized, a car to travel from city to city, 24 working pens, notepad to mark important
points during the course of the survey, 50 copies of the retailer questionnaires.
3.7 Limitations of the proposed data collection method
The limitations of the above data collection process included the following issues:
Geographical constraint to only two Emirates/cities and not all seven cities of the
U.A.E.
Since the research adopted simple random sampling, some of the survey participants
were reluctant to share opinions or views on the subject research.
Some of the respondents did not complete the survey and left fields blank. These
respondents were contacted again to ensure completion of the survey.
Some of the research participants were unable to comment on behalf of the
organization.
Obtaining access to key personnel in the organization was challenging.
After the researcher distributed the questionnaire, the researcher realized Q10 of the
questionnaire was missing the "Others" option. Participants were contacted and
informed of the same to ensure all views were received.
3.8 Data processing and analysis
In the data processing stage, the raw information was summarized and organized. Each and
every questionnaire was reviewed individually to ensure correctness of information and the
removal of error. If fields were left unchecked, the research participants were contacted via
phone or email to complete the research questionnaire. On completion of the questionnaire,
the information was digitized into an excel spreadsheet. The quantified data for each question
was graphically represented with a detailed explanation of the findings using a qualitative
approach. The researched employed SPSS (System Package for Social Science) version 20
for data interpretation. As mentioned above, a total of 40 questionnaires were distributed and
33 surveys were completed, displaying a response rate of 82.5%. The researcher has therefore
taken the 33 completed surveys as a 100% of the total sample with which the information was
analyzed.
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3.9 Activity Timetable
Gantt Chart
Activity Oct-12 Nov-12 Jan-13 Feb-13 Mar-13
Literature Review Final 31st
Research Proposal Final 30th
Questionnaire build 15th
Questionnaire pilot test 20th
Survey Schedule 5th
Data collection 20th
Data refinement 25th
Data digitization 25th
Data representation 27th
Data analysis 5th
Conclusion 8th
The Gantt chart displayed above is an illustration of the research project schedule; it projects
the time frame to complete each activity for the final dissertation. The time frame allocated
above for each activity is taking into consideration that the research proposal is approved by
the respective faculty. A change in time frame to obtain approvals for the Research Proposal
will alternately change the time frame for the other activities (Fisher, 2004:58).
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3.10 Questionnaire for Retailers
E-commerce Questionnaire- The Retailer's perspective
Date:____________
Name of contact person:__________________________________
Contact No:____________________________________________
Contact email ID:________________________________________
Section A: Company Profile
The researcher has used this section to carry out company profiling and to identify key
information about the company that participated in the study.
1. Name of Company:_______________________________________________
2. Length of Business:____________
3. Business Category:_______________________________________________
(for e.g. Jewellery, electronics, fashion, Business services/consultancy)
4. Products and Services
offered:_____________________________________________ (for
e.g. Diamond, Gold, Silver etc )
5. Please specify your target customers:
Consumers
Business
Both
6. Please specify your location details:___________________________________
Section B: e-commerce
The researcher has used the following type of questions for the questionnaire: Dichotomous,
Multiple choice, Likert scale and Importance scale. This section uncovers the aims of the
study.
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Q1. Does your company have a website?
Yes
No
Q2. Is your website equipped with an e-commerce solution?
Yes
No
Not applicable
Q3.In your opinion how important is it to sell the products/services of your company online?
Not important
Somewhat important
Important
Very Important
Q4. Is your company selling or has your company sold products/services on any other e-
commerce website? (for e.g. Cobone, Sukar, Groupon, etc)
Yes
No
Please note: If "Yes" is selected please specify the
website:____________________________
Q5. Does your company have an IT team (internal or external) that can build and maintain an
e-commerce website?
Yes
No
Q6 In your opinion, how would you rate your confidence with selling products/services
online in the U.A.E?
Not confident
Not sure
Confident
Very confident
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Q7. Do you agree it is expensive to build and maintain an e-commerce website?
Strongly disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
Q8. In your opinion, is e-commerce as a commercial means advantageous over traditional
retail methods?
Strongly disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
Q9. In your view, what do you think the benefits of adopting an e-commerce solution are?
(You can select multiple options for this question)
Increase in sales
Expansion to new markets
Establish a new customer base
Ability to target desired customers with the help of Social Media and Search
Engines
The ability to showcase a wide variety of products and services as there is no
restriction of shelf space
To network with other businesses
Enabling a prompt and convenient sales channel
Others: please specify if any:..............................................................................
Q10. In your view, what do you think the challenges of adopting an e-commerce solution
are? (You can select multiple options for this question)
Infant market
Not enough Government regulations to control the online market
Customer preference of offline shopping over online shopping due to credit
card frauds
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Customer preference of offline shopping over online shopping resulting from
need to physically examine the product
High initial capital requirement for setup
Marketing cost involved in promoting and maintaining brand online
Others: please specify if any:..............................................................................
Q11. In your view, which of the following business categories suit an e-commerce
application? (You can select multiple options for this question)
Electronics
Banking
Airline tickets
Fashion
Jewellery
Cosmetics
Food
Events/Concert tickets
Others: Please specify if any:...........................................................................
Q12. In your opinion what are the important elements that need to be considered before
developing an e-commerce website? (You can select multiple options for this question)
Cost
Expertise in the field
Market of operation
Customers
Nature of business
Return On Investment
Q13. Do you think the application of e-commerce amongst consumers has increased over the
years in the U.A.E?
Yes
No
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Q14. Do you agree that e-commerce can provide an alternative marketing channel for
businesses to sell their products and services online, therefore eliminating the middleman of
trade?
Strongly disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
Q15. In your opinion, how would you rate the future of e-commerce in the U.A.E.?
No future scope in the U.A.E.
Possible failure
Neutral
Good
Very good
Q16.What measures do you recommend in order to promote e-commerce in the U.A.E.
Develop e-security initiatives
Government support for retailers
Increase e-commerce awareness amongst consumers
Others: Please specify is
any:..................................................................................
Q17. According to you, can e-commerce stimulate your business/service on the Internet
rather than in a traditional shop? If so, Please specify the reasons:
…………………………………………………………………………………………………
……………………………………………………………..........................................................
.............................................................................................................................
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Chapter 4 - Research findings and data analysis
4.0 Introduction
This chapter focuses on concluding the readiness of retailers to utilize e-commerce in their
business and to identify the key advantages and disadvantages of e-commerce in the U.A.E.
The data displayed in this chapter has been gathered through the primary research of this
study. The researcher has utilized SPSS version 20 to interpret the information, as mentioned
previously in chapter 3. A total of 33 completed surveys were received. In order to avoid any
missing fields, the data from the survey was first reviewed. It was then digitized on SPSS to
draw up tables and charts that explain the findings of the survey in detail.
The questionnaire was split in two sections. Section A of the questionnaire primarily focused
on the profile of the retailers that were surveyed. This section requested the following
information from the companies; the Length of businesses, the category, the products and
services offered and the target audience. A consolidated list of the mentioned information is
readily available for the reader in the Appendix.
The main purpose of Section A was to establish the operations of different retailers that
participated in the survey. From the length of business we gauge how long the business has
been in operation. This is also an indication of sustainability, with and without the application
of e-commerce. An average of over 10 years was recorded amongst the retailers involved in
the survey. This section also requested for the retail categories, products and services offered.
This was asked in order to gauge the different types of business categories and their notion
about selling their product via e-commerce, which is revealed in the analysis of Question 3,
Section B. The information also enables the reader to identify the different business
categories that consider e-commerce an important channel to sell their products and services.
Section A also requested retailers of their target segment. 22 retailers out of 33 retailers
catered to consumers and businesses, 5 retailers catered only to businesses and 6 catered only
to consumers. The importance to identify the target segment is because some retailers may
not be willing to utilize e-commerce as a channel to sell, as their target audience may not be
available online. Section B of the questionnaire represents the core findings of this study.
The results of the survey are revealed in this chapter.
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4.1 Section B
Q1. Does your company have a website?
The first question in this section serves as an introductory question to retailers, which
develops the foundation for the upcoming questions on e-commerce. This question focuses
on identifying the total number of retailers that possess and do not possess a website for their
company. The participants were provided with two options, varying between “Yes or No”.
The responses are listed out below.
Website
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Yes 26 78.8 78.8 78.8
No 7 21.2 21.2 100.0
Total 33 100.0 100.0
Table 2: Retailers that possess and do not possess a website
Graph 1: Representation of retailers that possess and do not possess a website
A staggering 78.8% of the participants in the survey own a website. This represents 26 out of
33 respondents that own a website and only 7 who do not. The data also suggests that an
online presence is therefore perceived as important by most of the companies in the survey.
Many consumers and businesses today visit the Internet for information. In Mueller's opinion,
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there is a high probability that consumers or businesses that are unable to find information
about a particular company on the Internet, may not consider any potential trade with said
entity in the future (Mueller, 2012). The benefits of owning a website are numerous,
however, it is valid to highlight some of the few key points.
Retailers may have a brick-and-mortar store, however, having a website is essential in today's
world as many businesses and consumers are on the lookout for products and services using
search engines (Google, Yahoo, etc.) and Social Media channels (Facebook, Twitter,
YouTube, etc). A website performs the function of a "Power Station", which empowers
various channels like Social Media and Search engines. Owning only Social Media properties
is insufficient, as consumers and businesses are continuously on the lookout for maximum
information, which cannot reside on Social Media alone. Moreover, in order to be traceable
on powerful search engines, a website with optimized content is highly recommended. This
helps in ranking, which thereby produces the search results on the first page on entering
search queries (Mueller, 2012).
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Q2. Is your website equipped with an e-commerce solution?
This question directly investigates the application of e-commerce among the participants of
the survey. The respondents were provided with three options to select from – “Yes, No and
Not applicable”. The responses are recorded below.
e-commerce on the website
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Yes 9 27.3 27.3 27.3
No 15 45.5 45.5 72.7
Not Applicable 9 27.3 27.3 100.0
Total 33 100.0 100.0
Table 3: E-commerce application amongst survey participants
Graph 2: Symbolizes the application of e-commerce amongst the retailers in the survey
The survey recorded a top 45.5% in favor of "No" to e-commerce application, 27.3 %
confirmed that e-commerce is applied and 27.3% confirmed that e-commerce was not
applicable. 9 out of 33 retailers in the study adopt e-commerce as a channel to sell their
products and services. These retailers consist of businesses that own a brick-and-mortar store
and those that only operate an e-commerce website. This question plays an important part of
the study, as we are able to gauge the penetration of e-commerce currently in the U.A.E.
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9 out of 33 retailers also responded "Not Applicable" to this question. These respondents are
a combination of retailers that do not have a website and those who believe e-commerce is
not vital for their business operations. Question 3 will identify the importance of e-commerce
application to the business from a sale's perspective.
Taking into consideration a majority of 15 respondents have replied to this question as "No",
it is clear that the penetration of e-commerce amongst retailers in the U.A.E. is low.
However, this also suggests that the majority of the businesses do not have a tunnel view
approach to this channel as they could have selected "Not Applicable". What must be
considered at this point is that with the right guidance and an increased awareness of e-
commerce, the penetration could rise.
E-commerce penetration rate calculation: The below figures are purely hypothetical, which is
based on the findings of the survey. This does not represent an accurate rate but a mere
projection. The calculation helps us understand the penetration of e-commerce among every
1,000 retailers in U.A.E.
Retailers’ population in the U.A.E. Total Number of e-commerce websites
33 9
1,000 ?
Equation = 1000*9/33 = 273
The above penetration rate therefore informs us that for every 1,000 retailers, approximately
273 retailers adopt e-commerce.
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Q3. In your opinion, how important is it to sell the products/services of your company
online?
In this question we are able to directly identify the importance of e-commerce application to
the sales of products and services offered by the retailer. The participants were provided with
four options to select from. This represented the perceived importance ranging from “Not
Important to Very Important”. Below are the results for this question.
Importance of selling online
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Not
important 7 21.2 21.2 21.2
Somewhat
important 6 18.2 18.2 39.4
Important 7 21.2 21.2 60.6
Very
important 13 39.4 39.4 100.0
Total 33 100.0 100.0
Table 4: Importance of selling products and services online
Graph 3: Represents the importance of selling products and services online
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As per the above findings, it is evident that retailers do perceive e-commerce as an important
channel to sell their products and services. 39.4% of the retailers’ sample has announced e-
commerce as "Very Important", 21.2% responded as Important, 18.2% responded as
"Somewhat Important" and the rest of the 21.2% responded as "Not Important". An
outstanding 26 participants out of 33 see the importance of e-commerce in the region.
However, what must also be noticed here is that 7 out of 33 retailers do not find the
importance of conducting e-commerce.
The results of Question 2 displayed that 9 retailers applied e-commerce in their business
operations. However, as per Question 3, we have noticed that 26 retailers find it somewhat,
very important to sell online. This suggests that in a sample of 33 retailers, approximately 17
do not apply e-commerce, and they therefore are potential businesses to employ this channel
in the near future. It also reflects the readiness of retailers in the U.A.E. to adopt e-
commerce. What must be identified are the reasons these companies have not adopted e-
commerce, which will be revealed shortly in this chapter.
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Q4. Is your company selling or has your company sold products/services on any other e-
commerce website? (For e.g. Cobone, Sukar, Groupon, etc.)
The researcher has incorporated this question in the questionnaire to identify if retailers
utilized other e-commerce websites to sell their products and services. There are many
websites that offer businesses the platform to sell their products and services online. Some of
these are ‘www.cobone.com, www.sukar.com, etc’. The participants were provided with two
options to select from, varying between “Yes and No”. The results are listed out below.
Selling on other e-commerce websites
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Yes 12 36.4 36.4 36.4
No 21 63.6 63.6 100.0
Total 33 100.0 100.0
Table 5: Retailers selling their products and services on other e-commerce websites
Graph 4: Represents retailers that sell products and services on other e-commerce
websites
The results of this question have revealed that 63.6% of the retailers sample has not
participated in selling the products and services of their company on any other e-commerce
website. Only 36.4% of the sample has taken part in selling on third party websites. Selling
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on one's own e-commerce website may not be sufficient at times. Some retailers may utilize
other e-commerce websites to sell their products and services to improve brand awareness
and to increase sales. In some cases retailers may not develop their own e-commerce website
and will only bank on third party websites available online to sell their products and services
and to improve brand awareness.
Taking into consideration the categories offered by the companies in the survey were mainly
retail in nature, the response of "Yes" should obviously be higher in this question. However,
what must be noted are the concerns, which are linked to third party website sales. Some of
the concerns in the view of the researcher are as follows:
Retailers have to pay third party websites a commission for every sale, which may not
be favorable
Payment terms may be beyond expected timelines
The consumer interacts with the third party and not the retailers, therefore reducing
the opportunity to cross sell other products
Retailers will have to stock units for the third party website and wait until the order is
placed to dispatch the same. This therefore increases warehousing cost and in case
any of the stocked units remain unsold, this too will increase the cost to the retailers,
as the price may vary.
Considering the above issues, a majority of 21 retailers in the sample have opted "No" to
sales on other websites. This however could also be perceived as lost opportunity of sales and
improvement in brand awareness.
A hypothetical example has been illustrated below to identify the lost opportunity of sales
and brand awareness.
Channel of Sale -
Company A
Quantity sold of X Price of X (AED) Awareness Created
(Consumer Views)
Brick and Mortar
store
150 25 200
Own e-commerce
website
40 20 500
Third party e-
commerce website
75 20 1,000
Table 6: Representation of lost sales and brand awareness opportunity
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Company A sells approximately 150 units of product X at their physical retail outlet for the
price of AED 25. The same company also sells its product X on its own e-commerce website
at a subsidized price to attract customers. The company also adopts another e-commerce
website which is popular online to sell its product X.
The opportunity cost for not selling on third party websites is as follows:
Sales = Qty 75* AED 20 = AED 1,500
Brand awareness = 1,000 consumers.
In a nutshell, the retailer has lost sales of AED 1,500 and the visibility to 1,000 unique
consumers present online if the retailer opted not to participate in third party website sale.
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Q5. Does your company have an IT team (internal or external) that can build and
maintain an e-commerce website?
To build and maintain an e-commerce website, it is important for a retailer to possess an IT
team who can manage the daily requirements of the business. This question has been
implemented to identify the total number of retailers who have an IT team. The options
available to the participant ranged between “Yes and No”. The answers are listed below.
Build and maintain e-commerce website
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Yes 20 60.6 60.6 60.6
No 13 39.4 39.4 100.0
Total 33 100.0 100.0
Table 7: Retailers that have an IT team to build and maintain an e-commerce website
Graph 5: Signifies retailers that have an IT team to build and maintain an e-commerce
website
The majority of the retailers have responded to this question with a "Yes". Results show
60.6% of the sample is geared to build and maintain an e-commerce website. In order to
apply e-commerce to the business practice, it is very important to have expertise in the field.
Without the skills and knowledge one may spend a lot of time and money in building only a
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basic e-commerce website. It is vital to understand the technologies that are available in the
market to build the website, the functionalities available with these technologies, the cost and
the time required to build an e-commerce platform.
The results for this question also suggest that 20 out of 33 retailers are in a position to launch
an e-commerce platform if the requirement arises. 13 out of 33 retailers which represents
39.4% of the sample population do not have an IT team to build an e-commerce website. This
however is not an issue today as there are many consultants in the market who are capable of
providing business with e-solutions to build websites. This could also result in a cheaper and
quicker solution to empowering the business with e-commerce.
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Q6 In your opinion, how would you rate your confidence with selling products/services
online in the U.A.E.?
This question is set out for participants to project their confidence levels in selling products
and services online in the U.A.E. It also builds the foundation for retailers that are
considering applying e-commerce. Trust is very important before a company can establish a
sales/promotion channel, be it a brick-and-mortar store or an online store. To identify the
participant’s precise opinion on the matter, four options were made available to them to
choose from. These ranged from “Not confident to Very confident”. The answers are listed
out below.
Confidence of selling online in the U.A.E
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Not confident 3 9.1 9.1 9.1
Not Sure 8 24.2 24.2 33.3
Confident 16 48.5 48.5 81.8
Very confident 6 18.2 18.2 100.0
Total 33 100.0 100.0
Table 8: Retailer's confidence of selling products and services online in the U.A.E.
Graph 6: Representing the retailer's confidence levels in selling products and services
online in the U.A.E.
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The above results depict that 9.1% of the sample population are not confident, 24.2% are not
sure about online sales, 48.5% are confident and 18.2% are very confident with selling online
in the U.A.E. Out of the 33 participants, 22 project confidence on selling online. This
represents a total of 66.7% of the sample that are confident.
Confidence/trust is a key element in the decision making process before selecting a channel
for sales/promotion. This view, obtained in the above question, also reflects the readiness of
retailer's to apply e-commerce to their business operations. 3 out of 33 participants are not
confident about selling online in the U.A.E. There could be multiple reasons for this.
However, in the opinion of the researcher, the below are a few:
Trust issues with payments
Little or no experience with previous online sales
Threat of getting hacked, therefore loosing critical customer information to an
unlawful source
A total of 8 participants out of 33 are not sure of selling online. Some of their reasons for this
opinion are as follows:
Never experienced online selling before
Do not have the team/expertise required to carry out online sales
These retailers do not find it important to sell their products and services online in the
U.A.E.
As mentioned in Chapter 2, major retailers such as Carrefour and Apple Inc, have launched
their very own e-commerce website in the U.A.E. Carrefour is a hypermarket selling
everything from electronics to groceries. They launched their website in 2010 and primarily
focus on selling electronics. Though you may not find all the categories, Carrefour has
definitely seized the moment of the rising e-commerce market. This not only displays the
confidence that major retailers have with selling online in the U.A.E., but they are also
building the confidence of the consumers with statements such as "Buy Online With
Confidence", which is clearly visible on the home page of the website. Other major retailers
to follow the trend are Sharaf DG, Emax, etc.
(Carrefour - www.ic4uae.com, Sharaf DG – www.sharafdg.com, Emax –
www.emaxme.com)
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Q7. Do you agree it is expensive to build and maintain an e-commerce website?
This question obtains the retailer's perceived notion that is linked to the build and
maintenance of an e-commerce website. The researcher has directly identified why some of
the retailers have not adopted online selling with the help of this question. The participants
have 5 options to select from which ranges from “Strongly disagree to Strongly Agree”. The
results of the findings are as follows.
Expensive to build and maintain an e-commerce website
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Strongly disagree 1 3.0 3.0 3.0
Disagree 10 30.3 30.3 33.3
Neither agree nor disagree 6 18.2 18.2 51.5
Agree 13 39.4 39.4 90.9
Strongly agree 3 9.1 9.1 100.0
Total 33 100.0 100.0
Table 9: Retailer's perceived notion on the expense to build and maintain an e-
commerce website
Graph 7: Signifying the retailer's perceived notion on the expense to build and maintain
an e-commerce website.
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The results of this question reveal the retailer's perceived notion in regard to the expense of
building and maintaining an e-commerce website. 3% of the sample strongly disagree, 30.3%
disagree, 18.2 % neither agree nor disagree, 39.4% agree and 9.1% strongly agree that
building and maintaining an e-commerce website is expensive. A total of 16 retailers out of
33 agree with the statement, which represents 48.5% of the sample population. What also
needs to be noted here is that 18.2% do not agree or disagree, which could be due to the
uncertainty of the cost involved in development and maintenance.
The high percentage that agrees with this statement is one of the reasons, which has impacted
the penetration of e-commerce noticed in Question 2. As per Muller, many companies have
an opportunity cost when they use their marketing budgets to promote themselves via
"newspaper, magazine, TV commercials or radio". What one does not bear in mind is that
these mediums will reach out to many but only for a limited period. The below is an example
which explains the opportunity cost involved with selecting traditional marketing techniques
versus an e-commerce website. The figures listed out below are hypothetical representations.
TV Ad - AED 60,000
Radio Ad - AED 20,000
Newspaper Ad (Quarter Page) - AED 15,000
Magazine Ad - AED 10,000
Total spent - AED 105,000
These ads will be placed for 2 to 3 days across channels. Please note, the amounts mentioned
in the above scenario are the bare minimum. This would drive approximately 1,000 units of
sale of product X.
Cost to build a simple website - AED 40,000
Gateway charges - AED 73,600
Total Cost - AED 113,600
The e-commerce website is permanent as long as it is funded year on year. This will not drive
1,000 sales directly, however, it will gradually build up and once it has fully developed this
will become a strong sales and promotional channel for the business. The opportunity cost in
this case is that the business is losing out on long-term gains, a permanent visibility that could
be achieved online through a 24/7 operational outlet to consumers and an international
platform.
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Q8. In your opinion, is e-commerce as a commercial means advantageous over
traditional retail methods?
In this question, the researcher has directly questioned the participants to identify if they find
e-commerce advantageous over traditional retail stores. Respondents were provided with 5
options to choose from ranging between “Strongly Disagree to Strongly Agree”. Results of
the findings are recorded below.
e-commerce is advantageous over traditional retail
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Disagree 6 18.2 18.2 18.2
Neither agree nor disagree 16 48.5 48.5 66.7
Agree 10 30.3 30.3 97.0
Strongly agree 1 3.0 3.0 100.0
Total 33 100.0 100.0
Table 10:Retailer's that think e-commerce is advantageous over traditional retail outlets
Graph 8: Representing retailers that think e-commerce is advantageous over traditional
retail outlets
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In order to apply e-commerce in business, it is vital to know if retailers believe selling online
is advantageous over selling via retail outlets. The advantages of adopting e-commerce from
a retailer's perspective will be revealed shortly in this chapter.
18.2% of the sample disagrees, 48.5% neither disagree nor agree, 30.3% agree and 3%
strongly agree with the question posed by the researcher. None of the participants from the
sample have strongly disagreed with the question. Only 6 out of 33 retailers have disagreed
with the statement. 16 have a neutral opinion and a total of 11 agree with e-commerce having
a relative advantage over traditional retail methods.
A majority of 16 retailers have a neutral opinion, which also suggests the low e-commerce
penetration amongst the sample. If retailers do not believe e-commerce is advantageous over
traditional retail methods, there is a high probability that they would not invest time or money
in developing or utilizing e-commerce as a channel to sell and promote their products and
services.
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Q9. In your view, what do you think the benefits of adopting an e-commerce solution
are?
This question directly involves the participants to selecting the advantages that are linked to
adopting an e-commerce solution in the U.A.E. It is important to understand the different
advantages perceived by different retailers in the study. The researcher consolidated a list of
7 advantages of applying e-commerce to the business, with the help of the literature gathered
in Chapter 2. The question also provided the participants with the option to list any more
advantages they saw fit.
Advantages of adopting e-commerce
Frequency Percent Valid
Percent Cumulative
Percent
Valid Increase sales 25 15.6 15.6 15.6
New markets 27 16.9 16.9 32.5
New customer base 26 16.3 16.3 48.8
Target desired customers 20 12.5 12.5 61.3
Wide variety 20 12.5 12.5 73.8
Network 18 11.3 11.3 85.0
Convenient channel 20 12.5 12.5 97.5
Others 4 2.5 2.5 100.0
Total 160 100.0 100.0
Table 11:Advantages of adopting e-commerce in U.A.E, the retailer's perspective
Graph 9: Representing retailer's responses to the advantages of adopting e-commerce
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This question targets one of the primary aims of the study. A set of advantages was provided
to retailers in the survey. They were given the option of multiple-choice in this question. The
researcher refrained from incorporating an "All of the above" option in this question, as it
would not provide a precise response on the retailer's perception of advantages. The
following are the results of this question:
1. "Increase in sales" took up 15.6% of the advantage, which was selected by 25
respondents of 33.
2. "Expansion to new markets" accounted for 16.9% of the advantage selected by 27 out
of 33 participants.
3. "Establish a new customer base" recorded 16.3% of the advantage selected by 26 out
of 33 participants.
4. "Ability to target desired customers with the help of Social Media and Search
Engines" resulted in 12.5% of the advantage selected by 20 out of 33 participants.
5. "The ability to showcase a wide variety of products and services as there is no
restriction of shelf space" accounted for 12.5% of the advantage selected by 20 out of
33 participants.
6. "To network with other businesses" took up 11.3% of the advantage selected by 18
out of 33 participants.
7. "Enabling a prompt and convenient sales channel" accounted for 12.5% of the
advantage selected by 20 out of 33 participants.
8. "Other advantages" represented 2.5% of the advantage selected by 4 out of 33
participants.
Expansion to new markets and establishing a new customer base is seen as the two most
important advantages perceived by retailers in the U.A.E. This also becomes a key business
decision element before a retailer adopts e-commerce. What is also noticed here is that the
percentage of "Increase in sales" is lower than expansion to new markets and acquiring new
customer base.
We can therefore assume that retailers in the U.A.E. may adopt e-commerce as a promotional
channel to build the brand image on an international scale and to increase the customer
database with sales being the third objective.
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Other advantages highlighted by retailers in the survey are as follows:
1. One of the most economic ways to advertise and for visibility
2. Payments are made instantly meaning no cash handling and no daily accounting
3. Low cost to maintain
4. Having its own store would mean avoiding the “middle men”
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Q10. In your view, what do you think the challenges of adopting an e-commerce
solution?
In this question, the participants are requested to select the disadvantages that are linked to
adopting an e-commerce solution in the U.A.E. The researcher consolidated a list of 6
disadvantages of applying e-commerce to the business, with the help of the literature gathered
in Chapter 2. The question also provided the participants with the option to list any more
disadvantages they saw fit.
Disadvantages of adopting e-commerce
Frequency Percent Valid
Percent Cumulative
Percent
Valid Infant market 17 19.5 19.5 19.5
Government regulation 11 12.6 12.6 32.2
Credit Card fraud 15 17.2 17.2 49.4
Customer preference 19 21.8 21.8 71.3
Capital requirement 10 11.5 11.5 82.8
Marketing cost 13 14.9 14.9 97.7
Others 2 2.3 2.3 100.0
Total 87 100.0 100.0
Table 12: Disadvantages of adopting e-commerce in U.A.E, the retailer's perspective
Graph 10: Representing retailer's responses to the disadvantages of adopting e-
commerce
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This question too, targets one of the primary aims of the study. A set of disadvantages was
provided to retailers in the survey. They were given the option for multiple-choice in this
question. The researcher refrained from incorporating an "All of the above" option in this
question as it would not provide precise response on the retailer's perception of
disadvantages. The following are the results of this question:
1. "Infant market" accounted for 19.5% of the disadvantage selected by 17 out of 33
respondents.
2. "Not enough Government regulations to control the online market" took up 12.6% of
the disadvantage selected by 11 out of 33 respondents.
3. "Customer preference of offline shopping over online shopping due to credit card
frauds" represented 17.2% of the disadvantage selected by 15 out of 33 respondents.
4. "Customer preference of offline shopping over online shopping resulting from need to
physically examine the product" accounted for 21.8% of the disadvantage selected by
19 out of 33 respondents.
5. "High initial capital requirement for setup" signified 11.5% of the disadvantage
selected by 10 out of 33 retailers.
6. "Marketing cost involved in promoting and maintaining brand online" symbolized
14.9% of the disadvantage selected by 13 out of 33 respondents.
7. "Other disadvantages" accounted for 2.3% of the disadvantage selected by 2 out of 33
respondents.
Three major disadvantages of e-commerce highlighted in the above results are:
1. Infant market
2. Customer preference of using traditional retail outlets to make purchase over online
stores due to credit card fraud
3. The need to physically examine the product
Retailer's in the sample perceived the U.A.E as an infant market, when it comes to e-
commerce. As mentioned in Question 6, many major retailers are seizing the opportunity to
get onto this platform as it develops in the region. There are various factors, which impact the
growth of e-commerce in the U.A.E. such as technology, consumer demographics, public
awareness, etc. However, with improved Internet speed, improved e-security measures, faster
computers, powerful mobile devices and an increased youth audience, the e-commerce
market will definitely transform from infancy to a developing status in the near future.
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Currently, consumers in the U.A.E. are still not confident with making purchases on line with
the use of their credit cards, as they fear fraudulent transactions. Moreover, consumers in the
U.A.E. also wish to physically examine the product before a purchase is made. Both these
elements are linked to the consumers' confidence and trust. These issues are partly
responsible for the low e-commerce penetration in the U.A.E.
Other disadvantages highlighted by the retailers are as follows:
1. "Clients need assistance and guidance"
2. "Inefficiency of postal service"
3. "Lack of consumer education, UAE consumer protection laws and GCC payment
gateways"
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Q11. In your view, which of the following business categories suit an e-commerce
application?
In this questions retailers of the survey were questioned about the best business categories
that can adopt an e-commerce solution. The question had categories ranging from electronics,
banking and airline tickets to food, etc. Respondents were given the option to incorporate
multiple selections and if they thought of any other business category fit to adopt e-
commerce, an option was also made available. The results for this question are as follows:
Best business categories for e-commerce
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Electronics 24 15.4 15.4 15.4
Banking 26 16.7 16.7 32.1
Airline tickets 29 18.6 18.6 50.6
Fashion 14 9.0 9.0 59.6
Jewellery 14 9.0 9.0 68.6
Cosmetics 14 9.0 9.0 77.6
Food 8 5.1 5.1 82.7
Events/Concert tickets 24 15.4 15.4 98.1
Other 3 1.9 1.9 100.0
Total 156 100.0 100.0
Table 13: Best business categories that can adopt e-commerce
Graph 11: Representing the best business categories that can adopt e-commerce in the
U.A.E. The retailer's perspective
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The researcher discovers the best business categories that will sell online with the help of this
question, which will aid retailers who are ready to adopt e-commerce. This is taking into
consideration the retailer's perspective. The researcher noticed 4 main categories, which were
voted above all in this section.
1. "Electronics" accounted for 15.4% of the best business categories. In count 24 out of
33 participants
2. "Banking" signified 16.7% of the best business categories. In count 26 out of 33
participants.
3. "Airline tickets" took up 18.6% of the best business categories. In count 29 out of 33
participants. This also represented majority votes.
4. "Fashion" represented 9% of the best business categories. In count 14 out of 33
participants.
5. "Jewellery" too represented 9% of the best business categories. In count 14 out of 33
participants.
6. "Cosmetics" also accounted for 9% of the best business categories. In count 14 out of
33 participants.
7. "Food" only took up 5.1% of the best business categories. In count 8 out of 33
participants.
8. "Events/Concert Tickets" accounted for 15.4% of the best business categories. In
count 24 out of 33 participants.
9. "Other categories" stood for 1.9%. In count 3 out of 33 participants.
Airline tickets, Banking, Electronics and Events/Concert Tickets topped the categories list for
adoption of e-commerce. This is only the retailers’ perspective. However, what needs to be
noted at is that retailers too are consumers of other businesses and to them 4 of these
categories are great e-commerce businesses. This also provides retailers an indication of
products/services that will sell online in the U.A.E. Retailers that are planning the
development of an e-commerce website will definitely find this information worthwhile.
Other business categories mentioned by the retailers:
1. "Hotels, Government, utility bills, literally all trade and services activity"
2. "Technical products"
3. "Books, music, consumer/business software applications"
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Q12. In your opinion, what are the important elements that need to be considered before
developing an e-commerce website?
This question focuses on the key elements that have to be considered before any retailer plans
to develop an e-commerce website. To develop the response for this question, the researcher
provided the participants with options to select from. The participants could select multiple
options for this question. The results of the findings are mentioned below.
Elements to consider before developing an e-commerce website
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Cost 25 19.2 19.2 19.2
Expertise 20 15.4 15.4 34.6
Market 20 15.4 15.4 50.0
Customers 19 14.6 14.6 64.6
Nature of business 23 17.7 17.7 82.3
Return on investment 23 17.7 17.7 100.0
Total 130 100.0 100.0
Table 14:Elements to consider before developing an e-commerce website
Graph 12: Symbolizing the main elements to consider before developing an e-commerce
website.
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The retailer’s that participated in the study considered all the elements incorporated, as
options to select from, important. Cost was voted by most of the participants as one of the
factors that needs to be considered before developing an e-commerce website. Cost
represented 19.2% with 25 participants in favor. This was followed by Return on Investment
and Nature of Business with an equal percentage of 17.7% selected by 23 out of 33
participants. Expertise in Field and Market of operation also shared an equal percentage of
15.4% selected by 20 out of 33 participants. Customers stood last with 14.6% selected by 19
out of 33 participants.
As a retailer, it is only obvious that cost is the most important factor to be considered before
developing an e-commerce platform. Cost is also tied with an opportunity cost i.e. if the
retailer wishes to develop an e-commerce website, they also need to consider the next best
alternatives where the money could be used to boost sales or promote the brand. Once all the
options are visible, the retailer will have to weigh the effectiveness of each initiative before
carrying it forward. This also reflects the readiness of retailers adopting e-commerce.
At this point the retailer will also weigh factors such as ‘return on investment and nature of
business’ to identify if the business model is suitable for e-commerce, the expertise/skill
available in the business to manage and maintain the project, the market where e-commerce
will be hosted. These in turn will help to identify the pricing, competition, strategy of entry
and lastly the customer/ audience the retailers wish to sell their products and services to.
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Q13. Do you think the application of e-commerce amongst consumers has increased over the
years in the U.A.E?
The researcher has incorporated this question in the survey to identify the retailer's
perspective of the consumer behavior over the recent years in relation to e-commerce. The
participants were provided with two option between “Yes and No” to select from. The
following are the results of this question.
Increase usage of e-commerce amongst consumers
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Yes 31 93.9 93.9 93.9
No 2 6.1 6.1 100.0
Total 33 100.0 100.0
Table 15: Increase usage of e-commerce amongst consumers of U.A.E.
Graph 13: Representation of increase in e-commerce usage amongst consumers of
U.A.E
Consumer behavior plays a very important role in the decision making process. If consumers
are not online-friendly it is not recommended to establish an e-commerce website. Consumer
behavior for e-commerce can develop a study by itself, however, in this research the surveyor
has taken the views of various retailers to identify the growth of the consumer market online.
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An outstanding 93.9% recorded yes to the increase in consumer usage of e-commerce in the
U.A.E. from a retailer's perspective. This represents 31 out of 33 retailers in the study. Only
6.1% do not agree with the increase in consumers adopting e-commerce over the years.
Many large retailers are establishing e-commerce portals to enjoy the benefit of this growing
market in the U.A.E. as mentioned in Question 6. These retailers are using various channels
online to reach their desired target with the help of Social Media and Search engines. In
brick-and-mortar stores, consumers need to physically visit the store to find a desired
product. However, with the use of a search engine, this process has been simplified. Please
view the example below.
Search Keyword incorporated on Google - "electronics in uae"
Figure 4: Google search performed
On performing the search for "electronics in uae", three of the major electronics retailers are
made available in less than 10 seconds. The shopper need not move from shop to shop
anymore, as he/she can easily find what they are looking. This not only saves time but also
shopper's cost of moving from one place to another.
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Q14. Do you agree that e-commerce can provide an alternative marketing channel for
businesses to sell their products and services online, therefore eliminating the
middleman of trade?
With this question the researcher tried to identify if retailers can eliminate the requirement of
a middleman with the application of e-commerce. Participants were offered 5 options to
select from, ranging between “Strongly Disagree to Strongly Agree”. Results of the findings
are recorded below.
E-commerce eliminates middleman of trade
Frequency Percent Valid
Percent Cumulative
Percent
Valid Disagree 2 6.1 6.1 6.1
Neither agree nor disagree 8 24.2 24.2 30.3
Agree 16 48.5 48.5 78.8
Strongly agree 7 21.2 21.2 100.0
Total 33 100.0 100.0
Table 16: E-commerce eliminating the middleman of trade
Graph 14: Representation of e-commerce eliminating the middleman of trade
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Some retailers use a middleman to promote/sell their products and services while others use
e-commerce websites as a middleman to promote and sell their products online. In such
cases, due to the supply chain, the retailer's profitability is impacted, as margins need to be
divided with the middleman. Not a single participant has strongly disagreed with the
statement, 6.1% of the sample has disagreed, 24.2% has neither agreed nor disagreed, 48.5%
agreed and 21.2% has strongly agreed to e-commerce eliminating the middle man of trade.
A total of 23 out of 33 participants agree with the statement which suggested that e-
commerce does eliminate the middleman of trade as the business can directly interact with
the shopper online and increase profitability. 8 out of 33 retailers neither agreed nor disagreed
with the statement and therefore we can assume there is no middleman of trade involved in
their business transactions
.
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Q15. In your opinion, how would you rate the future of e-commerce in the U.A.E.?
In this question the researcher has directly posed the question to the participants to identify
the current growth of e-commerce in the U.A.E. Retailers had five options to choose from,
ranging from “No future scope to Very good” future in the U.A.E. The results of the findings
are as below:
The future of e-commerce in U.A.E
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid Neutral 8 24.2 24.2 24.2
Good 15 45.5 45.5 69.7
Very Good 10 30.3 30.3 100.0
Total 33 100.0 100.0
Table 17: Future of e-commerce in the U.A.E
Graph 15: Representing the future of e-commerce. The retailer's perspective
The results of this question highlight the confidence retailers have on the growth of e-
commerce. Out of five options two of the options were not selected by any of the retailers.
These options were "No future scope in the U.A.E and Possible failure". This also suggests
that retailers believe that this sector is developing in the U.A.E. 45.5% of the retailers have
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rated the growth as good, 30.3% have rated it as very good and 24.2% of the sample has a
neutral view about the growth.
A total of 25 out of 33 retailers have clearly indicated that e-commerce is growing in the
U.A.E., 8 out of 33 retailers are not sure of its growth. To support the views of the retailers,
the researcher has incorporated some facts as mentioned below. As per Bond, U.A.E has the
highest penetration of Internet shoppers amongst other countries in the Middle East. The e-
commerce market in the U.A.E. was estimated $2 billion in 2010, representing approximately
60% of the GCC e-commerce sales (Bond, 2013).
This not only justifies the growth of e-commerce in the U.A.E. but also sets path for retailers
in the study to adopt e-commerce in the near future to enjoy the benefits of the growing
sector.
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Q16.What measures do you recommend in order to promote e-commerce in the U.A.E?
Question 16 represents the last of the mandatory questions, which were used to find out the
different techniques of promoting e-commerce in the U.A.E. This was a multiple-choice
question and retailers had the option to voice out other ways of promoting e-commerce in the
U.A.E. The results of the findings are as below:
Recommendation to promote e-commerce in U.A.E
Frequency Percent
Valid
Percent
Cumulative
Percent
Valid E-security initiatives 15 26.3 26.3 26.3
Government support 12 21.1 21.1 47.4
Increase awareness 25 43.9 43.9 91.2
Others 5 8.8 8.8 100.0
Total 57 100.0 100.0
Table 18:Recommendation to promote e-commerce in U.A.E.
Graph 16: Representing the recommendations made to promote e-commerce in the
U.A.E.
The researcher has taken the opportunity to obtain recommendations from the retailers on
promoting e-commerce in the U.A.E., which would help tackle some of the key issues that
makes the U.A.E. an infant market as specified by 17 retailers in the study. "Develop e-
security initiatives" accounted for 26.3% of the recommendation to promote e-commerce. 15
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out of 33 retailers have strongly recommended e-security initiatives to boost the confidence
of public to shop online. As mentioned in chapter 2 TRA is taking the necessary steps to
tackles online quality issues with its "TRUSTae" initiative. If shoppers are made confident
that their credit cards will not be compromised online or that the e-retailer is legit, there will
be very little reason for not shopping online.
Government support for the retailers signified 21.1% of the recommendations to promote e-
commerce. 12 out of 33 retailers selected this. In a market where e-commerce is in its infancy
it is only fair to recommend government support. This however has been noticed in a live
example known as "Tejuri.com". Tejuri.com is also "the region's first e-shopping mall" which
is fully supported by the Dubai Economic Department also known as DED. The website
projects the concept of a shopping mall, bringing together major and medium sized retailers
in one place to showcase and sell products. Every retailer promoting and selling on
"Tejuri.com" is certified by DED and are compliant to the "Consumer Right's Code"
(McBride, 2013). When the government participates in supporting e-retailers, retailers as well
as shoppers are confident in conducting trade online.
"Increase e-commerce awareness amongst consumers" displayed a staggering 43.9% of the
recommendations to promote e-commerce. This however is not a single day effort, it is a
behavioral change. It has taken 9 years for Social Media giant "facebook" to connect 1
Billion users across the world (Bullas, 2013). In order to create a behavioral change amongst
consumers it is important to educate them on the benefits of using e-commerce which will be
informed shortly in the recommendations of the thesis.
"Other" options to promote e-commerce was selected by 5 out of 33 retailers.
1. "Strong Promotions, Quick Delivery Services, Excellent Warranty and After Sales
Support to build CONSUMER CONFIDENCE in doing on line purchase"
2. "Supported Media Initiatives"
3. "Make a basic platform available" i.e. to simplify the website rather than making it
complicated.
4. "Ability to customize your required product which is currently available only with a
set of features" i.e. having websites which can customize products based on
customers' requirements.
5. "Constant touch with existing and new customers"
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Q17. According to you, can e-commerce stimulate your business/service on the Internet
rather than in a traditional shop? If so, Please specify the reasons:
Question 17 was the last question in the survey and was not made mandatory by the
researcher. This was incorporated to find out retailers' views on e-commerce when compared
with traditional brick and mortar stores to stimulate business. This was an open-ended
question with no options to select from. The results of the findings are not projected in tables
or graphs for this question. However, below are the opinions of different retailers.
Proton Healthcare Middle East FZE- Home Healthcare Products & Services
"It is an inexpensive way to market and reach out to consumers compared to traditional
advertising methods. Websites can be easily updated and monitored. Tools such as Google
Analytics can be used to track visitors to the website and understand consumer trends,
success and failures. It makes the business visible 24hours/ 7days and helps in
communicating to a wider audience."
Al Tayer Insignia - Fashion & Home
"Not 100% as retailers are known to provide good tangible products and excellent service".
However, e-commerce can help us in targeting the new generation consumer who prefers to
shop with a click of a button".
Nestle Middle East FZE -Dubai - Food
"Our business is a food and we directly deal with the top key accounts within the market.
This market is not yet ready for a e-commerce platform where food is concerned, that’s the
reason why big retailer like Carrefour apply e-commerce for their electronics division and not
their food. Moreover, People within this country still prefer to shop at the store rather than
shop online. They consider it as part of family outing rather than a chore. On the other hand
the e-commerce platform has really developed for the electronics, travel & entertainment
sector. There is huge potential within these categories and can really raise the competitive
platform within this industry"
Epoc Messe Frankfurt GmbH- Exhibitions and Conference Organizers
"Currently e-commerce reflects to a small extent of our business fulfilling some basic
necessities, it would require much more advanced technologies put together for us to provide
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utmost flexibility and simplicity for our end users to operate easily and efficiently. Hopefully,
e-commerce would attain its fullest in the near future when technology becomes simpler,
economical, reliable and secure which would lead us to gain our client's trust and can expect
the paradigm shift."
Richemont- Luxury Brands
"No, the nature of the products in the company is high end exclusive products that need to be
viewed personally as a huge price tag is in involved".
Ramesh Trading- Textile
"No, Because our customers need to physically see the products we offer."
Marhaba Jewellery LLC- Gold and Diamond Jewellery
"The jewellery industry is huge and only key internationally recognized brands can benefit
from e- commerce (Cartier, Chopard, Tiffany and Co, Harry Winston) etc as they have been
present for years, have a huge customer base and marketing budgets. Customers have more
faith in big brands. This makes it difficult for smaller companies to try and gain that
confidence, and the nature of the local population in Dubai has only recently been exposed to
online commerce."
Dubai Gifts - Senergy General Trading LLC- Gifts and home accessories
"No- because my range of items need to be physically examined before purchase. But having
said that my website is important to my business"
Infinite Technologies JLT- Information Technology
"Yes, because our primary target market is outside the U.A.E"
Flydubai-Travel
"Yes, e-commerce can stimulate business online. Being able to conduct online purchases
allows businesses to expand into new markets cost effectively. It also allows small & medium
sized companies to compete against established brands with large brick and mortar
distribution networks".
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Catman Solution- Marketing Consultancy
"Build Awareness and build a stronger brand for the company across the region"
Meed- Media and Publishing
"Yes it can help drive the traffic of visitors to shop or purchase various products and services
my business has to offer, also giving me insight to trends of visitors, on which pages they
spend most time and what contents they are clicking"
3SC Technologies-Consultancy
"At present everyone is busy and spending more time at work and other productive efforts .
it will be always an added advantage if we can provide better and efficient service through e-
commerce, definitely customers will rely on us to save time and get good products with
minimum effort".
Bonavenue General Trading L.L.C- Fashion
"Yes, Stimulating your e-commerce business online has a much greater impact and is
rewarding. As technology is progressing you MUST have an online portal for your business.
And I quote Bill Gates “ if your business is not online, then you have no business”".
Al Zahra Hospital- Medical Services
"It is a cheaper and quicker way to promote the business with less manpower".
Potential Advertising and Publishing- Media
"Traditional shops can reach few customers whereas internet reach is enormous and
economically viable".
TASK FZC- Manufacturing and Retailing doors
"I do think e-commerce can stimulate our business on the internet better than a traditional
shop primarily because a virtual shop on the internet makes our business internationally
accessible whereas a traditional shop would necessarily have to be limited to its physical
locale. Furthermore, e-commerce not only frees our company of physical boundaries by
allowing us global outreach, but it also makes the process of updating and changing our e-
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commerce website instant and as effortless as a few clicks—a veritable logistics dream come
true; when the need arises we simply update our website with new PDF catalogues and
content versus printing new catalogues, manufacturing new samples for display, shipping all
the materials out to various shops all over the world, and coordinating the setup of the new
products at each shop".
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Chapter 5 - Conclusion and recommendation
5.0 Introduction
This section forms the last and final chapter of the thesis. In this chapter the researcher will
consolidate the views obtained in chapter 2 along with the findings of the research to draft a
conclusion to the study. This section also reveals how chapter 4 has served the purpose of the
aims of the study. Valid and valuable recommendations will also be processed for retailers
that wish to setup an e-commerce website in the near future. Scope of further research will
also be detailed in this chapter.
5.1 Research objective The objective of this study was to identify the benefits and challenges of retailers adopting to
e-commerce in the U.A.E. This also linked to identifying the readiness of retailers in the
sample to adopt e-commerce for selling products and services online in the U.A.E. The
objective of the study also required the researcher to analyze global trends in e-commerce
thereby identifying its importance to the economy of the country.
The researcher has listed various advantages and disadvantages within the literature review of
the study, the researcher has also discussed global key players in e-commerce, trends of e-
commerce in countries and regions such as Egypt, Ghana, London and the Middle East,
therefore highlighting its importance to an economy.
On building the foundation of e-commerce in Chapter 2, with opinions and views of various
authors/ reporters, the researcher set out to employ a survey in the form of a questionnaire,
which primarily focused on validating the aims of the study. The survey was conducted
amongst retailers in the U.A.E. that belonged to various categories of business ranging from
food, travel, events, etc. The finding of the questionnaire was analyzed in Chapter 4 of this
study which supported in identifying the key issues and opportunities related to e-commerce
in the U.A.E.
5.2 Problem Statements Some of the key issues highlighted in chapter 1 are as follows:
Shoppers in the U.A.E. prefer utilizing the brick-and-mortar method rather than e-
commerce websites
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There are many websites launching online in the U.A.E. as per Flanagan, with price
wars being a common issues (Flanagan, 2010). Will the government intervene to safe
guard interest of new retailers adopting e-commerce and mainly the shoppers?
Are businesses/retailers in the U.A.E ready to utilize e-commerce to fill the gap of
the potential online market?
5.3 Research Findings The findings of the literature review were obtained using secondary research methods and the
survey conducted utilized primary research methods. The primary research concluded that a
majority of the retailers in the sample were geared to apply e-commerce in the business,
however due to various factors majority of the retailers did not adopt an e-commerce solution
in their day-to-day business activities.
In the survey, the researcher has drawn all the attention towards retailers from different
categories of business in the U.A.E. to provide opinions on the research topic. After
interpreting the raw data from the surveys answered by 33 sample retailers, the results are as
follows:
1. Website - 78.8% of the sampled retailers representing 26/33 owned a company
website, which suggests that, these retailers are one step closer to applying e-
commerce when compared to the remaining 7/33. Before adopting a full time e-
commerce solution it is mandatory to have a website. 7/33 representing 21.2% of the
sample population would have to bear the cost of building a website before utilizing a
fulltime e-commerce solution.
2. E-commerce on website - The survey recorded a low of 27.3% retailers that adopted
a fulltime e-commerce solution on their website which represents 9/33 retailers.
27.3% also responded with "Not applicable" to this section. Retailers have selected
this option because they believe e-commerce is not required for their business
category.
3. Importance of selling online - 39.4% of the sample responded; selling products and
services of the company online is "very important" and 21.2% voted it as "important"
representing a total of 20/33 retailers. Only 21.2% of the sample did not find online
sales of any importance to the business. This indicates that majority of the retailers are
ready to adopt e-commerce as they see the importance of selling online.
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4. Currently selling or ever sold online - 63.6% of the sample representing 21/33
retailers i.e. the majority of the sample has never engaged in selling products and
services on any other e-commerce website. This suggests that retailers are not taking
the advantage of the growing online market or using third party websites to promote
and sell their products and services.
5. IT team to build and maintain an e-commerce website - An outstanding 60.6%
representing 20/33 retailers have the expertise required to construct an e-commerce
website. This also indicated that majority of the retailers are geared for e-commerce in
U.A.E.
6. Confidence with online sales in U.A.E. - 48.5%, 18.2% of the retailers are
respectively confident and very confident with selling products and services online in
the U.A.E. Confidence is a key element which impacts the decision making process of
many businesses in the U.A.E before taking a leap forward into a new business
venture. A total of 22/33 are confident in selling online which also suggests 22-9 ("9"
represents retailers that have selected Yes in Question 2) = 13 i.e. 13/33 retailers that
have selected "No" to e-commerce on the website in question 2 are potential
businesses that can adopt e-commerce in the near future.
7. Expensive to build and maintain an e-commerce website - A total of 11/33
retailers do not agree with the statement, "It is expensive to build and maintain an e-
commerce website". 18.2% have a neutral opinion, as they may not be sure of the cost
involved. However, a majority of 16/33 retailers agree with the statement.
8. E-commerce is advantageous over traditional retail methods - 30.3%, 3%
respectively agree and strongly agree with this statement. Majority of 48.5% have a
neutral opinion, as they are uncertain of the channel when compared to traditional
retail methods.
9. Advantages of e-commerce - In this section the researcher has cleared uncertainty by
providing the participants with options, which represent the advantages of adopting e-
commerce. The top three advantages selected in this section were:
1. "Expansion to new markets" represented 16.9% of the advantages linked to e-
commerce selected by 27/33 retailers
2. "Establish a new customer base" signified 16.3% of the advantages linked to
e-commerce selected by 26/33 retailers
3. "Increase in sale" accounts for 15.6 % of the advantages linked to e-commerce
selected by 25/33 retailers.
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These were the three main advantages revealed from the research in the study, which
also suggests that retailers would adopt e-commerce to benefit from the above three
opportunities.
10. Disadvantages of e-commerce - This section serves one of the objectives of the
study to identify the challenges of e-commerce in U.A.E. The top three disadvantages
highlighted by retailers are as follows :
1. "Customer preference of offline shopping over online shopping resulting from
need to physically examine the product" accounted for 21.8% of the
disadvantages linked to e-commerce selected by 19/33 participants
2. "Infant market" represented 19.5% of the disadvantages linked to e-commerce
selected by 17/33 participants
3. "Customer preference of offline shopping over online shopping due to credit
card frauds" signified 17.2 of the disadvantages linked to e-commerce selected
by 15/33 participants.
These were the three main disadvantages revealed from the research in the study
which also suggests that retailers would not adapt to e-commerce to avoid the above
three benefits.
11. Best business categories for e-commerce - The researcher also surveyed the retailers
to identify the best business categories that would suit the application of e-commerce.
Below are the three top categories in this section.
1. Airline tickets accounted for 18.6% of the best business categories selected by
29/33 participants
2. Banking represented 16.7% of the best business categories selected by 26/33
participants
3. Electronics and Events/Concert tickets had a tie symbolized 15.4% of the best
business categories selected by 24/33 participants.
12. Elements to be considered before adopting e-commerce - If retailers were geared
to develop an e-commerce website it is important to identify the elements that would
be taken into consideration before applying e-commerce. The following elements are
placed in ascending order based on rank.
Cost
Return on investment
Nature of Business
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Market
Expertise
Customers
Cost was ranked the most important factor to be considered before adopting e-
commerce.
13. Increase in e-commerce amongst consumers - 93.9% of the participants responded
to this section as “Yes”. Therefore clearly indicating growth of the e-commerce sector
in the U.A.E. and the opportunity available for retailers to engage in sales and
promotion online.
14. E-commerce eliminates middleman of trade - 48.5% of the participants in the
survey agree with the fact that e-commerce eliminates the middleman of trade. 21.2%
of the retailers strongly agree with this fact therefore making e-commerce an
attractive channel to trade on.
15. Future of e-commerce - 45.5% have voted the future of e-commerce in the U.A.E. as
good and 30.3% of the participants have voted the future to be "Very Good". This is
also signifies a rise in the online retailers which will be experienced shortly to cater to
this growing market.
16. Recommendation to promote e-commerce - Increase awareness amongst consumers
was the top most selected option when retailers were asked to recommend ways to
promote e-commerce in the U.A.E., 25 out of 33 retailers shared a similar opinion.
This is a clear indication that majority of the shoppers in U.A.E. still resort to
traditional retail shopping rather than online shopping, which therefore does not make
e-commerce very attractive to retailers in the U.A.E.
The researcher summarizes the conclusion of this study by stating the below facts:
1. The penetration of e-commerce amongst retailers in the U.A.E. is low
2. Majority of the retailers find it important to sell online
3. Many retailers have the skills and team required to build and maintain an e-
commerce website
4. Majority of the retailers are confident to sell online
5. Cost to build an e-commerce website plays the most important role before a
retailer can adopt e-commerce
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6. Majority of the retailers are aware of the growing e-commerce market and believe
that e-commerce adoption has increased over the years amongst consumers in
U.A.E.
7. The best business categories to sell online are airline tickets, banking services,
electronics and concert tickets.
8. The main advantages linked to e-commerce are expansion to new markets,
establishing a new customer base and increase sales.
9. The main disadvantages linked to e-commerce are U.A.E. is an infant market for
online trade, consumers prefer offline shopping due to credit card frauds and the
need to physically examine products.
5.4 Recommendations Taking into consideration the above highlighted issues, the researcher takes the opportunity
to present some recommendations, which would help businesses with adopting e-commerce
to sell and promote products and services.
5.4.1 Website
To establish an e-commerce platform it is highly recommended that the business launches a
website. In today's world having an online presence is very important. Consumers and other
business refer to the "web" to find products and services of wants and needs. However,
retailers should not make the website a brochure and should constantly update the content of
the website with most popular keywords that are used by shoppers on search engines such as
"Google". Using popular keywords in the content of the website will improve the ranking on
search engines thereby populating the website on the first couple of pages.
In order to boost traffic to the website the retailer can also employ a Search Engine Marketing
campaign, which empowers the retailer's website on Search engines, improving its visibility
and therefore the traffic that will access the website.
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Figure 5: Representation of SEM campaign on search engine "Google". ( Google.ae,
2013)
5.4.2 Third party e-commerce website
If cost is one of the most important factors that is deterring retailers from adopting an e-
commerce platform, the researcher highly recommends using a third party website to
experience online trade before adopting it as a full time channel. Many companies are using
third party e-commerce websites to build their brands and to sell their products and services.
As mentioned in Chapter 4, Tejuri.com an online shopping mall conceptualized website
offers retailers the opportunity to showcase and sell their products and services. The website
also emphasizes on payment security, return policies and free shipping which makes this one
of the most ideal portals to carry out e-commerce. Tejuri.com not only boosts the confidence
of shoppers but retailers too as they are completely supported by the DED therefore ensuring
timely payments and a legit channel of trade. Once retailers have experienced e-commerce
they can weigh the benefits against the challenges to see if it is worthwhile to adopt a full
time solution.
Figure 6: Representation of elements to boost consumers’ confidence to shop online
(Tejuri.com, 2013)
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5.4.3 Social Media Marketing
Social Media has become a very powerful channel over the years. Social Media has also
become a daily routine for millions of people to keep in touch with friends, search for funny
videos, jobs, reviews on a particular book, the list is endless. Social Media has made possible
what most thought was impossible. How is social media related to e-commerce? Social
Media is a marketing tool used by many companies around the world to drive followers and
fans to their websites to make purchase decisions.
With the help of Social Media retailers can create buzz about their daily activities, product
launches, new technologies in the industry, carry out competitions to make boring products
come to life. Retailers can drive sales to their websites with cost effective social media
campaigns which would not be possible in the case of traditional mediums such as radio and
TV commercial. That's not all, with Social Media Marketing the turnaround time from a
potential shopper visiting one of the social media channels to purchasing a product online is
much lesser as compared to a potential shopper listening to a radio ad and then visiting the
store. Retailers use various social media channels such as "Facebook, Twitter, YouTube,
Instagram to promote itself, etc".
Figure 7:Representation of STAEDTLER Malaysia on Social media. Making pencils
look lively (facebook.com, 2013)
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5.4.4 Increasing awareness amongst consumers
As per an online shopper study conducted by Jadopado.com, which is one of the leading e-
commerce websites in U.A.E., approximately 29.3% of the payments for transactions made
online are carried out via "Cash on delivery". In order to reduce this number the researcher
recommends the bank's of the U.A.E. to provide customers with brochures and ongoing e-
mails detailing steps to carry out a safe and secure online transactions. The penetration of
credit card usage for online transactions is very low, Bank's can help boost the confidence of
shoppers (Jadopado.com, 2012).
Education of security and safety to carry out transactions online should be taught at high
schools, universities and other institutions to ensure the youth make responsible purchase
decisions. The researcher also recommends Internet operators such as Etisalat, Du alongside
TRA to initiate marketing campaigns to promote safe and secure online transactions in the
U.A.E. These campaigns could be posted on Social Media channels, public transport
facilities, all government websites to inform customer about the advantages of e-commerce
and steps to make a safe and secure online transaction.
As mentioned in Chapter 4, Question 16, the majority of the retailers selected "Increase e-
commerce awareness amongst consumers". As discussed this is a behavioral change. Major
retailers such as Apparel group, Landmark group, etc are constantly registering customer's e-
mail ids to their database whenever a customer visits any one of their stores. This data is
collated with all the registrations that take place at these outlets. Instead of radio ads, TV
commercial, these outlets send out promotional e-mails to registered customers. Customers
are made aware of the deals and therefore visit the store to make purchase, In order to
promote e-commerce in the region these outlets could also launch an e-commerce websites,
on clicking any of the links on the email the shopper can be directed to the website to
immediately make a purchase with a guarantee that the offer is only valid online and not at
the physical store. Shoppers will react to incentive and quickly make the purchase online,
what the outlet must assure is delivery timeline as promised and that the product is in good
condition.
These are only recommendations to promote e-commerce and educate the public on the
benefits of shopping online.
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In conclusion of this thesis, the researcher recommends the below investigation for
postgraduate colleagues that want to embark on e-commerce as a research topic for their
thesis.
1. How can Social Media boost your e-commerce business in the U.A.E.?
2. Adopting Electronic Commerce as a platform to purchase products and services in
the United Arab Emirates. The consumer's perspective.
3. Adopting mobile commerce to your business to sell products and services. An
investigation on its success and drawbacks.
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Appendix