Research on Ecommerce Strategies

Literature Review

Introduction

While the concept of e-commerce may no longer be considered new in concept, an important part of e-commerce that is still relatively new is the use of social media, such as Facebook, MySpace, and Twitter, as a way for internet-based companies to connect directly with customers and attempt to sell products or services. The trend in e-commerce is to rely heavily on social networking sites because of the ability that they provide to connect directly with customers regardless of location and in a way that builds a loyal and trusting relationships between buyer and seller (Lai and Turban 400). However, it is important to examine a full range of issues related to the e-commerce strategy of using social networking as a way to attempt to connect with customers and increase revenues. Issues such as the issue of the digital divide between countries around the world, and even the way in which the cultures and customs of countries can impact the use of social media, and in turn, impact the e-commerce efforts of companies that make social networking a focal point of their e-commerce strategies must be examined. Information about the actual success of e-commerce strategies that are based around social networking and the idea that the digital divide has been reduced because of the ease with which people can communicate will also be examined.

In this review of recent academic literature regarding e-commerce related to the use of social networking technologies, information about the digital divide between countries and the impact that cultures can have on e-commerce strategies are reviewed. Even more, with the academic literature that is reviewed, the variables that are important for e-commerce companies to attract more customers and to develop additional e-commerce ventures that will actually be successful will be discussed.

The Digital Divide

The ability for companies to not only operate entirely over the internet, but to also sell to clients entirely over the internet, has raised the issue about whether the digital divide that exists between peoples and countries around the world is being reduced. As more companies operate entirely online, previous ideas of economic conditions in a single country or in a single region of the world seem to become less important. Instead, products can be bought and sold without concern about political and economic boundaries (Pratt 434). One of the arguments that has been made about the decrease in the digital divide is the way in which the internet allows people in developing nations have the same access to products and services as people in developed nations, which is actually improved even more with the use of social media. Kaplan and Haenlein noted in their research that only 13% of the citizens of Thailand actually have internet access, but 82% of the citizens of Thailand have cellular phones and devices (67). The researchers indicated that these statistics are important because even though they may not have internet access, they can use their phones and use social networking tools to have the same access to companies as people in a developed nation such as the United States or the United Kingdom. In this regard, the digital divide between people around the world is reduced in relation to e-commerce strategies that focus on social networking tools because more people actually have access. A computer that is connected to the intenet is no longer required to have access.

Another argument that has been made is that because there are now a variety of ways in which people can access the internet and access information, the actual technological infrastructures of a country become less important in relation to the digital divide (Crenshaw and Robison 204). The problem with this argument, however, may be that there are many other characteristics that do impact not only the level of access to even a social networking service access via a mobile device, but also the way in which social networking might be used to communicate with an e-commerce organization. An important obstacle that still causes a divide to exist with regards to access to the internet is the political and economic systems that are present in countries around the world. In many developing nations, political leaders attempt to maintain control by limiting or blocking access to the internet. In other nations, regardless of the desire to have improved communications infrastructures, the communications systems that exist do not make it possible for a large number of people to easily access communications tools such as social networking services (Guillen and Suarez 704).

Fuchs and Horak investigated the digital divide in Africa (114-115). The researchers used macro-level data regarding internet usage in African countries. They found that a variety of demographic variables are significant in the actual usage of the internet. First, social inequality with regards to differing economic conditions impacted the differing levels of internet in Africa. In addition, demographic characteristics such as age and education also significantly impacted the actual levels of internet usage between countries in Africa. The conclusion that was drawn by the researchers is that the digital divide includes many other types of inequalities between people. In order to drastically reduce the digital divide, the related inequalities that are based on education, social condition, and even age must be overcome.

Fuchs and Horak also explained from their research that the digital divide that exists in countries in Africa is not a product of a lack of desire to improve access to communications technologies and the internet (115). Instead, the digital divide that exists and the inequalities in access to the internet that exists in Africa is a product of hundreds of years of history for these countries. Many countries in Africa have faced decades and even centuries of war and poverty. The idea that infrastructures can be created and people can quickly be connected to the internet is simply not realistic. Even more, the exploitation that many African nations have faced from countries and people outside of Africa is a further obstacle that must be overcome before the inequalities that exist with regards to access to the internet and modern communications technologies can be addressed.

Overall, the research that has been reviewed thus far does indicate that the internet and particularly the trend toward social media can indeed reduce the digital divide. People in a country such as Thailand may not have internet access with a computer, but they can obtain internet access with mobile devices and through the use of social networking sites such as Facebook and Twitter, have the same level of access as people in developed nations (Kaplan and Haenlein 67). However, there are part of the world in which the digital divide is not really an issue of one communications technology or service over another. Instead, the digital divide exists because of long histories of war, poverty and general social inequality. The ability to overcome these issues is necessary in order to actually reduce the digital divide in any significant way.

Countries and Cultures

The literature that was reviewed in the previous section and the analysis that was provided would seem to already address the issue of the impact of countries and cultures on e-commerce strategies related to the use of social networking as a way to connect with customers and increase revenues. However, a slightly more in-depth and focused examination of the issue of country differences and the cultural impact on social networking as an e-commerce strategy seems important given the analysis conducted by Van Dijck and Nieborg in which the researchers argue that many of the assumptions and arguments that are made about the impact that current technologies have on the ability to bring people together are not accurate and are even simplistic in nature (855).

Van Dijck and Nieborg argued from their research that the internet and interactive media, such as social networking, have not created the collectivist culture that some in the business and internet communities have talked about (870). Instead, the researchers explained that even though social networking and other interactive communications tools may bring people together, they will still behave based on their own desires, as well as based on their cultural backgrounds and experiences. In this way, researchers should think about finding the actual similarities that exist between people as they access the internet. At the same time, researchers and business leaders in the e-commerce sector should actually think about the way in which people who use social networking and who engage in e-commerce diverge in terms of their actions and behaviors.

Brashear, Kashyap, Musante and Donthu investigated the profiles of internet shoppers from the United States, United Kingdom, New Zealand, China, Brazil and Bulgaria in order to determine if significant differences existed between internet shoppers in these countries with regards to similarities and differences in online shopping behaviors (277). The researchers found that the internet shoppers from the six countries were different in their actions and behaviors. Specifically, internet shoppers in different countries have different goals and objectives for why they engage in e-commerce activities. The researchers argued based on their findings that a single global e-commerce strategy is not appropriate for e-commerce firms. Instead, e-commerce firms should adopt specialized strategies for the countries from which they seek to attract customers and with whom they want to connect.

Interestingly, Brashear, Kashyap, Musante and Donthu did find in their research that the internet shoppers in all six of the countries in which they investigated were similar in terms of being impulsive (277). The internet shoppers that they examined were impulsive in terms of making large number of purchases as compared to people who did not shop online. The importance in this research may be that it demonstrates that there are indeed similarities in the people who engage in e-commerce activities. However, e-commerce companies must recognize that the similarities between internet shoppers are limited. Instead, there are differences in the actions and behaviors of online shoppers based on cultural differences that must be considered in any e-commerce strategy.

Another issue that has been examined within the academic literature in relation to country and cultural differences is the concept of e-readiness, which is the level to which a country is considered to be friendly and accepting toward e-commerce (Berthon, Pitt, Cyr and Campbell 701). Interestingly, the research on the connection between e-readiness and cultural issues has found that the cultural issues and characteristics of a country actually influences e-readiness (Berthon, Pitt, Berthon, Campbell and Thwaites 89). Based on these findings, the indication is that countries with the highest levels of e-readiness, or the acceptance of e-commerce, have higher levels of people who accept the internet and who actually want to engage in e-commerce activities. In other words, it is desire of the people who have a great deal of power to dictate the e-readiness of a country.

These findings also seem valid when considering the research conducted by Fuchs and Horak (114-115) about the importance of characteristics such as education and income on the digital divide in Africa. Because of inequalities in education and income in Africa, a digital divide exists even between countries on that continent. If the e-readiness is indeed based on the desire of people in a particular country to actually have access to e-commerce, then the lack of information and knowledge about the internet and e-commerce in much of Africa, as well as the need to focus on day-to-day issues of survival in overcoming poverty and war, causes a lack of interest or demand to engage in e-commerce activities that influences the lack of e-readiness that is present.

Singh, Alhorr and Bartikowski conducted a review of literature about e-readiness. They found from their review of existing literature regarding differences in e-readiness across countries that a lack of internet skills and a lack of knowledge about the internet and about web tools were associated with lower levels of e-readiness (1). These results concur with the other research about the factors that are associated with differences in e-readiness across countries. In order for a country to have a high level of acceptance toward e-commerce, the people in that country must have knowledge about the internet and actually want to use the internet, particularly in relation to making purchases. Furthermore, Ho, Kauffman and Liang investigated growth rates in e-commerce revenues in countries around the world as a measure of acceptance and desire to engage in e-commerce (237). The researchers concluded that differences in the growth rate of e-commerce growth rates across different countries does indicate that there are cultural and economic factors that are related to e-commerce behaviors across countries.

E-Commerce and Social Networking Success

Moscato and Moscato investigated the success of e-commerce strategies in relation to the recent social networking technologies and similar interactive media technologies (272-273). The researchers found that the use of e-commerce strategies based on interactivity over the internet, such as social networking, has not been successful for the e-commerce industry. Instead, the researchers investigated the number of page views to e-commerce web sites. The data collected by the researchers found that only 10 e-commerce sites accounted for 40% of the traffic to the e-commerce web sites. The conclusion that can be drawn from these findings is that the use of social networking to communicate directly with customers is not enough for e-commerce success.

Furthermore, Zhao, Huang and Zhu stated that about 70% of e-commerce strategies are actually not successful at all (134). Once again, what is demonstrated is that simply having an online company that attempts to bridge the digital divide is not enough to achieve business success in terms of revenues and profitability. Instead the way in which e-commerce strategies that are designed to allow an online company to connect with potential customers and actually encourage them to make purchases is based on many other issues other than simply making products or services available in a convenient manner. Most people who visit e-commerce sites actually do not make purchases (Evans 57). Instead, they are simply browsing for information or for products, but actually have no desire to make a purchase. In fact, people may respond to the information that they receive via social networking sites by visiting an e-commerce website, but receiving the information and visiting an e-commerce site is not a guarantee of business success.

As with so much of the literature that has been reviewed, however, e-commerce success does indeed seem to be about being able to connect with customers based on their specific cultural backgrounds, as well as other demographic factors such as education and income. While the ability to conduct business entirely over the internet and to purchase products and services from nearly anywhere in the world has decreased the digital divide in some countries, the reality is that the digital divide still exists in many countries because of the unique cultural characteristics of those countries (Fuchs and Horak 114-115). The indication that would seem to be come from the literature that has been reviewed is that there are unique variables that must be considered in order for e-commerce ventures to grow and expand.

Developing a Model of E-Commerce Success

Within the academic literature, several important variables have been noted to attract greater success with regards to e-commerce. One of the variables that has been noted within the academic literature as being important for e-commerce success with regards to the use of social networking technologies is actually providing information and content that is actually useful to the target audience (Yang, Kim and Dhalwani 9-10). E-commerce must be focused on the ability to connect with potential customers based on their needs and desires as opposed to the needs and desires of an e-commerce firm or organizations that are attempting to expand e-commerce in a particular country.

Another important variable that has been addressed within the academic literature in relation to e-commerce expansion and success is the actual means by which information is disseminated to the target audience (Waters, Burnett, Lamm and Lucas 104). While there are a variety of ways to communicate with people via the internet, such as a variety of social networking sites and services, a particular target audience may use a specific social networking service. Using a social networking service, or even using an actual means of information distribution over the internet that does not allow for potential e-commerce customers to be reached will not result in success.

On a larger level, an important factor that is related to e-commerce development and success is the infrastructure that exists within a country to allow people to take part in e-commerce activities (Uzoka, Shemi and Seleka 11). For the e-commerce industry, this may mean assisting countries with the reasons why a lack of communications and technology infrastructure exists. As has been noted within the academic literature, the reasons for the lack of an e-commerce or internet infrastructure is not necessarily because of a lack of desire (Fuchs and Horak 114-115). However, assisting in creating an infrastructure for e-commerce and encouraging e-commerce activities is important in relation to achieving e-commerce growth and expansion.

Another variable that is necessary for e-commerce success is for the e-commerce industry to understand differences in e-commerce behaviors across different customer segments. For example, research has shown that men and women exhibit different behaviors when engaging in e-commerce activities (Cha 87). Specialization for specific targeted groups is vital in order for e-commerce strategies to be successful. Attempting to use a single strategy for connecting with customers and encouraging them to make purchases over the internet is not likely to be successful.

Finally, the issue of trust is also important with regards to an e-commerce strategy. Potential customers must have trust that the company from which they are making a purchase via the internet will provide the product or service that is promised. In addition, customers must trust that the appropriate security protocols are in place to protect their sensitive information (Brown and Jayakody 142). Without a high level of trust, people with either find another online company from which to purchase a given product or service, or will simply avoid making a purchase online at all.

Summary

The literature that has been reviewed with regards to e-commerce strategies and the trend of social networking have demonstrated that while the digital divide is decreasing, simply making products or services available over the internet is not enough to overcome all of the barriers that exist with regards to accessing the internet in order to be able to communicate with online companies and engage in e-commerce activities. Countries around the world have different levels of e-readiness that is based largely on the desire of people to engage in e-commerce activities. However, the desire to engage in e-commerce activities is not merely an indication of the desire of a country’s leaders or people to have access to the internet or to make purchases on the internet. Instead, the income and education of the people in a country, as well as the larger issues of war and poverty impact whether people are knowledgeable about the internet and their ability to take part in e-commerce. Even more, the importance of day-to-day survival can mean that the importance of the internet is of much less concern, and certainly any desire or ability to engage in e-commerce activities may not be important at all.

In order for e-commerce ventures to be successful, several variables have been identified within the academic literature as being significant. The variables that are important in relation to e-commerce venture success are specialization of the content and specific means of communication, working to improve the internet infrastructure of countries as much as possible, and working to obtain the trust of potential e-commerce customers. By addressing these variables, success and growth in e-commerce is possible.