Driving Factors for E-Commerce: Gulf Region Review

Article excerpt

INTRODUCTION

An early analysis of web-related information economics was given by Benjamin & Wigand (1995), who argued that the Internet has a great potential for efficiency gains along the whole industry value chain, primarily because of transaction cost savings.

The Web not only can help to reduce costs and add value for existing customers, but it also has a potential role in customer acquisition, and in the case of a Web startup, this role is crucial (Bertschek, Fryges & Kaiser, 2006). The Internet is also an important advertising medium (Hofacker, 2001). Drucker (2002) argued that the "truly revolutionary impact of the Internet is e-commerce" (pp.3-4).

E-commerce can be described as "the sale and purchase of goods or services over the Internet"(Chase Paymentech, 2007), the use of IT to allow direct selling and automatic processing of purchases between parties using the internet (Expedite Email Marketing, 2004) or the substitution of information for physical business processes (Weill & Vitale, 2001). An increasing volume of E-commerce research has been conducted for a diverse range of areas in terms of application areas, technological aspects, support and implementation (Ngai & Wat, 2002) as well as the significance of cost aspects in relation to e-commerce development (Cohen & Kallirroi, 2006).

According to Lin, (2007) e-commerce is one of those rare cases where the need to change and emerging technologies come together to re-engineer the way in which business is conducted, improving processes efficiency, allowing for flexibility, working more closely with suppliers, and catering for the needs and expectations of the customers. It allows companies to select the best suppliers regardless of the geographical location and to widen the scope of their market to the global market (Soopramanien, Fildes & Robertson, 2007). Its evolution goes through several stages of growth according to Chan & Swatman (2004). They proposed a four-stages model in relation to B2B E-commerce (table 1): stage 1: growth: initial e-commerce; stage 2: centralised E-commerce; stage 3: looking inward for benefits; and stage 4: global e-commerce.

The readiness for e-commerce or e-readiness, however, may depends on the "state of play of a country's information and communications technology (ICT) infrastructure and the ability of its consumers, businesses and governments to use ICT to their benefit" (EIU, 2008). E-commerce can be shaped by variety of factors such as the economic, political and social environments in addition to the quality of the ICT infrastructure, however average e-readiness has risen in 2008 in comparison with 2007 (EIU, 2008). Such growth of e-commerce can also be attributed to the unique features of the Internet and the Web such as ubiquity, global reach, universal standards, richness, interactivity, information density, personalization and customization factors (Laudon & Laudon, 2007).

Internationally, many developments have occurred in the last 10 years in the world of e-commerce (IGW, 2007) that impacted on business, government and personal computing. Washington-based Software & Information Industry Association' compiled the top 10 list of developments that have most impacted e-commerce. Google, at the op of the list, used by 30% of Internet users, half of the 6.9 billion online searches conducted by US users in February 2007 were on Google. Followed by Broadband, eBay online auctions, Amazon.com online store, GoogleAdWords Key word advertising, Open standards for the web embodied in HTML (overseen by the WWW Consortium), Wi-Fi Wireless internet, User-generated content (YouTube), iTunes where more than US$2 billion worth of music was sold online or through mobile phones in 2006 and digital sales now account for around 10 % of the music market, and finally BlackBerry communications device which enables new mobile business culture. …