Academic journal article International Journal of Electronic Commerce Studies

Factors Influencing E-Commerce Adoption by Retailers in Saudi Arabia: A Quantitative Analysis

Academic journal article International Journal of Electronic Commerce Studies

Factors Influencing E-Commerce Adoption by Retailers in Saudi Arabia: A Quantitative Analysis

Article excerpt

ABSTRACT

This paper presents findings from a study examining the diffusion and adoption of online retailing in Saudi Arabia. Although the country has the largest and fastest growing Information and Communication Technologies (ICT) sector in the Arab region, growth in e-commerce activities has not progressed at a commensurate rate. In general, Saudi retailers have not kept pace with the global growth of online retailing. The authors have conducted research to identify and explore key issues that influence Saudi retailers in deciding whether or not to adopt online channels. As part of a larger research project using mixed methods, this paper focuses on a quantitative analysis of responses obtained from a survey of retailers in Saudi Arabia. The design of the questionnaire instrument was based on the findings of a qualitative analysis reported in a previous paper. The main findings of the current study include a list of key factors that affect retailers' e-commerce adoption, such as lack of online payment options and lack of clear legislation on e-commerce in Saudi Arabia, and quantitative indications of the relative strengths of the various relationships.

Keywords: Online Retail, Retailers, Saudi Arabia, Questionnaire Survey, Diffusion of Innovations

1. INTRODUCTION

The number of commercial organizations that utilize electronic commerce systems is on the rise. In the future, these systems are likely to become not only a tool for increasing income, but also an essential means of competition1. While e-commerce has become a familiar part of life in developed nations, it is still considered an innovation in the Kingdom of Saudi Arabia (KSA). Despite possessing the largest and fastest growing Information and Communication Technologies (ICT) sector in the Arab region2, 3, 4, 5, the country has proceeded at a relatively slow pace in the e-commerce area6, 7, 8. At present, only a tiny number of Saudi commercial organizations, mostly medium and large companies in the manufacturing sector, are involved in e-commerce activities, and these are mostly Business to Business (B2B)8. A question that naturally arises is why retailers in Saudi Arabia have been so reserved in adopting the e-commerce channel.

This paper contributes toward addressing the above question, by providing a quantitative analysis of responses obtained from a survey of retailers in Saudi Arabia. The paper is organized as follows. In the following section, we present a brief review of the relevant literature as well as some background information regarding e-commerce in Saudi Arabia. Section 3 then discusses the research methods used, and Section 4 presents a quantitative analysis of the results. This is followed by a discussion, in Section 5, of some implications of these findings and, in Section 6, a summary of the main points raised in the paper.

2. BACKGROUND AND PREVIOUS RESEARCH

The period 1995-2000 saw a notable proliferation of e-commerce start-ups and online retailing systems in the USA9, 10. Since 2000, the rapid growth of e-commerce activities has been obvious in the developed world. Global e-commerce spending is worth about US$10 trillion at present, compared to US$0.27 trillion in 2000. The USA accounts for the largest share (about 79%) of the current total, followed by Europe. By comparison, the Middle East and African region has a very small share (around 3%)11.

Many studies have been conducted around the world to gain a better understanding of the drivers and challenges of online commerce. For example, Nair12 finds that key factors that influence the development of e-commerce include ICT infrastructure (such as access to Internet broadband), availability of online services (such as online payment services), legislation and regulation, and security.

Gibbs, et al13 present a cross-country study of e-commerce diffusion which covers the experiences of the USA, Mexico, Brazil, France, German, Denmark, Singapore, China, Taiwan and Japan. …

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