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Impact Of E Commerce On Small Retail Firms
 

Impact Of E Commerce On Small Retail Firms

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    Impact Of E Commerce On Small Retail Firms Impact Of E Commerce On Small Retail Firms Document Transcript

    • International Journal of Information Management 22 (2002) 195–209 Going global—remaining local: the impact of e-commerce on small retail firms in Wales Rhiannon Lewisa,b, Antje Cockrillb,* a Gerald Davies Limited, Kenfig Industrial Estate, Margam, Port Talbot SA13 2PE, UK b European Business Management School, University of Wales Swansea, Singleton Park, Swansea SA2 8PP, UK Abstract This research paper outlines the findings of a multiple research study among 25 small and micro retail companies throughout Wales regarding e-commerce usage. The key aim of the research has been to establish the level of e-commerce usage among these companies, in accordance with the Connectivity Indicator and E-commerce Adoption Model, developed by the UK Department of Trade and Industry. Moreover, an assessment of the strategies used to implement e-commerce by these companies has been made, which includes an examination of the question whether these businesses, through their use of e-commerce, are focusing on global, local or other markets. This research has focused only on retailers who are new channel experimenters, i.e. companies augmenting their main business with experimental electronic commerce. Transactional e-commerce is emphasised, since significant growth in this arena is anticipated in the next 5 years. The authors conclude that the Welsh retail sector is partially failing to capitalise on the opportunities that e-commerce presents, which in turn may lead to future job losses, and prosperity being eroded by e-commerce competition from overseas. The authors also note that there appears to be a conflict between business structures aimed at supplying local markets and attempts of reaching global markets with inadequate means. r 2002 Elsevier Science Ltd. All rights reserved. Keywords: E-commerce; Retail; Small and medium sized companies; Wales 1. Introduction This paper represents the findings of a multiple study of e-commerce participation and application by traditional, bricks and mortar small retailers in Wales. E-commerce is increasingly becoming a ‘‘normal’’ way of trading, especially in the retail sector. However, researchers have *Corresponding author. Tel.: +44-1792-295-601; fax: +44-1792-295-626. E-mail address: a.cockrill@swansea.ac.uk (A. Cockrill). 0268-4012/02/$ - see front matter r 2002 Elsevier Science Ltd. All rights reserved. PII: S 0 2 6 8 - 4 0 1 2 ( 0 2 ) 0 0 0 0 5 - 1
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 196 largely ignored how e-commerce will impact on local (small) businesses, (which on the whole consist of small and micro businesses) and their communities, instead the study of electronic commerce usage among retailers has concentrated on large retailers. This study has focused on small companies (defined as those employing 10–99 staff) and micro companies (defined as those employing o10 staff people) in Wales. These companies play an important role in the Welsh economy, since over 99% of all businesses in Wales employ o250 people (66% of businesses are sole traders, 33.3% of businesses employ 1–49 people, 0.6% employ 50–249 people and 0.1% of businesses employ 250+people (DfEE, 1999). There are few studies on the actual usage of e-commerce in Wales. Therefore the research creates an interesting snapshot of e-commerce usage by such Welsh companies. The retail sector was chosen because it significantly contributes to the Welsh economy. Over the period 1994–97, the wholesale and retail sector has consistently represented approximately 10% of Welsh GDP. This sector is also responsible for a significant proportion of employee jobs in Wales, for example in the period from 1990 to 2000 the sector has been responsible for approximately 15.5% of total employee jobs (NafW, 2000). Although small and micro retailers make a crucial contribution to the Welsh economy (NOP, 2000), their situation has become increasingly difficult since the choices of where and how to shop continue to expand (Morganosky, 1997). They continually compete against larger organisations and have faced growing competition in the last few years from out of town stores set up by large retailers. Importantly there are also new electronic competitors, who pose a threat to these retailers by using e-commerce to offer goods and services to a local market via the Web (Vanderwerwe, 1999; Steinfield, 1999). However, small and micro retailers can use e-commerce to their competitive advantage, to develop new sales channels and to gain business benefits that go beyond improving processes. Leveraging of the web can, for example, bring customers, vendors and suppliers together in ways never before possible, so that these companies can sell products, improve customer service, and obtain maximum results from limited resources. The use of e-commerce is therefore an interesting research issue, as it may well have an important impact on the future development of such firms. The agenda of the UK Government has been for several years to increase e-commerce usage among small businesses, so that the UK can achieve the aim of becoming a world leader in e- commerce (E-Commerce Task Force, 2001). This vision has filtered down to regional governance, and the regional government’s targets for Wales are ambitious: near 90% of companies are expected to use e-commerce in 2003/4 (NafW, 2001), and by 2010 all businesses in Wales are supposed to have access to a choice of modern advanced telecommunication technologies at an affordable cost (NafW, 2001). Little statistical information on the use of e-commerce exists, and where it is available, it is often inaccurate, over-inflated (Garcia, 2000) or contradictory. However, for comparative purposes, the International Benchmarking Study (DTI, 2000), NOP Research (NOP, 2000) and Kite Project (Chappell & Feindt, 1999) stand out. The Kite Project clearly demonstrates the way in which most SMEs are engaging in e-commerce, and outlines the critical success factors for participating in e-commerce. The NOP Research gives the most recent measurement of ICT usage throughout Wales and explores reasons behind such usage. These statistical resources therefore indicate that
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 197 there are some general trends among the small and micro business retail companies, which could give some reason for concern. The entire retail sector (including small and micro companies) is lagging behind in the adoption * of e-commerce compared to other sectors (Spectrum, 1999a). Small and micro companies are lagging behind in the use of e-commerce compared to medium * and large businesses (NOP, 2000). More importantly, regional disparities in the adoption of e-commerce are clearly evident; small and micro Welsh companies illustrate a general apathy towards the use of electronic commerce, compared to companies of the same size in other regions of the UK (Garcia, 2000). For the purpose of this research, the authors have adopted and modified the description of e-commerce used by the UK Department of Trade and Industry (DTI, 1999) to define e-commerce as Using an electronic network to simplify, improve and speed up particular stages of the business process, i.e. the buying, selling and delivery of goods and services. Zwass claims that the Internet has become the prime driver of e-commerce, and goes on to present a hierarchical framework. This consists of three meta-levels: infrastructure, services, and products and structures, which permits the analysis and development of very complex systems such as e-commerce participation (Zwass, 1999). Transactional e-commerce, rather than process e-commerce, is the main focus of this research, and this lies at the top of Zwass’ hierarchy, (within the level of products and structures.) Products and structures of e-commerce cover three categories: consumer-orientated commerce, business-to-business and intra-organisational busi- ness. The research focuses primarily on consumer-orientated e-commerce, and briefly touches upon business-to-business e-commerce. Many commentators maintain that e-commerce can provide numerous potential and actual benefits to small and micro firms (Dedhia, 2001; Chappell & Feindt, 1999; Poon & Swatman, 1999; Ng, Pan, & Wilson, 1998). Small firms, for example, can create a global presence through the use of websites, for comparatively very little investment when compared to other media (Greaves, Kipling, & Wilson, 1999). Furthermore, the boundaries of business on the web are not defined by geography or national boundaries, but rather by the coverage of computer networks, which offer widened access to markets for Welsh small and micro companies, which are on the periphery of Europe. Therefore ‘‘border crossing’’ may appear, i.e. the disappearance of distance- related barriers (Walczuch, Braven, & Lundgren, 2000). Kalakota (2000) cites cost benefits as an explanation for the increased participation in e- commerce. This includes the reduction of transaction costs, since buyers and sellers can access and contact each other directly. Lower purchasing costs could be gained through broader scope for cost effective purchasing, reduced amount of inventory held and improved logistics management. Some of the biggest gains may lie in smaller firms’ purchases of indirect inputs, such as telephone charges, etc., which together account for 30–60% of firms’ total non-labour costs. Other cost benefits may include lower personnel costs and reduced support costs (Chappell & Feindt, 1999). Quality benefits of e-commerce use could include the improved flow of information, new products and customer services, improved availability, improved market transparency (Chappell & Feindt, 1999), and reduced errors in information processing (Ng et al., 1998; OECD, 1999). Regarding customer services, the interaction between the customer and the retailer has never been
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 198 as important as it is today, and the interactive nature of the web can support such interactions (Hoffman, Novak, & Chatterjee, 1995). E-commerce also permits savings in time: levels of response time and accuracy for specifications, requests for proposals, tenders, orders, progress chasing, payment into supply chains, deliveries, all of these can be delivered faster than with the traditional tools of telephone and fax (Chappell & Feindt, 1999; Lancioni, Smith, & Oliva, 2000). However, although increased sales and profitability via e-commerce have been discussed extensively, the actual benefits are still extremely contentious. Even for those who admit gaining short-term benefits such as increased sales, such advantages are marginal and often circumstantial (Poon & Swatman, 1999). There is currently no reliable way of estimating sales delivered to consumers electronically versus those delivered using traditional methods, and likewise no measurement of e-commerce retail sales (Haltiwanger & Jarmin, 1999). Sales and online transactions may generate only a fraction of overall sales, perhaps due to the fact that certain goods are not easily purchased over the Internet, or that they require some form of face-to-face interaction in addition to the web presence. Although barriers to engage in electronic commerce have progressively fallen over recent years, some persistent obstacles to the use of e-commerce remain (OECD, 1999). Confirmed not just merely as a specifically Welsh issue, but a global one, the key barriers to electronic uptake among small and micro companies include lack of financial resources, staff support, and skills (Parfett, 2000; Terry, 1999). The high cost of entry into and maintenance of e-commerce has been cited by small and micro company representatives as a significant barrier to e-commerce adoption (Chappell & Feindt, 1999; Walczuch et al., 2000). Naturally the start-up costs for venturing into e-commerce vary for companies, depending on how computerised their business processes already are. Companies willing to invest in emerging technologies also face a daunting array of solutions, and can choose from many different architectures and implementation possibilities. Another issue in this context is that the time constraints in small businesses are often so tight that managers feel they cannot justify the risk of allocating staff time to implement a new e-commerce strategy without a clear view of potential benefits (Dawson, 2000). Without a doubt e-commerce imposes new skills requirements on the retail sector. The successful uptake of e-commerce requires IT expertise, coupled with strong business applications skills and therefore a flexible, multi-skilled work force (OECD, 1999). However, the retail sector already faces difficulties in attracting young people with relevant skills (Tackey, Hillage, Jagger, & Bates, 2000), and this is likely to be compounded by the growing need for IT skills. Previously 35% of Welsh firms stated that their employees did not have sufficient understanding of information and communication technologies (ICTs) available in their company to enable them to maximise the competitive advantage that new technologies could bring (DEIS, 1998). This is in conjunction with the fact that Welsh businesses are notable for their lack of confidence in the skills levels of their employees (DTI, 2000). The continuous learning required to manage the rapid change of technical applications needed for e-commerce purposes may lead a large number of small and micro companies to outsource technical support services. However, there are once again cost implications in this choice. Nevertheless, the operational monthly cost to outsource the e-commerce technology infrastructure for such enterprises is relatively low compared to acquiring and
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 199 maintaining in-house systems and staff with enough technical expertise (Jutla, Bodorik, Hajnal, & Davis, 1999). It has been stated that uncertainty about the legal, regulatory and tax environment also acts as a barrier to the uptake of e-commerce among small and micro companies, in particular for those companies undertaking international commercial activities (Bologna, 2000). There is also an acute problem of security and fraud, with the perceived security risk of participating in e-commerce inhibiting the use of the Internet for financial transactions (Troy & Willcocks, 1999). Taken together, it is evident that there are still strong barriers to e-commerce use, even though, as outlined above, there are also clear advantages. The latter can be best exploited if a business takes into consideration the planning, management and assessment of the use of e-commerce within the business (Evans & King, 1999). This is explored below. It is often advocated that organisations should build an electronic presence without regarding the actual benefits, since costs are apparently low. However, there is a contradictory belief (Jutla et al., 1999) that this may cause disillusion to some companies, because organisations find it difficult to build sustainable electronic business plans if they do not support them with a long-term business strategy. And indeed it is often the case that small and micro companies engage in e-commerce without preparing a strategic business case (Chappell & Feindt, 1999). Included in a strategy, appropriate business models and frameworks for investing in electronic commerce need to be decided upon, as the introduction of e-commerce into any business often requires business processes to be reengineered in order to gain the full benefits of e-commerce usage (Jutla et al., 1999). E-commerce strategies also have to be supported by funding, and funding of e-commerce usage tends to give a rough measure of commitment (Chappell & Feindt, 1999). The use of external funding sources implies the development of a business case and thus a high level of commitment, whereas publicly funded initiatives (projects) have often difficulty in commercializing themselves, thus raising the question of the level of commitment beyond the lifetime of the funded project. There are also valid reasons for businesses positioned in a local community to develop a competitive strategy that emphasises their physical store. For example, rather than creating a website only to attract distant clients, an alternative strategy for local merchants has been advocated, whereby a physical presence is combined with creative use of the web to target local markets. This, in turn, could lead to a better service to the local community (Steinfield, 1999; Steinfield, Mahler, & Bauer, 1999), and thus increased competitiveness and profitability. 2. Research methodology The key objectives of the research have been to examine a number of issues related to e-commerce in a sample of Welsh small and micro retail companies. The following aspects of e-commerce usage have been investigated: Levels of e-commerce usage. * Key reasons for the uptake and non-uptake of e-commerce. * Benefits and disadvantages of participating in e-commerce. * Inhibitors to the adoption of e-commerce. * E-commerce strategies. * Funding of e-commerce. *
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 200 Given the dynamic nature of the subject area, a multiple research strategy was taken (Dutta & Segev, 1999). The first stage of the research consisted of an e-commerce usage survey being sent to 98 small and micro retailers. These companies were evenly distributed throughout Wales, so that any regional bias in the results could be minimised, and that issues common to all regions of Wales would be assessed. The respondents were either owners or managers of the companies. The classification of the companies was based on the Standard Industrial Classification codes 1992. The level of e-commerce usage among the sample companies was gauged against the Connectivity Indicator (Spectrum, 1999a), and the six-step E-commerce Adoption Ladder developed by the UK Department of Trade and Industry (DTI, 2000). In order to engage in any form of e-commerce, a business must have a basic level of connectivity, i.e. a basic connection to the Internet either by having a website, making frequent use of external e-mail or using electronic data interchange, irrespective of the technology deployed. Once a business is connected, this six-step model measures the progression of any business from relatively simple to more complex e-commerce activities. The six steps of the Ladder, leading to full e-business participation include: 1. Messaging: The use of e-mail to send text messages. 2. Online marketing: Creation of a website or e-mail to publish information about products and services, so that customers can access this information on line. 3. Online ordering: Online interaction between a business and its customers, or a business and its suppliers, for the placement of an order. 4. Online payment: A transaction which can be split into two separate online activities, issuing or receiving an invoice and completing the transaction online by an electronic payment. 5. Order progress/online sales support: The use of e-commerce to support the business relationship between a customer and a supplier, for example through online post-sales support such as courier information. 6. E-business: The theoretical end point when a business has fully integrated ICT into its operations, potentially redesigning its business processes around ICT or completely reinventing its business model. The second stage of the research involved an observational study of the respondent company websites, in order to assess the market orientation of those respondents having websites. The third part of the research included a small number of semi-structured interviews being conducted to compliment the survey findings and observational study. The aim of the interviews was to elicit qualitative and/or anecdotal data from the owner or manager of the companies regarding e-commerce strategies and market orientation. 3. Results Twenty-five out of the 98 retailers responded to the questionnaire, giving an overall response rate of 26%. Clearly there were limitations in using this sample, since the respondents were self- selecting and therefore it was more likely that respondents were those with strong positive or negative feelings about the issue of e-commerce. It is recognised therefore that given the small
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 201 sample, the authors cannot claim representativeness, although the data appears to indicate some strong trends. As illustrated in Table 1, 68% (17 out of 25) of all respondent companies have external e-mail facilities. This trend is higher than the most recent figures for Welsh businesses, which state that overall e-mail penetration amongst Welsh SMEs is 38%, in comparison to 57% of UK SMEs using e-mail (NOP, 2000). The findings are positive, illustrating a high level of e-mail usage. With regard to the specific purpose of using e-mail, it is evident that e-mail is mostly used in a consumer-orientated way, i.e. in a sales function (50% of companies), for marketing purposes (38% of companies) and for post sales support (19% of companies). For business-to-business applications, 43% of companies use e-mail for direct purchases. This is a disappointing finding, demonstrating that the use of e-mail in this context is limited in its use. In addition, 52% (13 out of 25) of all respondents have their own website. A further 16% of respondent companies plan to set up websites in the near future. This positive finding is in lines with other research (NOP, 2000). Noticeably, 16% of the respondent companies lack computerisation within their companies. These findings are similar to overall figures for the UK, which indicate that one-fifth of retailers do not have any computerised systems at all installed Table 1 E-commerce usage according to the Connectivity model Company Type of product Company size Use of e-mail Website   1 Wood flooring 5 O O 2 Celtic jewellery 8 O O 3 Flooring 60   4 Dairy products 6 O O 5 Optical wear 12 O O 6 Jewellery 7   7 Fresh food produce 6 O O 8 Sports equipment 7 O O 9 Decorating materials 30 O O 10 Sports equipment 45 O O 11 Welsh crafts 4   12 Cards and gift wrap 14 O 13 Sports apparel 8 Pending O  14 Meat products 11 O O 15 Wood products 25 16 Carpets and furniture 8 Pending Pending   17 Meat products 10 O O 18 Farm produce 6 O O 19 Horticultural products 15 O O 20 School clothing 5 O O 21 Optical wear 10   22 Jewellery 7   23 Hardware 3 O 24 Motor parts 3 Pending 25 Groceries 20 Pending Pending
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 202 in their business (Spectrum, 1999b). For smaller firms (0–99 employees) in all sectors the picture looks even bleaker, with 33% lacking computerisation (NOP, 2000). Table 2 illustrates that the progression along the e-commerce adoption ladder by the respondent companies is very limited. Only 64% of companies reached step 1 (online messaging), 52% of companies reached step 2 (online marketing), 12% of companies reached step 3 (online ordering) and step 4 (online payments), and 4% of companies reached both step 5 (post-sales support) and step 6 (e-business). The most recent figures (DTI, 2000) indicate similar trends, with 46% of small and micro UK businesses reaching step 2 (online marketing), 24.5% of small and micro businesses reaching step 3 (online ordering), 9.5% of small and micro companies reaching step 4 (online payments), and 6.5% of small and micro reaching step 5, (post-sales support). These DTI figures indicate that the respondent companies are somewhat lagging behind in reaching the steps outlined in the adoption ladder, indicating once again that Welsh companies are not using e-commerce to the full. More significantly, this gap will not be easily reduced, as there is a significant time lag between implementation of e-commerce and full participation. Table 2 Overall use of e-commerce according to the E-commerce Adoption Ladder model Company Type of product Adoption ladder Messaging Online Online Online Order E-business marketing ordering payment progress 1 Wood flooring NA O O O O O O 2 Celtic jewellery O O Â Â Â Â 3 Flooring 4 Dairy products NA O O 5 Optical wear Unknown—no website access O O Â Â Â Â 6 Jewellery 7 Fresh food produce NA O O Â Â Â Â 8 Sports equipment O O Â Â Â Â 9 Decorating materials O O 10 Sports clothing Website under construction O O O O Â Â 11 Welsh crafts 12 Cards and gift wrap NA O Â Â Â Â Â 13 Sports clothing O Â Â Â Â Â 14 Meat products O O Â Â Â Â 15 Wood products 16 Carpets and furniture NA 17 Meat products NA O O Â Â Â Â 18 Farm produce O O Â Â Â Â 19 Horticultural products O O O O Â Â 20 School clothing O O 21 Optical wear Website under construction 22 Jewellery NA 23 Hardware NA O Â Â Â Â Â 24 Motor parts 25 Groceries NA
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 203 Looking at the organisational factors that influence the adoption of e-commerce, it is apparent that progress along the e-commerce adoption ladder is not dependent on company size within the respondent companies, although other studies have shown that even within the small business category more larger firms adopt e-commerce compared to smaller ones (Premkumar & Roberts, 1999). However, another phenomenon can be observed in this research: niche retailers have progressed further along the adoption ladder. These retailers include, e.g. a jeweller specifically selling Celtic jewellery, a Welsh craft shop and a specialist clothing shop. This is perhaps not surprising since the wider audience of the Internet might appear particularly attractive to niche retailers. With regard to e-commerce usage, in general, 35% (6 out of 17) companies stated that the main reason for participating in e-commerce was primarily to gain quality benefits such as efficiency and precise purchasing. In addition, time benefits were a reason for participation for 2 out of 17 companies and 1 company wanted to gain cost benefits from participating in e-commerce. However, it is debatable if such benefits can be obtained in the short term. Disappointingly few respondents participate in e-commerce to specifically gain cost and time benefits. This is a missed opportunity on the part of the companies. Specifically focusing on customer-orientated e-commerce, the reason for participating in e- commerce is more distinct. Sixty-two per cent (8 out of 13) of the respondent companies with websites claim to use their websites for promotional purposes, which is in line with other research findings (NOP, 2000). Secondly, 46% (6 out of 13) respondents with websites aim to increase sales by using their websites to reach more customers. This implies a reactive (Fink, 1998), rather than a proactive approach, where additional revenue may be more important than providing consumers with as many options as possible (Tackey et al., 2000). In addition, during interviews, some of these companies also displayed corporate inertia regarding this issue, treating the Internet simply as another sales channel, rather than a business model. Finally, 29% (5 out of 17) companies gave other reasons for participating in e-commerce. For example, one company expressed that participation in e-commerce was necessary to keep up with competitors and technological change. This, again, implies a reactive rather than proactive strategy, although it reflects the recognition that these changes are taking place and need to be acknowledged by the company in order to remain competitive. Forty-four per cent of companies not participating in e-commerce stated lack of advice and support as a reason for non-participation; as well as a lack of funds and lack of skilled and qualified staff. Several respondents maintained that e-commerce is not applicable to the business, and these statements coincided with those companies lacking computerisation. One further respondent indicated that their principal customers and suppliers had not yet adopted e- commerce as a means of conducting business, and therefore they were slow in adopting it themselves. This phenomenon has also been observed by other researchers (Bologna, 2000; Chappell & Feindt, 1999). Importantly one interviewee claimed that the use of a website was not suitable for their main customer base (the elderly) and would therefore not lead to increased sales, yet a website would be produced in the future to offer services ancillary to the main business function. This implies a strategic and proactive approach by the company. Direct benefits, quantifiable by analysis of financial data, were not assessed among the sample companies, since such benefits of IT investment are often intangible and disproportionately
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 204 difficult to measure. Furthermore, companies are often not willing to divulge such financial information. An overwhelming 88% of companies participating in e-commerce had realised some sort of indirect benefit, either reduced costs, quality benefits or time benefits. Overall 71% of e-commerce participants (15 out of 17) had realised quality benefits, in particular access to new markets; 59% of e-commerce participants (12 out of 17) had realised cost benefits, particularly reductions in purchasing costs; and 41% of e-commerce participants had realised time benefits, especially the reduction of cycle times. Despite the fact that many of these respondent companies have not yet proceeded far along the e-commerce adoption ladder as illustrated in Table 2, considerable benefits are being accrued by these companies. This is a very encouraging finding since it has been suggested that the implementation of IT in small businesses occurs most successfully where there is a demonstrated relative advantage in terms of time saved, benefits accrued or discomfort decreased (Cragg & King, 1993). Interestingly, at least two-thirds of the respondent companies not currently participating in e-commerce perceived some benefit of participating in e-commerce, which supports previous findings that small and micro companies are fully aware of the stated advantages of e-commerce (Jacobs & Dowsland, 2000). A third of the respondents participating in e-commerce, 31%, did not answer whether they perceived any disadvantages in using e-commerce. However, 44% of respondent companies have experienced drawbacks. These include inefficient/slow response of systems, high cost of software for specific applications, low take up of e-commerce by suppliers and customers, and a lack of IT training for specific software. Although it was not apparent from the survey that security and fraud is an issue, the interviews indicated that fraud was perceived as a serious danger, and indeed in one company customer data had been stolen. Additionally, companies wishing to implement security measures face severe cost implications. The respondent companies were asked whether formal e-commerce strategies were used for the implementation of e-commerce. Only one respondent had adopted such a strategy. Most of the other companies appeared to use e-commerce on an ad hoc basis, for example, one respondent stated that the use of website was to ‘‘simply a general presence on the Internet’’. Another company stated the future use of their website would be linked to the company’s marketing strategy. Table 3 illustrates the market orientation of the respondent companies, and the use of their websites to strategically bolster business from their local community. The majority of companies intend to serve their local markets through the use of their websites. Although this localisation in market orientation can be illustrated in other research (NOP, 2000), it is an important finding since it contradicts other research which states that local providers are attracted by the allure of new access to global markets and are more likely to de-emphasise their geographic location and physical establishment when they do go on the Web (Steinfield, 1999). In the interviews, companies clearly stated that local markets were targeted through the use of the website, as the products sold were not suitable for global markets. Undoubtedly, this reflects a realistic view of the use of websites, as products sold by certain respondent companies, e.g. general optical wear, are not niche products and are unlikely to be sold to global markets (Kassaye, 1997). However, this approach may also lead to the failure to utilize opportunities a more global approach offers, for example in cases where products are niche products and could be sold to a wider market.
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 205 Table 3 E-commerce strategies for various markets Company Type of product Market orientation Local Global Specific geographical Specific customer market group 1 Wood flooring NA O O Â Â 2 Celtic jewellery O Â Â Â 3 Flooring 4 Dairy products NA O O Â Â 5 Optical wear O O O Â 6 Jewellery 7 Fresh food produce NA O O Â Â 8 Sports equipment/clothing 9 Decorating materials No reply O Â Â Â 10 Sports equipment/clothing O O O Â 11 Welsh crafts 12 Cards and gift wrap NA O O Â Â 13 Sports apparel 14 Meat products NA O O Â Â 15 Wood products 16 Carpets and furniture NA 17 Meat products NA 18 Farm produce No reply O O O Â 19 Horticultural products O O Â Â 20 Specialist School clothing O Â Â Â 21 Optical wear 22 Jewellery NA 23 Hardware NA 24 Motor parts No reply 25 Groceries NA The researchers also adopted a framework developed by Steinfield (1999) to evaluate the websites of respondent companies. This was used as an attempt to assess whether the companies claiming to support local markets were actually applying such strategies on their website to take advantage of their local presence (i.e. local contact details, map or directions, photo of the physical store, marketing strategies to entice customers to the physical store, etc.). Although the majority of websites listed local addresses and provided telephone numbers, far fewer offered maps, directions, and no website made use of marketing strategies to entice customers to the physical store. It is therefore evident that the respondent companies focusing on local markets do not take full advantage of their local presence through the use of their websites. The vast majority of respondent companies do not outsource e-commerce implementation activities. Only three companies participating in e-commerce used external bodies to implement e-commerce, although there is a wealth of organisations available, which support such activities (Garcia, 2000). These findings are in line with those of NOP Research. In the NOP study (NOP, 2000) only 34% of small companies (5–9 employees) sought IT/Telecom advice. It is therefore
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 206 surmised that advice on e-commerce is not specifically targeted to the retail sector, and that most of the advice currently offered is postal based, whereby only a small minority of companies prefer this (NOP, 2000). Although government support for the implementation of e-commerce among small firms is being given in Wales, much of this has been in the form of fairly small-scale, unrelated pilot projects which, in many cases, have not been developed into sustainable or wider- ranging initiatives (WIS, 2000). This issue is currently being addressed by the development and implementation of the Wales Information Society Initiative that aims at encouraging SMEs in all sectors to use e-commerce. A quarter of respondent companies (25%) participating in e-commerce have received at least partly public funding, which included free training from Higher Education institutions, setting up of websites, etc. The remaining companies funded such activities internally. These results are similar to other findings (Chappell & Feindt, 1999), which showed that 17% of such companies rely on public funds, and 61% of small and medium companies relied on internal funding to implement e-commerce. However, in the interviews conducted for this study, it emerged that sources of information regarding such funding is difficult to find and also difficult to understand. In addition, the activities of various funding bodies and projects are perceived as uncoordinated and bureaucratic. The lack of funding may explain why respondent companies in the main do not outsource e-commerce implementation as mentioned previously. 4. Discussion and conclusion It is apparent that for the majority of respondent companies, the use of e-commerce is in an embryonic stage. The results indicate that the majority of retailers are not participating in the sophisticated, highly interactive e-commerce solutions that larger firms are focusing upon. This may be compounded by the fact that innovation is limited by resource (human, financial and time) constraints in small and micro enterprises. It is also apparent that these companies are taking a rather uncoordinated, ad hoc approach to the introduction of e-commerce technology (Parfett, 2000). Despite this, a minority of companies have linked e-commerce usage to formal/ informal business plans or marketing strategies, and are beginning to take a more strategic approach to e-commerce usage. However, the authors maintain that a differentiation will be seen between those small and micro companies who are quick in the adoption of new technologies, and more traditional small companies who tend to stick to traditional technologies (Dutta & Segev, 1999). This divide is evident among the respondent companies, for certain respondent companies illustrating an overly cautious approach towards e-commerce usage, where a realistic view of the cost-benefits of e-commerce usage is taken. Nevertheless, this approach may be too extreme; small and micro companies should not completely dismiss e-commerce by maintaining that e-commerce is not applicable to their business, since the simplification and streamlining of business processes through the use of e-commerce is a clear advantage. The potential benefits of e-commerce participation with the target group have been shown in this survey. Furthermore, the critical success factors for e-retailing include the presence of a unique and/or innovative product or service that is saleable over the Internet, and that fits with the media of the Internet and exploits the electronic environment in a value-added way (Chappell
    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 207 & Feindt, 1999; Dawson, 2000). Managers must be able to identify e-commerce applications that have a strategic/competitive potential for the firm, before committing valuable resources to possibly unsuccessful e-commerce implementation projects. If products are not appropriate for e-retailing, alternative competitive strategies may be more appropriate. The authors therefore support the view that, if physical stores cannot be moved to cyberspace, then by default cyber retailing must be moved to the physical retailing realm. This implies cyber-enhanced retailing (Otto & Chung, 2000), where retailers may do better by focusing on strategies which deliver a new customer service concept within the physical world, thus increasing the value of the shopping experience for the customer. In this way, companies will be directly competing with large retailers who already provide a wider variety of quality customer services. Of particular concern is the fact that the usage of geographical market expansion strategies by Welsh companies is limited (NOP, 2000). The results of the survey confirm the ‘‘regional’’ image of most of the respondent companies, highly unaware of the small size of the local market and not searching for potential business opportunities further a field. However, the authors anticipate that within a decade, reduced costs of e-commerce implementation will increase the use of e-commerce in small retail companies significantly. Currently, a small minority of companies are extremely pro-active in their approach, and it is hoped that they set the scene for other Welsh companies in an age of increasing globalisation. Acknowledgements The authors are grateful to the retail managers who took the time to respond to the questionnaire and to those who participated in the telephone interviews. We also gratefully acknowledge the contributions of Dr. Cliona O’Neill and Ian Owens, both from the European Business Management School at the University of Wales Swansea. This research would not have been possible without the funding received from ESF/ADAPT via the WALES 2000 project (based at EBMS, University of Wales, Swansea), Dossier No. 992177UK8. References Bologna (2000). Enhancing the competitiveness of SMEs through innovation. SME Conference Business Symposium Issue Paper, submitted. Chappell, C., & Feindt, S. (1999). Analysis of e-commerce usage in SMEs. Kite Project, submitted. Cragg, P., & King, M. (1993). Small firm computing: Motivators and inhibitors. MIS Quarterly, 12(1), 51–61. Dawson, J. (2000). Retailing at century end: Some challenges for management and research. International Review of Retail Distribution and Consumer Research, 10(2), 119–148. Dedhia, N. S. (2001). E-commerce quality. Total Quality Management, 12(3), 397–402. DEIS (1998). Developing employment in the information society. Selected Annotated Bibliography, Draft V1 09/98, Toucan, Europe. Department for Education and Employment (1999). Skills and Enterprise Network, Small and Medium Enterprises: Their role in the economy. Special feature. Sheffield: DfEE. http://www.dfee.gov.uk/skillnet/lmqrnov4.pdf. Department of Trade and Industry (DTI) (1999). Net benefit: the electronic commerce agenda for the UK. http:// www.dti.gov.uk.
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    • R. Lewis, A. Cockrill / International Journal of Information Management 22 (2002) 195–209 209 Tackey, N., Hillage, J., Jagger, N., & Bates, P., 2000. The skills implications of electronic retailing. Institute of Employment Studies. Terry, S. (1999). Research report: barriers and inhibitors 1998–1999. http://www.commerce.net/research/reports/1999/ 99 18 r.html Troy, S., & Willcocks, L. (1999). Global research perspectives on electronic commerce: Introduction to the theme issue. Journal of Information Technology, 14(4), 315–318. Vanderwerwe, S. (1999). The electronic ‘go-between service provider’: A new ‘middle’ role taking centre stage. European Management Journal, 17(6), 598–608. Walczuch, R., Braven, G. V., & Lundgren, H. (2000). Internet adoption barriers for small firms in the Netherlands. European Management Journal, 18(5), 561–572. Wales Information Society (WIS) (2000). http://www.wis.org.uk/english/executive. Zwass, V. (1999). Structure and macro-level impacts of electronic commerce: from technological infrastructure to electronic marketplace. In K. E. Kendall (Ed.), Emerging information technologies. Thousand Oaks, CA: Sage Publications. Rhiannon Lewis (LLB Law/German, University of Wales) is currently working as a graduate trainee in an environmental engineering firm in South Wales. Previously, she worked as a Project Officer in the European Business Management School at the University of Wales Swansea, and for a firm of management consultants. Her research and work interests focus on IT training, e-commerce and Internet usage. Antje Cockrill (MA American Studies, Frankfurt University, MLib and Ph.D. University of Wales) is currently a Lecturer at the European Business Management School at the University of Wales Swansea. She has her Ph.D. in Information and Library Studies and has worked both as an Information Officer and Researcher prior to her current post. Her main research and work areas concern small and medium sized enterprises, with special focus on training and skills issues and marketing.