Adopting Electronic Commerce as a platform to sell products and services in the United Arab Emirates. The retailer’s perspective.

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?
 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?
 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

Adopting Electronic Commerce as a platform to sell products and services in the United Arab Emirates. The retailer’s perspective.

Adopting Electronic Commerce as a platform to sell products and services in the United Arab Emirates. The retailer’s perspective.

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