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Abstract- Information Technology has been playing a vital role in the future development of
financial sectors and the way of doing business in an emerging economy like Bangladesh.
Increased use of smart mobile services and internet as a new distribution channel for business
transactions and international trading requires more attention towards e-commerce security for
reducing the fraudulent activities. The advancement of Information and Communication
technology has brought a lot of changes in all spheres of daily life of human being. E-commerce
has a lot of benefits which add value to customer’s satisfaction in terms of customer
convenience in any place and enables the company to gain more competitive advantage over
the other competitors. This study predicts some challenges in an emerging economy.
Keywords: e-commerce, information technology, customer satisfaction, business.
GJMBR - B Classification : JEL Code : L81
ElectronicCommerceAStudyonBenefitsandChallengesinanEmergingEconomy
© 2016. Abdul Gaffar Khan. This is a research/review paper, distributed under the terms of the Creative Commons Attribution-
Noncommercial 3.0 Unported License http://creativecommons.org/licenses/by-nc/3.0/), permitting all non-commercial use,
distribution, and reproduction in any medium, provided the original work is properly cited.
Electronic Commerce: A Study on Benefits and
Challenges in an Emerging Economy
Abdul Gaffar Khan
Abstract- Information Technology has been playing a vital role become more engaging, making it easier for
in the future development of financial sectors and the way of transactional exchanges to happen online. Internet
doing business in an emerging economy like Bangladesh. retailers continue to strive to create better content and a
Increased use of smart mobile services and internet as a new
realistic shopping experience with technologies like
distribution channel for business transactions and international
2016
augmented reality. With mobile commerce gaining
trading requires more attention towards e-commerce security
for reducing the fraudulent activities. The advancement of speed, more users are purchasing from the palm of their
Year
Information and Communication technology has brought a lot hand (Miva-2011). E-commerce could deliver a
of changes in all spheres of daily life of human being. E- significant benefit to businesses in developing countries
commerce has a lot of benefits which add value to customer’s by increasing their control over its place in the supply 19
satisfaction in terms of customer convenience in any place chain, thus improving its market efficiency (Molla &
and enables the company to gain more competitive advantage
Global Journal of Management and Business Research ( B ) Volume XVI Issue I Version I
Heeks, 2007).
over the other competitors. This study predicts some
challenges in an emerging economy. a) What is E-commerce?
Keywords: e-commerce, information technology, Electronic commerce, or e-commerce, is the
customer satisfaction, business. buying and selling of goods and services on the
Internet. Other than buying and selling, many people
I. Introduction use Internet as a source of information to compare
N
ow-a-days e-commerce is growing popular in an prices or look at the latest products on offer before
emerging economy. E-commerce began in1995. making a purchase online or at a traditional store. E-
It requires the digital goods for caring out their Business is sometimes used as another term for the
transactions. Digital goods are goods that can be same process. More often, though, it is used to define a
delivered over a digital network (Laudon and Laudon, broader process of how the Internet is changing the way
2013). E-commerce is rapidly transforming the way in companies do business, of the way they relate to their
which enterprises are interacting among each other as customers and suppliers, and of the way they think
well as with consumers and Governments. As a result of about such functions as marketing and logistics. For the
changes in the landscape of ICTs, e-commerce is now purpose of this study e-commerce is taken to mean
growing rapidly in several emerging markets and doing business electronically. (Lindsay P., 2002)
developing economies (UNCTAD/IER/2015). The b) Why E-commerce?
technologies designed to improve commercial With the increasing diffusion of ICTs, more
transactions using the Internet have evolved as quickly. specifically the Internet, the global business community
However, we have not yet achieved an ideal world of is rapidly moving towards Business-to Business (B2B)
painless and secure transactions utilizing the Internet, as e-Commerce. The buyers gain a clear advantage when
unresolved privacy issues of the purchaser have the Internet gives them access to the global market, by
impeded the further development of the technologies which they can compare prices across regions, find out
(Alberto, Avila and violeta-2007). E-commerce has been whether prices vary by order fragmentation and get
hailed by many as an opportunity for developing awareness about substitute products. Due to
countries to gain a stronger foothold in the multilateral transparency of the market, customer can compare the
trading system. E-commerce has the ability to play an services of various e-commerce sites easily. For instant,
instrumental role in helping developing economics in case of e-commerce the competitors are one click
benefit more from trade (WTO-2013). The growing use away from customer. If clients are not happy with the
of the Internet, tablet devices, and smart phones products, prices or services offered by a particular e-
coupled with larger consumer confidence will see that commerce site, they are able to change much more
ecommerce will continue to evolve and expand. With easily than in the physical. From the Sellers’ point of
social media growing exponentially in recent years, the view, they don’t need to have physical existence of
conversation between businesses and consumers has shop.
Commercial transactions involve the exchange of value in e-commerce; however, due to various economic,
(e.g., money) across organizational or boundaries in infrastructural and legal reasons it did not spread widely
Year
return for products and services. Exchange of value is in the past. After the introduction of 3G technology, the
important for understanding the limits of e-commerce. e-commerce has been growing rapidly because people
20 Without an exchange of value, no commerce occurs have more easy access to internet than in the past.
(Laudon and Traver). E-business has changed According to BASIS (Bangladesh Association of
Global Journal of Management and Business Research ( B ) Volume XVI Issue I Version I
processes within and between enterprises. Electronic Software and Information Services), in just three
Data Interface (EDI), widely introduced twenty five years years, more than 2000 online trading platforms have
ago on dedicated links between firms, showed how made their way to Bangladesh. Business people and
information could be directly passed from the operating trading houses state that the rapid growth in internet
systems of one enterprise into the order processing, networking and mobile phone coverage induces them
production and logistics systems of another(Clayton and to meet customers online and deliver a smooth and
Criscuolo). If implemented properly, E-commerce transparent shopping experience including e-ticket sales
technologies can result in business process and sales on Facebook the market has yearly
improvements and increased efficiencies. Leveraging E- transactions around Tk 10 billion (approximately DKK
commerce technologies should result in improvements 700 million). Furthermore, it increases at a tremendous
to developing countries, but so far have not produced pace with a monthly growth of 20-25 percent according
the desired results (Jeffrey S. Ray-2011). The to data from BASIS. Around 15 million people use the
development experienced in internet and other global internet regularly of them,4-5 million have accounts
online networks have, thus, created new commercial on Facebook which is still holding the leading
opportunities for e–commerce and creation of position for online shopping through smaller and more
completely new sets of global and national trading local businesses although the market is changing
relationships. This consequently, led to the perception rapidly. Larger companies, domestic and international,
that e-banking and e-commerce are now an inevitable are having success in transforming a somehow hectic
aspect of financial services. It enables multiple buyers shopping culture into a transparent and easy way
and sellers to come together on a common platform and of accessing a greats e-location of consumer goods.
conduct business without compromising individual This trend is known to Swedish e-commerce
requirements and relationships among the participants company Bikroy.com who is doing well in Bangladesh.
very quickly; (Harris and Spencer, 2002; Bairagi, 2011). Since their launching in 2012 Bikroy.com has
Electronic commerce is creating new opportunities to experienced a significant growth and is today the largest
the global economic, for example in global travel online marketplace in Bangladesh. Now they have more
and tourism industry. Transforming from than 2 million unique visitors on their website.
traditional business method to electronic commerce
VI. Benefits of E-commerce
method is hard and there were many different factors for
companies to adapt them with electronic commerce The main benefit from the customers’ point of
factors (Nanehkaran, 2013). (Hasan, 2010) pointed out view is significant increase and saves of time and eases
that nowadays e-commerce industries have increasingly access from anywhere in the globe. Customer can place
become a necessary component of business strategy a purchase order at any time. The main benefits of e-
and a strong catalyst for economic development. commerce for customers are as follows:
• Reduced transaction costs for participating
III. Objectives of the Study exchange in a market.
The main objectives of the study are as follows: • Increased comfort - transactions can be made 24
1. To get a full acquaintance of the E-commerce in hours a day, without requiring the physical
Bangladesh. interaction with the business organization.
© 2016
1 Global Journals Inc. (US)
Electronic Commerce: A Study on Benefits and Challenges in an Emerging Economy
• Time saving- Customer can buy or sell any product beyond the credit card approach, banks and other
at any time with the help of internet. financial service intermediaries are challenged to
• Quick and continuous access to information- develop alternative modalities for secure and
Customer will have easier to access information reliable online transactions in environments where
check on different websites at the click of a button. credit cards are not commonplace (Anupam-2011).
• Convenience-All the purchases and sales can be • In developing countries there is a culture of buying
performed from the comfort sitting a home or product by negotiating price with seller, which is not
working place or from the place a customer wants easily possible in case of e-commerce in
to. developing countries because of lack of
• Switch to others companies-Customer can easily infrastructure facility.
change the company at any time if the service of a • One of the biggest challenges is the cutting down
company is not satisfactory. the price of internet. Authorities are trying to keep
• Customer can buy a product which is not available low the price of bandwidth low. But the high cost of
2016
in the local or national market, which gives customer spreading networks and operating expenses hinder
Year
a wider range of access to product than before. to keep price low for internet.
• A customer can put review comments about a • Trust is the most important factor for the use of the
product and can see what others are buying or see electronic settlements. Traditional paper about 21
the review comments of other customers before based rules and regulations may create
making a final buy. uncertainties the validity and legality of e-commerce
Global Journal of Management and Business Research ( B ) Volume XVI Issue I Version I
The main benefits of e-commerce from sellers’ transactions. Modern laws adopted and impartiality
point of view is increasing revenue and reducing implemented in the electronic transactions form the
operation and maintenance costs through internet. basis of trust in the developed world. Where legal
These include as follows: and judicial systems are not developed e-
• Increases revenue. commerce based transactions are at a
• Reduces operation and maintenance costs. disadvantage because of lack of security whether
• Reduces purchase and procurement costs. real or perceived. In many developing countries
• Raises customer loyalty and retention. even today cash on delivery is the most accepted
• Reduces transportation costs. system, even cheques and credit cards are not
• Develops customer and supplier relationships. readily accepted (Roni Bhowmik-2012).
• Improves speed of the process of selling. • New methods for conducting transactions, new
• Improves internal and external communication. and instruments, and new service providers will require
• Develops the company image and brand. legal definition, recognition, and permission. For
example, it will be essential to define an electronic
VII. Challenges in E-commerce signature and give it the same legal status as the
The major challenges faced by the sellers and handwritten signature. Existing legal definitions and
the buyer which carrying out business transactions permissions such as the legal definition of a bank
through internet are as follows. and the concept of a national border—will also need
to be rethought (chavan-2013).
• Private and public corporation is not involved jointly
to grow the business of e-commerce. Private and Besides the above challenges, the emerging
public joint initiative is needed to develop the e- economy like Bangladesh also faced the following
commerce business. Joint initiatives bring credibility challenges:
inside people, which is needed for flourishing the e- • Lack of education
commerce business. • Cultural tradition
• There is a lack of system security, reliability, • Poor concept of online marketing
standards, and some communication protocol. • Less marketing or promote
Customer loses their money if the website of e- • Political problem
commerce site is hacked. Most common problem of
• High cost of products/services comparing traditional
e-commerce website is not having enough cyber
market
security.
• Financial institutions and intermediaries: Thus far, • Internet coverage arena is limited
financial institutions and banks in developing • Communication is haphazard over the country
countries are hesitant to take an active role in • Lack of trustable business and enterprise and
promoting e-commerce. However, merchants need • Lack of experience of meeting directly with
the involvement of banks to broaden the reach and merchant and customer.
appeal of ecommerce and to help prevent fraud and
potential losses attributable to credit card fraud. But
© 20 16 Global Journals Inc. (US)
Electronic Commerce: A Study on Benefits and Challenges in an Emerging Economy
implementation of e-commerce with the help of 13. Molla, A., and Heeks, R. (2007). “Exploring E-
comparing with developed country. When the internet commerce benefits for businesses in a developing
Year
cost will be low then the e-commerce will flourish easily country”. The Information Society.
and will make many of traditional business to run out of 14. Nanehkaran, Y. A. (2013). “An Introduction to
22 their business. Convenience is one of the benefits that Electronic Commerce”. International Journal of
customer gets from the e-commerce and thus Scientific & Technology Research, Vol. 2(4), pp.190-
Global Journal of Management and Business Research ( B ) Volume XVI Issue I Version I