This work is a special dedication to my dear Mother, brothers, sisters, friends, and relatives.
Acknowledgment
I wish to thank the Almighty God for strength, protection, and ability to perform even when I felt so disheartened and stressed. I wish to acknowledge the help and encouragement I received from a number of people without whom this research work would not have been successful. I am greatly indebted to my supervisors. Their endless support, supervision and positive criticism, permitted me to complete this project.
I also acknowledge the support provided by my lecturers. Moreover, I wish to acknowledge my peers for their support and help during my course of study.
Abstract
The main aim of this study is to investigate the contribution of technology to business operations and how the growth of E-commerce has impacted the retail industry. On the other hand, the major objectives if this study is; to document the history and growth of technology in business; to highlight the key trends in E-commerce; to highlight the ethical concerns of the dominance in E-commerce and in the retail business. The study will target individuals that have used E-commerce platforms to purchase goods and services from various companies. The study will be conducted in Manhattan, New York, and the United States. Research instruments include semi-structured interviews and discourse content analysis will be administered to the target population. Out of the 18 respondents, 12 preferred shopping online whereas 6 favored the use of physical shops. The study demonstrated that all retailers, regardless of their operating model, relied heavily on technology in most of their operations. The Amazon Company was ahead of the rest in terms of relying on technology with a 90% score, followed by Alibaba at 85%. The Kingfisher Company was third with a 65% reliance on technology, while Walmart was last at 60%.
Keywords: E-commerce, retail industry, technology, e-commerce trends.
How E-Commerce and the Adoption of Technology Have Revolutionized the Retail Industry
The application of technology in business has created a major impact on the growth and development of enterprises. Belew and Elad (2017, p. 52) argue that businesses experienced dawdling growth in the twentieth century, due to the lack of tools restricted by traditional technology and E-commerce methods. This, they purport hindered the execution of business operations, such as information storage and retrieval, record keeping and transactions. However, the technological developments that have been witnessed in the 21st century such as the upsurge of a software application that aid business application has further triggered the growth of companies. Laudon and Traver (2018) add their thoughts by indicating that in the late twentieth E-commerce, which was emerging by then, was not considered as a popular business practice since the internet technology had not taken ground among the retail industry as well as the prospective customers of the industry. Conversely, the adoption of personal computers and smartphones has intensified the growth of E-commerce businesses. According to Erisman (2017), the application of technology in business activities is yet to introduce more revolutionary and disruptive aspects that will change how companies and people transact. The author argues that E-commerce will also experience major changes with further advancements in technology.
Problem Statement
Technology has affected the retail industry directly. For instance, the process of performing transactions and facilitating the delivery of products is aided by technology (Belew and Elad, 2017, p. 96). However, the revolution of retail activities by technological advancement has raised controversies, such as the increase of incidence of fraud, protecting consumer interest and creating unemployment. Thus, it is imperative to perform scientific studies into the issues and delve into previous studies to achieve an in-depth look into the issues pertaining to this topic.
Purpose of the Study
This study is important has it will dissect into the contributions that technology has had on business. As such, this work will help create an understanding of the positive and negative implication of relying on technology as a key pillar in business activities. The research also intends to investigate the ethical concerns involved with applying technology in facilitating the growth of E-commerce businesses. The study is also purposed in making recommendations that will help entrepreneurs and policymakers in adjusting E-commerce businesses for sustainable operations.
Aims and Objectives
The main aim of this study is to investigate the contribution of technology to business operations and how the growth of E-commerce has disrupted the retailed industry. On the other hand, the major objectives if this study is;
i. To document the history and growth of technology in business.
ii. To highlight the key trends in E-commerce.
iii. Highlight the ethical concerns of the dominance in E-commerce and in the retail business.
Significance of the Research
This research is important as it will contribute to the body of knowledge that will be referred to in discussions and debates on how technology has impacted businesses. The audience of this work will also gain an understanding of the history, and hence, project the future of E-commerce activities. Further, the research will help identify emerging issues both positive and negative regarding technology and E-commerce, therefore, breaking the ground for the need to explore them in future studies.
Research Questions
a. How does the integration of technology boost the profitability of businesses?
b. What have been the key influencers in the dominance of E-commerce?
c. Does the emergence of E-commerce platforms threaten traditional retailers?
d. What are the modern trends in E-commerce?
Focus and Scope of the Study
This study will majorly focus on the retail industry with special attention to the E-commerce activities. The researcher will draw illustrations from major internet retailers, such as Amazon, E-bay, and Alibaba. The issue of technology will be the central aspect that will inform the scoop to be adhered to by the researcher.
Limitation of the Research
The researcher will be limited to business activities and how technology plays a crucial role in the development of commercial activities. Further, the researcher will also be limited to the retail industry when collecting and analyzing data. Other limiting factors will include time and financial resources, which will inform the choice of sample size and the target population.
Research Roadmap
The execution of this study will be organized on chapter-basis, where the researcher will systematically structure the report. The investigator will document the various procedures a[plied when collecting information and analyzing it, as well as deriving relevant illustrations and making deductions.
The first chapter, the introduction part, will be utilized to describe the major concepts being investigated, as well as explaining the background of the study. The introduction will also be used to explain the problem statement and highlighting the objectives of the research. On the other hand, in the second chapter, the literature review will be used in presenting the scholarly perspective on the main thematic areas relevant to this study. In this chapter, the researcher will draw arguments from various researchers while documenting and comparing their arguments on the issues relevant to the topic.
In the methodology chapter, the investigator will explain the step by step procedure used to obtain data from the target population. The chapter will also feature the research approach and philosophy that will be applied in the investigation of the problem statement. The fourth chapter will be used to make presentations of the outcome of the study methodology.
Chapter five, which will focus on discussions and analysis, will explain the results of the investigation while using the different view from previous works, thus attempting to answer the research questions. In the final chapter, the researcher will draw conclusions on the subject matter while making recommendations and opinion for further studies.
CHAPTER 2: LITERATURE REVIEW
A review of the e-commerce and adoption of technology in the retail sector can be categorized into various areas, such as the planning and management of the businesses, products, and service distribution channels, and consumer behavior (Forbes, Kelley and Hoffman, 2005, p. 288). The authors argue that from these categories, several themes can be developed. They include the perspective of the retailers, which addresses how the businesses adopt e-commerce based on how they perceive the market. Key angles of perception include the potential of the internet market and risks associated with internet marketing. The second theme is the consumer perspective, which addresses the effects of electronic commerce, from the angles of how e-commerce and technology affect its adoption and its apparent value. The third theme is the technological perspective, which is the main intermediary between the retailer and consumer. It encompasses the design of websites and software engineering of the online channels and platforms.
According to Laudon and Traver (2018), most business activities in the modern era are heavily dependent on technology. The authors base their argument on the observation that most production and service-delivery activities, such as customer-engagement are supported by technology (Laudon and Traver, 2018). However, before the adoption of technology in business, companies operated without the help of the internet, telecommuting and mobile marketing (Alberta, 2006). Nonetheless, modern-day enterprises embrace technologies, such as Artificial Intelligence (AI), quantum computing and robotics, aspects that have made the use of computers become an integral part of doing business.
According to Bajaj and Nag (2005), the future of businesses relies heavily on technological advancements because the innovations will be embedded in most business activities of the future. Technology helps organizations achieve efficiency, better productivity and gain competitive advantage. Schneider (2018) argues that the level of proficiency and adoption of technology forms grounds for companies to compete and outdo one another. A company that effectively utilizes its technological resources is better-placed to keep up with market and production demands, as well as meeting the expectations of their customers (Plunkett, 2017).
The adoption of technology helps companies to boost savings and streamline their operations (Plunkett, 2017, p. 96). Investing in technology allows firms to grow exponentially and empower their employees in a fast-paced spectrum. Software and hardware innovations give organizations the ability to streamline their operations and enhance their processes as they move towards meeting their markets objectives. For instance, advances in AI will improve productivity and augment existing jobs, as this innovation will help enhance decision making, revitalize customer experience, and revolutionize business ecosystems and models (Mann, 2011).
There have been discussions on what entails an effective technological change in the corporate sector, with the major point of disagreement being the extent to which companies should embrace technology. According to Kalantzis-Cope (2011), adopting technology in most departments within an organization enhances standardization of products and seamless operation. On the other hand, Verkerk (2016) notes that making the entire organization to be dependent on technology is risky as it can stall operations in the event of a technical glitch. In the business context, technological change entails enhancements in the style of making products or managing processes. Since innovation stems from technological advancements, strategies used to embrace modernity in business are geared towards improving the quality of the final product and the services being offered (Awad, 2002).
In most industries, both manufacturing and service based, technology has emanated as a necessity. As companies embrace modernity, the business world progressively leans towards technology for sustainability. In the past, businesses relied on simplistic systems, such as the barter model, which was later on overtaken by cash payments. As years go by, the cash system is also being eroded slowly through the adoption of electronic payment systems. However, the adoption of modern payment systems introduces new risks to businesses, such as fraud and cyber-crimes, which are potentially perilous to businesses. According to Plunkett (2017), the withdrawal of technological applications in modern businesses would result in the collapse of entities as their major operations somehow rely heavily on the innovations.
Technology has been important in business advancements as it links the companies to the world. Most businesses rely on technological applications to communicate with clients regardless of their geographical location (Schneider, 2017, p. 129). Innovative advancements have not only pushed businesses to the global scale but also facilitated transactions and negotiations. According to Mann (2011), the internet is a basic example of an instrument that hosts the business ecosystem, where marketing activities are anchored. It is due to Internet-related innovations, such as electronic payments and mailing services that E-commerce has sprouted.
Through technology, it has become possible for companies to achieve higher productivity due to the reduction of resources consumed in the production process (Schneider, 2017). As such, technology has enabled companies to develop better products and provide faster services as well as reach more clients. In fact, companies with stable technological infrastructure have the capability to spiral their profits within a short period. Besides, technology enables companies to store and retrieve information with high integrity, security aspect that most organizations aspire to run their operations with minimal threats (Plunkett, 2017). The ability to store big data also enables companies to make marketing decisions with much effectiveness.
Major organizational operations, such as accounting, sales management, and information management require the application of technology. Over time, businesses have achieved a remarkable shift from manual systems to technology-based operations. The shift is attributed to the desire by organizations to adopt better approaches to business that are characterized by convenience, faster delivery and efficiency in carrying out transactions (Plunkett, 2017, p. 105).
Schneider (2017) depicts that online shopping has become a mainstream activity among the internet population. The E-commerce concept is built on the need to provide products and services over the internet using convenient mechanisms to achieve customer's satisfaction. In as much as digital transformation has been a key aspect of the business revolution, it has also guided companies in understanding consumer behaviors and ultimately studying markets. Thus, technology-based ideas have become a central ingredient in marketing activities and decisions. Besides, through technological systems, companies are able to offer products and services for various departments under one platform. For instance, Appendix A demonstrates various departments under which shoppers can access products from the Amazon Company. The integration of such departments on a single website system makes it easy for the company to manage its operations as well as achieve their administrative objectives, such as monitoring sales, and customer preferences on various products and service (Erisman, 2017).
According to Mann (2011, p. 210), digital tools, such as the social media have become a media that connects organizations to the general population. In fact, online media creates a bridge between the business worlds to the global population, thus making it easy for companies to advertise their products. For instance, the Facebook and Twitter communities connect people across the world, thus creating a concrete platform where companies can market their goods and services. Plunkett (2017, p. 126) points out that digital technology has allowed companies to get more out of their marketing efforts since they have the capability of targeting prospective clients. This is well indicated in Appendix B where the integration of social in their customer service enables an almost one-on-one interaction with the customers where complaints, requests, and questions are addressed.
Various digital marketing tools, such as lead accelerator by LinkedIn allows the sales team to perform highly targeted messaging to specific industries, companies, and individuals. Thus, the marketing efforts aimed at transforming the recipients of the messages into prospective clients. In a nutshell, targeting avoids sending messages to irrelevant audiences to more specific recipients who could be interested in the product or service. However, there are no precise formulae for measuring the contribution of the digital methods in promoting sales, as prospective customers can view the products on the media platforms but not be necessarily influenced to purchase them. As noted by Verkerk (2016), the reputation of an organization plays a crucial role in promoting sales through referrals and return customers, thus discrediting the notion that digital marketing is a superior method of gaining more clients.
The use of social media to engage customers creates an avenue for disappointed customers to criticize the companies openly, an aspect that can cost the retailers prospective clients (Kaufman, 2014). The social media is an open space where individuals can openly air their views, where some can be genuine and others malicious. Regardless of the intent of the individuals who offer product and service reviews by a given company, negative comments are disastrous to the company (Erisman, 2017). For instance, the image in Appendix B shows negative comments from a customer that is dissatisfied with the quality of service by the Amazon Company. Since the comments are visible to the public, prospective customers are likely to be turned away by the contents of the message.
The Emergence and Growth of E-commerce
As indicated by Schneider (2017), the idea of E-commerce was actualized in 1991 when the internet was put up for commercial use. Since then, numbers of businesses have established themselves on the internet. Bajaj and Nag (2005) shed some light on the implication of e-commerce in the retail sector when it was actualized. The authors indicate that the term e-commerce was used to imply commercial transactions that were conducted electronically using technology, such as Electronic Funds Transfer (EFT) and Electronic Data Interchange (EDI). E-commerce enabled organizations to exchange information amongst themselves and their customers. The use of the internet in managing financial and business activities gained momentum in 1994, but it took approximately half a decade to develop security protocols for safe internet transactions.
However, the meaning of the term E-commerce slightly changed with the advent of the 21st-century where it was used to infer to the buying and selling of goods and services over the internet. Bidgoli (2002) notes the negative impacts of the collapse of the dot-com phenomenon in the year 2000 on the retail companies that had adopted E-commerce. However, the E-commerce phenomenon was given a lifeline by the "Brick and mortar" companies, which realized the benefits of integrating web, and electronic commerce models into their operations. Bajaj and Nag (2005) noted that the business-to-business (B2B), which was the largest form of E-commerce, had achieved transactions totaling to $700 billion towards the end of 2001. The authors further noted that the level of sales attributed to E-commerce grew exponentially, and by the end of 2007, the industry had grown by 3.4% in sales value.
Major E-commerce trends
Digital and E-commerce command more than 50% of the purchases made in stores. In the US alone, E-commerce represents over 10% of sales. Digital commerce has revolutionized itself by just buying items online to various interactions between individuals and organizations, resulting in the movement of goods and making of payments (Strahle, 2017). The growth of e-commerce suggests that traditional stalls ought to incorporate digital solutions to provide commodities and services to their customers, such as delivery to specified locations. The continuous evolution of E-commerce is championed by the emergence and revolution of the key trends in the retail industry (Mann, 2011).
The Rebirth of Brick and Mortar
The emergence of a new set of retail stores that are rooted in digital trends has slowly started to replace traditional retailers. However, it is crucial to observe that shops are not being phased out, but a rapid transformation has started which poses a risk to the profitability of the shop models. The brick and mortar experiences entail on-sight and physical interactions, which are important in building a stable relationship with their customers (Schneider, 2017). Under this model, merchants are supposed to develop styles that build a good customer experience, such as organizing events, and product demos, thus growing their physical footprints into new customer basis. According to Plunkett (2017), the advent of E-commerce trade as perceived a threat of maintaining the fundamental element of achieving customer touch. However, e-commerce platforms have progressively improved their systems to enhance interactions with their customers. Besides, the clients are able to get more information on their products with a click of a button and by interacting with the customer care personnel online.
However, a contradicting argument by Gupta (2015) has it that retailers have been using data for an unfair advantage over their rivals in digital commerce. Data has been used by retailers to enable their customers to reach what they are looking from huge ranges of product designs and selections from their rivals. Further, retailers have been using quantitative analysis to know the needs of their customers to be able to design and incorporate various products and services on their digital platforms. Big data has become a popular concept where companies are investing in systems that store and analyze the data to predict customer patterns and design new products for them.
Online stores, such as Nordstrom, Casper, IRL and home depot have opened physical shops as a way of establishing convenient outlets for their products to customers as well as maintaining a personal touch with their customers (Schneider, 2017). The initial idea of E-commerce was perceived as being an alternative option for physical shops in a bid to cut cost and improve the distribution of commodities. However, time and the need to improve operating models have demanded that E-commerce companies reintroduce the Brick and Mortar shops to maximize their potential.
Enhanced user experience
According to Schneider (2017), e-commerce companies focus on their customers who are the end users of the commodities and services they offer. Traditional transactional features, such as sales calls and print catalogs have been overhauled by alternative digital solutions and processes that seek to simplify the ordering process. Concisely, the transformation that is attributed to E-commerce innovations is geared to improve the ease of doing business, thus improving the user experience (Strahle, 2017). The need to enhance the user experience is based on the idea that customers shop where they deem convenient. Reduced paperwork and minimal time consumption in effecting transactions help shape the user experience. In the case of E-commerce, the issuance of receipts and making of payments done through integrated electronic systems, which reduce the level of customer engagement significantly.
Digital marketing
Electronic commerce businesses rely heavily on digital marketing to boost their sales and, their profits. Most companies have embraced digital marketing to reach wider markets beyond their geographical locations. For instance, E-commerce firms such as Amazon and Alibaba utilize a series of digital marketing strategies to maintain their global online presence (Deiss and Henneberry, 2017). One of the key strategies used in digital marketing is Content and search engine optimization (SEO). Internet users determine whether to use the services of an online company based on the information they access on their websites. On the same note, the quality and relevance of articles on a given item drive prospective customers to the e-commerce company. E-commerce funds put in place SEO and content strategies to boost their rankings on Google in order to have the edge over their competitors (Kaufman, 2014, p. 168). Unlike a decade ago, a higher ranking on Google exceeds being present on the first page of the search engine. It is important for company websites to be ranked first in order to be guaranteed a high number of clicks, as this will increase visitor-customer conversion rate.
Technology-aided market research
According to Erickson (2017), every industry requires a concrete market strategy in order to have sustainable operations and be guaranteed with profits. The outcome of the research ought to have dimensions such as customers’ distributions, preferences, and level of demand. A report on the market research is relevant when it is timely. However, this objective is difficult to achieve because various market forces and elements are ever changing. For this reason, traditional research methods, such as the use of printed questionnaires and physical interviews are largely ineffective in volatile markets. With the use of technology, it is possible for companies to perform quick studies when gathering information on market phenomena that are subject to change (Longbottom, 2017). For instance, studies on financial markets and E-commerce businesses require prompt research activities in order to obtain real-time data on the aspects being studied. One of the key strategies used to obtain such types of data includes the use of customer surveys especially after receiving a service in order to determine their level of satisfaction, their preferences, expectations, and opinion on the measures that can be taken to improve the quality of service (Schneider, 2017). Mailed surveys are also used to respondents across industries and geographical locations, which are then filled and returned promptly for analysis. The use of mailed surveys is effective since it takes a little amount of time to gather data, and hence, facilitate the research process within the specified timelines (Erickson, 2017).
Implications of E-Commerce on the Prospects of Traditional Retailing
E-commerce is viewed as being a disruptor in the retail business. For instance, traditional retail companies have been prompted to adapt to the new trends in the industry, which are shaped, by the changing customer preferences and needs. Most importantly electronic commerce has changed the way retailers do their businesses regardless of their size. In observation by Mann (2011), the e-commerce take-over posed a great risk to the retail industry because customers were being drawn towards relying on the internet for commercial transactions. The author based his arguments on the idea that the ideal retail industry entails physical window-shopping, a process that informs the decision of a prospective customer to make a decision of purchasing a product.
In fact, there has been a trend over the past decade in which traditional retailers are adopting internet and web offerings. Using the assertions of Mann (2011) regarding the emergence of e-commerce, the author believes that traditional retailers would be extinct at some point as people are progressively embracing modern shopping methods. On the other hand, the fact that companies, such as Amazon and Bonobos have resolved to open Brick and mortar shops is evidence that electronic commerce is a real disruptor of the retail industry.
The rapid evolution of technology demands retailers to devise new ways of satisfying their clients (Erisman, 2017). The introduction of mobile computing devices, as well as the enhanced access to the internet, provides a wide spectrum that internet retailers can use to provide their customers with goods and services. Thus, traditional retailers are under pressure to expand their activities beyond operating physical shops in order to counter the competition from their internet rivals. However, in his assessment, Erisman (2017) limits his views on innovation and creativity in the use of technology. Thus, his suggestion fails to acknowledge the fact that by lauding small retailers to adopt the technology, they face stiffer competition from already established companies, such as Amazon.
Based on the structural adjustments that have taken place in the retail industry subject to the inclusion of internet solutions, there has been uncertainty about the future of the businesses. Traditional retailers are adopting internet mechanisms in their operations whereas e-commerce companies are opening physical shops (Plunkett, 2017). As such, the introduction and growth of E-commerce, therefore, only have a disruptive impact on the retail industry but doesn’t introduce the threat of eliminating traditional retailers.
Ethical Concerns on Technology and E-commerce
According to Plunkett (2017), the increased reliance on the internet by retail firms has brought about a number of ethical concerns that demand for checking and regulations. For instance, the use of the internet in marketing, distribution and facilitating payments reduces the level of human interactions required to perform the business activities. Consequently, a significant number of jobs are lost since the retail companies are enthusiastic to cut cost using the E-commerce model (Schneider, 2017). The fact that the use of internet in business threatens the employment status of the larger populations raises an ethical concern.
Internet platforms have been a medium for fraudulent activities. For instance, fake goods and service providers have emerged, who purport to sell commodities that they don’t actually have (Erisman, 2017).
