This research seeks to examine the impact of e-commerce B2C model on various businesses and industries.
In the contemporary corporate environment, companies are adopting the e-commerce model due to the increase in the rate of internet usage by consumers. However, this model is not fully embraced in regions such as Singapore, whose market is restricted by the small physical size. To narrow down the study, this research will focus on the retail industry in Singapore since it received the highest number of responses from the participants. It is imperative to identity some of the factors that hinder merchants in Singapore from adopting the B2C e-commerce model.
Key words: online shopping, internet, offline shopping, consumers, virtual platforms, B2B.
Introduction
The internet and the fast-growing globalization have increased innovation and competitiveness in the business and marketing spheres (Zhang, Zhu, and Ye, 2016). One of the outcomes of the internet and advancement in information technology is electronic commerce (e-commerce) or online shopping Gangeshwer (2013) states that e-commerce is a practice in business whereby companies transact via online platforms. It also covers the servicing of customers and establishment of networks and collaborations with other business partners on the supply chains. One of the sectors that have been affected by e-commerce capabilities is the retail industry. Right from advertisements using the e-commerce web-designed tools to selling over the internet to one picking up the item at a physical store to customized delivery to your door step after an online shopping, the retail industry has witnessed a shift from physical to virtual transactions (Aminu, 2013). Retailers are forced to adapt to latest technological demands of the market so as to remain competitive in the e-commerce world (Chaparro-Peláez et al., 2016).
E-commerce has received mixed reactions in the retail industry with some perceiving it as a killer shot the brick-and-mortar enterprises while others saw it as an opportunity to leverage on so as to gain competitive advantage (Zhang, Zhu, and Ye, 2016). Aminu (2013) asserts that during the beginning of the new millennium, most merchants blamed online shopping for the reduction in level of sales within physical stores. In such a case, it is advisable to accommodate the e-commerce system. Majority of traditional retailers now have mobile and web offerings and those that started as purely online stores such as Amazon, e-Bay, Bonobos, and Warby Parker are busy opening physical stores (Gangeshwer, 2013). Within the retailing industry, online shopping is increasingly becoming a vital component of the operational strategy and catalyst for growth (Chaparro-Peláez et al. 2016). This is because it offers consumers and businesses new methods of communicating and opportunities for supply to meet demand in real-time.
Background of the Study
According to Thakur and Srivastava (2015), consumer behavior is highly dynamic and difficult to predict hence the need for a matching level of flexibility from businesses to quickly fit into customer preferences. Shanthi and Desti (2015) observed that e-commerce is one of the tools that can allow businesses to be versatile and meet consumer expectations. This is because it establishes an interactive platform between customers and the businesses where customer tastes, perceptions and preferences can be addressed (Kurnia, Choudrie, Mahbubur, and Alzougool, 2015). By influencing consumer behavior, online shopping affects the brick-and-mortar shops in many ways (Gong Stump and Maddox, 2013). Through the consumer online views and preferences, physical stores try to adopt new ways of doing business right from the layout, display, and product range to customer service and availability.
Chaparro-Peláez et al. (2016) observed that traditional retail businesses in emerging economies are struggling to remain competitive given the triple threat of declining volume of sales, rising operational costs and industry-wide disruptions from online shopping. According to a World Bank report, over 38,000 major retail stores may close down worldwide by the end of 2017 due to the disruptive forces of e-commerce (Mallapragada, Chandukala, and Liu, 2016). According to Sam and Sharma (2015), the seamless integration of physical stores with the online channels has become a challenge for most small retailers. Precisely, the small retailers are unable to keep up with the demands of online selling in regards to Many have witnessed huge employee turnover, reduced sales volume, and startups face long periods of struggles before breaking even.
Research Purpose
In this paper, the researcher purposes to discuss how the practice of online shopping tends to affect the performance of companies that us brick-and-mortar stores. Borrowing from Kim and Lennon (2013) and Sam and Sharma (2015) approaches, the current study takes a holistic assessment of the influence of e-commerce on physical retail businesses in Singapore, a fast-growing economy in the world. In this study, the researcher ill adopt the quantitative approach when analyzing how e-commerce has influenced the Singapore retail industry. Zhang, Zhu, and Ye (2016) add that the approach also helps to analyze the growing trend in regards to e-commerce growth. The researcher used online questionnaires/survey to collect data from retail businesses and consumers within Singapore. The participants of this study were randomly selected within Singapore and the data analyzed to establish how e-commerce activities are influencing Singaporean retail industry.
Aims and Objectives
This research seeks to examine the impact of B2C E-commerce on physical retail stores in Singapore. The main objectives are to;
1. Establish e-commerce capabilities and activities within the retail industry in Singapore
2. Explore the effects of e-commerce on consumer purchasing behavior and store characteristics within the retail industry in Singapore
3. Predict future trends in the online and offline shopping in Singapore
Research Questions
The research questions guide the scope and the process of data collection. The following research questions were developed:
RQ1: What are the main online activities and capabilities within the retail industry in Singapore?
RQ2: What are the impacts of e-commerce on retail store characteristics and consumer purchasing behavior?
RQ3: What are the future trends in online and offline shopping in Singapore?
Significance of the Study
Despite the upsurge in online shopping in the last two decades, more than 65% of the world potential retail consumers still shop in physical stores. According to Zhang, Zhu, and Ye (2016), the ability to see, touch and try/test the items before buying is driving the brick-and-mortar business. For instance, customers in the fashion industry tend to research online beforehand but shop in physical stores because they are given an opportunity to assess the suitability of the products to their tastes and preferences (Riquelme and Román, 2014; Kim and Lennon, 2013). Gong, Stump, and Maddox (2013) argued that many shoppers are frustrated by the mismatch between the advertised and subsequently ordered products and the actual product that is delivered. They opt to see, feel and compare the product or service with others before carrying it home (Wu, 2013). Despite all these reasons, online shopping is growing and engulfing the world like wildfire. Zhang, Zhu, and Ye (2016) estimated the annual growth at 4.8%. Therefore, there is a need for empirical examination of the forces behind this growth by looking at its capabilities. The current research tries to address the growth by looking at the e-commerce activities and capabilities that drive such fast growth. Existing literature on this area focuses on the developed countries in the west such as the USA, Canada, and Western Europe (see Lu and Liu, 2015; Morganti et al., 2014; Falk and Hagsten, 2015; Shanthi and Desti, 2015; Ahmad et al., 2015). Few empirical studies have addressed the impacts of e-commerce on consumer behavior and retail business in emerging economies and third world countries (Gangeshwer, 2013; Thakur and Srivastava, 2015; Sam and Sharma, 2015). These destinations have consumer and market dynamics that are different from those in the West hence the need to explore the effects of e-commerce on their retail industry (Sam and Sharma, 2015).
Moreover, the majority of these studies in developing and second-world countries focus on the adoption of e-commerce and customer purchasing behavior, not its effects on offline retail businesses (Kurnia et al., 2015; Aminu, 2013; Ahmad et al., 2015; Wu, 2013; Gong, Stump, and Maddox, 2013). Given that Singapore is one of the emerging economies and dubbed the techno-engine of the East, it is critically important to understand how e-commerce impacts the physical retail businesses. There is no updated research study on the effects of e-commerce on the retail industry of Singapore hence the need for a current empirical examination of the subject. This research explores the online shopping activities and capabilities that influence retail business in Singapore and project future trends.
Definition of Terms
1. E-commerce: is the buying and selling of goods or services using electronic means such as computer networks (Gangeshwer, 2013). It also covers the servicing of customers and establishment of networks and collaborations with other business partners on the supply chains over the internet (Lim and Cham, 2015).
2. E-commerce capabilities: These are the products, characteristics and consumer-oriented features available in online platforms (Lim and Cham, 2015). These features and products enable consumers to shop online from the convenience of their homes.
3. Retail: Is a kind of business that sells products and services directly to consumers the right quantities (Aminu, 2013).Retailers normally break the bulkiness by selling the goods at small packs and in the right form for consumption.
4. Consumer purchasing behavior: This is the totality of the customer tastes and preferences for goods and services offered in the market (Mallapragada, Chandukala, and Liu, 2016). It also includes the purchasing power of the consumer that is influenced by the level of disposable income.
5. Offline store: This is a brick-and-mortar store where consumers physically shop by see-and-touch and carry the products or immediately receive the services (Aminu, 2013).
Chapter Summary
From the discussions above, online shopping is an important concept in business and its influence on retail stores cannot be overemphasized. This chapter introduced the research study by looking at the background to the study where the researcher set the basis for researching by exploring the overarching research problem. The purpose statement gave the intent of the researcher towards the study on the influence of e-commerce on physical retail business in Singapore. The research questions were derived from the objectives and the rationale for the study given. Crucial terms and study variables were defined according to the way they are utilized in the study.
The structure of this dissertation after this introductory chapter is as follows chapter two reviews the literature relevant to the study variables. Chapter three addresses the research methodology used in the study. The chapter outlines the research design, sampling procedures and data collection methods that were used to collect data that attempted to answer the research questions. Chapter four presents the research results from the data collected, and chapter five discusses the results in connection with the study variables. Lastly, chapter six addresses the recommendations and conclusion drawn from the data analysis and discussions. The researcher finally explores future areas of research and empirical concern.
LITERATURE REVIEW
This chapter provides various critical assertions from different authors regarding the subject of online shopping. In their work, Clemons et al. (2016) add that there is an exponential rate of growth of e-commerce model. This is because, through the usage of the internet, customers are able to access a variety of products from various merchants or retailers. Freathy and Calderwood (2016) argue that consumers are also able to easily communicate with retailers as well as manufacturers from all parts o the world through a virtual network. As Agrebi and Jallais (2015) state, online stores are accessible 24 hours and this makes it convenient for customers to shop at any time of the day. Physical retail stores are doing everything to offset the impacts of e-commerce including embracing it and using its capabilities to boost sales volume (Chaparro-Peláez et al. 2016).
E-Commerce Concept
Kim and Peterson (2017) define electronic commerce as a process that involves the purchasing, selling, and the exchange of information, services, and goods over a virtual network. According to Falk and Hagsten (2015), e-commerce started with Electronic Fund Transfers (EFT) and Electronic Data Interchange (EDI) of the 1970s followed by telephone banking, Automated Teller Machines (ATMs) and online debit card transactions. The systematic review revealed two concepts linked to e-commerce, that is, click-and-mortar and virtual e-commerce. Anesbury et al. (2016) raise a good argument by talking about the click-and-mortar concept, which involves the integration of online and offline businesses in which consumers shop for products online, and after placing the order, they pick the products or services at a physical store. Chen and Teng (2013) expanded the scope of click-and-mortar concept by including home delivery of the orders placed online. A company operating online with physical stores that are not open to offline shopping makes this possible. The goods and services are retrieved from the physical stores and delivered to a customer’s door-step at a fee. Examples provided by Yeung and Ang (2016) include Jumia Africa and Alibaba. While exploring the ‘what' and ‘where' of e-commerce, Mallapragada, Chandukala, and Liu (2016) emphasized that brick-and-mortar business model is all about striking a balance between online and offline business by complementing the strength of one model with the strength of the other.
Ahmad et al. (2015) in their study revealed that an appropriate balance between online and offline business results into the improved customer experience. The pure-play virtual concept involves consumers transacting over a virtual network with no physical stores in the transaction. For instance, Laudon and Traver (2016) provide an example of PayPal and Pioneer companies, which are online money, transfer agents with no physical banks such that everything starts and ends online. According to Falk and Hagsten (2015), many virtual pure-play firms act as intermediaries where a customer places an order, and the company outsources the product from physical stores and delivers it to the customer within the time required. According to Ahmad et al. (2015), the main aim of pure virtual business is to achieve fast, real-time business both business-to-consumer and business-to-business. Other examples of virtual pure-play include Netflix.com, Amazon.com, Pirates.com, and e-Bay.com.
Strengths and weaknesses of different scholars' arguments
Both Anesbury et al. (2016) and Chen and Teng (2013) raise a good and solid argument by discussing how brick-and-mortar stores operate. Moreover, Yeung and Ang (2016) include gives the most logic explanation to the research on brick-and-mortar store by providing examples such as Jumia Africa and Alibaba. Another One key strength based on Abed, Dwivedi, and Williams (2015) argument is that it is evident that most local stores today have an e-commerce platform for selling their products online as well. Additionally, the literature that makes the most contribution to this research is that of Anesbury et al. (2016) since she discusses the issue of brick-and-mortar stores, which is still the most common form of business in Singapore.
E-Commerce Capabilities for Retail Business
During its initial adoption stages, Hoppe, Lamy, and Cannarsi (2016) state that e-commerce capabilities were deemed suitable for business-to-business (B2B) models as wholesalers and manufacturers used various information technology tools to communicate about the market conditions to match supply the prevailing market demand. However, Huang and Benyoucef (2013) noted that in the last two decades, there had been an upsurge in the utilization of e-commerce capabilities in the retail industry. Resultantly, Brinson and Eastin (2017) add that this is leaving the retailers who rely purely on brick-and-mortar business scrambling for space. Cui and Pan (2015) revealed that the disruptive nature of the e-commerce capabilities on offline business makes it hard for offline retailers to remain competitive. Studies have termed the advent of cloud computing as the leveraging tool for online retailers to gain and maintain competitive advantage (Huang and Benyoucef 2013; Akter and Wamba 2016; Mohapatra 2013).
Mohapatra (2013) found that real-time consumer specific pricing ability of e-commerce platforms enables customers to view and compare prices of retail commodities across several online stores. Consumers are able to make purchasing decisions based on the quality and prices of goods and services in real-time from the comfort of their homes. Barnes Jr and Wounder GmbH (2013) added that consumers are able to make quick orders and re-ordering with using some IT capabilities of e-commerce that are able to handle the high frequency of customers ordering and re-ordering. Moreover, Mohapatra (2013) noted that many e-commerce platforms have the out-replenishment ability built into their systems to handle long queues checking long lists of items. However, the study by Strauss and Frost (2016) revealed that such e-commerce capabilities heavily depend on internet connectivity and bandwidth. The strength and availability vary sharply across regions hence making the impact of e-commerce localized (Villa-Real and Antony-Euclid, 2014). For instance, according to Villa-Real and Antony-Euclid, about 90% of Singapore access strong internet connectivity, but it is only 37% of Iraq that has stable internet connectivity.
Strengths and weaknesses of different scholars' arguments
The research that makes the most significant contribution to the subject is that of Maity and Dass (2014), who states that one of the cutting-edge capabilities of online shopping is consumer self-service and control of the entire purchasing process. Yan et al. (2016) make a significant argument by adding that contemporary e-commerce systems have the capability of empowering customers to configure and build their user trends, product hierarchies, and frequency of shopping supported by frequent notifications from the online stores. The study by Awa, Ojiabo.andEmecheta (2015) revealed that this reduces the operational costs and administrative problems are minimal as the client controls the process. Chen, Pan, and Ouyang (2014) study is also significant since it revealed that most e-commerce platforms have in-built credit and invoice reporting systems. These are generated instantaneously as the ordering process is ongoing. According to Escobar-Rodríguez and Bonsón-Fernández (2017), this change significantly reduces the cost of manually collecting and sending invoices and credit information to customers. Wang and Liu (2016) also noted that automated invoicing and credit reporting allows the customer to scrutinize the invoice and send back any concern in real-time. However, Villa-Real and Antony-Euclid (2014) warned that e-commerce capabilities are vulnerable to cyber-attacks especially transactions involving the transfer of funds such as paying for goods and services orders. They recommended tight cyber security or the involvement of physical payments at the end of an online transaction to mitigate the cyber risks.
E-Commerce and Consumer Purchasing Behavior
For a consumer, e-commerce involves some steps. Lim and Cham (2015) traced the behavior of consumers when undertaking online shopping and gave a general account. According to Li et al. (2017) study, the purchaser first browses through the web to get the dealer's site. At the site, the buyer is quickly given a prologue to the items that the company offers. According to Patro (2016), it is advisable for a company to ensure that the products on offer are the first on display. The buyer settles on the choice to shop from the web store by tapping on a connection or button situated on the web page. The name tags ‘Buy Now,' ‘Shop Online or a picture of a shopping basket button is a common section on a web that allows consumers to enter into a web store. Cao and Li (2015) add to the description by stating that upon visiting the web store, the shopper is normally connected to a virtual exchange server found elsewhere on the web, which runs a shopping basket application. According to ShenCai and Guo (2016), the shopping basket application has been setup by the company to show all items and services offered, and also compute prices, tax, and shipping charges. Zhang, Goh, and Lin (2017) add that this information enables the customer to calculate the total charges for purchasing and shipping a product. From that point, the customer concludes that he needs to buy something, so he enters all relevant credit card data, and a sales order is generated. The above scenario shows the common consumer purchasing journey and experiences online. Al-Hujran et al. (2015) revealed that the purchasing intention of a consumer is significantly influenced by not only the price but other factors. According to Chen and Teng (2013), there are various factors that influence consumer purchasing intentions online including the technology involved and cyber-security provisions.
Use of Technology
Given that e-commerce exclusively depends on internet connectivity which is based on technological capabilities, the level and characteristics of the technology involved influence customer behavior. Sam and Sharma (2015) study in Singapore retail online shoppers revealed that the technological capabilities of e-commerce influence the web speed which consequently influences consumer experience (See figure 1).
Figure 1: A demonstration of how site speed influences customer behavior (Sam and Sharma 2015).
From figure 1, it is evident that the web speed which depends on the technology utilized significantly influences customer experience and consequently affects the brand image of the online company. Sam and Sharma’s study revealed that 80% of Singapore retail online shoppers never come back to a given website to shop if it loads for a longer time than expected (Bonetti, Warnaby, Quinn (2018). These findings concurred with those by Gong, Stump, and Maddox (2013) in China in which about 78% of the participants gave bad reviews to websites that took long to load hence did not shop from them. This study attributed web speed to the equipment used by domain provider, the service providers having limited connectivity resources, or a low bandwidth allowed by the service providers and gateways.
Using the Stimulus-Organism-Response Framework, Kim and Lennon (2013) revealed that the design of the website is important to the consumer experience. The technologies employed to design a website determines the appearance and navigation of a web page. From Kim and Lennon (2013) study, too many aspects on the same web page make it look congested and inadequate graphical presentation of information drove away consumers. According to Melis et al. (2015), the study also recommended a balance between graphs and information displayed on a web page with the right font to maximize customer interaction with the website so as to stimulate the customer’s feelings towards the products and services in the website. Paswan. And Ganesh (2015) maintain that the level of technology and how it is utilized to influence customer behavior when doing online shopping.
Level of Cyber Security
Jiows (2016) asserts, more than 80% of customers felt safer seeing their trusted credit card logos displayed on the online retail store as a method of payment. From this study, about 59% of customers would abandon a transaction if their preferred online payment method is not available because of security and convenience reasons. About 98% of the respondents acknowledged trusting end-to-end encrypted online transactions such as that offered by PayPal, MasterCard, and Pioneer payment gateways (Gao and Su, 2017). Though the study's scope was narrow because it utilized data from only two countries, it revealed that cyber security influences consumer online purchasing behavior. Therefore, the level of security of a website that conducts online retail business is important, especially where monetary transactions are involved. Wu (2013) survey noted that many consumers have fallen into the hands of hackers, phishers, and scavengers online hence are careful to any suspicious actions online. The survey recommended that online companies should integrate cyber security technologies including foolproof authentication systems. This improves customer trust online hence influence their purchasing behavior.
E-Commerce and the Brick-and-Mortar Retailing
The online and offline retail business interacts on several fronts calling for the integration of their capabilities. Scarpi, Pizzi, and Visentin (2014) emphasized that offline retailers should not perceive the e-commerce capabilities as a threat to their existence but leverage for gaining competitive advantage. Kacen, Hess, and Chiang (2013) exploratory study on consumer attitudes revealed that e-commerce provides consumers with a huge convenience. Given its reliance on the internet and IT featuresMallapragada, Chandukala, and Liu (2016) add that e-commerce allows consumers unlimited shopping because potential customers can access and view available products and services online 24/7 from anywhere provided they have network connectivity. According to Verhoef, Kannan, and Inman (2015) study, online shoppers save money and time as they do not have to travel to physical retail to get the goods hence save the transport cost. Verhoef, Kannan, and Inman further argued that online shoppers do not have to wait on long queues or get poor services from the point-of-sale agents. Therefore, even those customers with tight daily schedules find it easier and convenient to shop online.
However, as Niranjanamurthy et al. (2013) pointed out, e-commerce has some challenges as far as consumer experience is concerned. Niranjanamurthy et al. (2013) argued that physical stores give customer the opportunity to check the quality of the products before making the purchase decision hence reduces product return, a common feature in online shopping. The after sale services are a bit more direct in offline shopping as the customer physically interacts with the sales representatives. Moreover, Jahanshahi, Zhang, and Brem (2013) noted that goods sold in physical stores are given out to the consumer immediately they are bought but online shoppers have to wait for a considerable time being the delivery is made. Delays sometimes lead to consumer frustration due to time inconveniences. Gallino and Moreno (2014) concluded that efficient integration of the online and offline business activities may best solve the problems associated with each channel of business.
Chapter Summary
In this chapter, literature related to the effect of e-commerce on brick-and-mortar retail business was addressed with a focus on Singapore and emerging economies. The concept of e-commerce is examined to understand how its scope has developed over time. The literature related to the IT capabilities that drive online retail business are discussed, and the impact of e-commerce on consumer purchasing behavior discussed. This is because studies by researchers such as Sam and Sharma (2015) have shown that it is the customer purchasing intentions that drive the retail industry hence it was important to understand how e-commerce influences them. A look at the literature related to the interaction of online and offline retail business has been done. This included the barriers to the adoption of e-commerce, levels of interactions between the two and future trends. The next chapter addresses the research methodology utilized to collect and analyze the data.
RESEARCH METHODOLOGY
Introduction
This chapter highlights the research methodology utilized by the researcher to collect, group, analyze and present data from the retail industry in Singapore. The research methodology aimed at employing the best-suited tools and approaches to collect data that can best-answer the research questions. The chapter addresses the research design, approach, sampling methods, data collection methods, ethical issues and the limitations of the methodology used.
Research Design and Approach
A descriptive cross-sectional design was employed in this study. This design was because guided the researcher in establishing facts about the effects of online shopping on offline retailing based on quantifiable data from the respondents (Collins and Hussey, 2014). The effects were described relative to the existing theories and propositions within the e-commerce and retail industry. A descriptive research design is important in quantitative research inquiry such as the current study because it allows the researcher to establish a statistical correlation behind given field patterns. The inquiry employed a quantitative method. A quantitative study aims at establishing causal-effect relationships among independent and dependent variables by the use of statistical linkages (Khare, 2016). Easterby-Smith et al (2012), it fits this research study because it enabled a cross-section analysis and examinations of variance so that any variation in the resultant criteria (dependent variables) was statistically expressed through input factors (independent variables).
Unlike qualitative research inquiry which is susceptible to biases of the researcher and the participants through subjective interpretation of reality, quantitative research utilizes statistical measures and analytical tools to improve the objectivity and generalizability of the results (Collins and Hussey 2014). Despite its strengths, Creswell (2014) argued that quantitative research could not accommodation situational and textual meanings thus have limited ability to explain social qualitative aspects. Moreover, it is prone to wrong interpretation of reality due to pre-existing hypotheses theories that make the researcher to override internal dynamics of the phenomena and focus more on external dynamics resulting into perceived reality (Easterby-Smith, Thorpe, and Jackson, 2012).
