Research Proposal

Research Proposalfor a Thesis in the Field of

Management

Topic barriers to e-tailing in emergingeconomies

A Pakistan Case Study

byAmin S. Lalani

Institute of Business [email protected]

Karachi

supervisorFasihulKarimSiddqui

February 27, 2011

Assignment I

e-tailing in emerging economiesA Pakistan Case Study

1. Introduction.

e-Tailing is a way of retailing products online through various digital means such as web, mobile,

interactive kiosk and IVR (Interactive Voice Response). It is B2C (Business to consumer) form of

ecommerce that adds value to the business processes giving secured and hassle free e-transaction

option to the end users. The integral components of an e-tail webstore are product catalogue, tax

calculator, shipping calculator and payment processing, for online legitimate selling. E-taling is also

embedded with various business functional areas which includes CRM (customer relationship

management), order processing, accounting and web analytics.

e-tailing is comparatively a new branch of retail management and marketing whereby customers are

served online rather than conventional onfloor selling by promoting product in online media such as

search engine, social media and other crowd spots. Today’s e-tailing consist of most of the offline

business functions which includes accounting, taxation, shipping, customer relationship, supplier

relationship, supply chain and HR management.

The success of e-tailing in country is measured by e-tail sales to GDP ratio and e-tailing sales as compare

to entire retail sales. According to US Census, US haveachieved 4% e-tailing out-of total retail sales

(USCB, 2010). Following table illustrates e-commerce sales which includes etailing, wholesale and other

trade transactions as a percentage of GDP in various countries in the year 2000

By Amin S. Lalani. Submitted toFasihulKarimSiddqui, M.Phil Program, IoBM


Retail and wholesale sector accounts 17% of Pakistan’s GDP (SBP, 2009, p.31); the domestic market size

is ranked 31 in the world (WEF, 2009 p.21) and the e-Readiness rating by IBM rates Pakistan 3.55 out of

10 points. All these indicators reflects that perhaps, Pakistan has potential and opportunity to sell

online, but there has been low volume of transactions done through internet. E-Tailing. (Online Selling

B2B and B2C) has become rapidly growing phenomena for trade and commerce. Pakistan has huge

potential to tap e-tailing opportunity to achieve quantum micro economic growth.

AIM and Objective

This research will evaluate some of the influential factors ie Government Policies, Technology, Human

Resource and Entrepreneurship that can mobilize the e-tail activity in an economy and underline the list

of barrier that needs to be addressed in order to give boost to profitable and sustainable e-tailing.



2. Background

Unlike retail business, e-tailing is easy and cost effective to setup and grow, with minimum cost; an

online branch could be setup for an existing brick and mortar business or for a new start ups. As an

example, LIGHTNING Instrumentation SA, a Swiss networking equipment manufacturer, was able to

raise its sales by about 20% after establishing a website, all of which came from outside its domestic

market (Quelch and Klein 1996). It is equally true for Pakistani products and services which has great

demand world over. Electronic Commerce can play a major role in boosting Pakistan’s exports, which

have stagnated. Pakistan has found it difficult to introduce new product and explore new markets.

(A.R.Kemal) in other words e-tailing can give direct market access of Pakistani product to local and

international consumers, whilst promoting branding of the respective product, which could lead in

reputation building and future prospects of the product. Information and Communication Technology,

ICT, can provide a small enterprise an opportunity to conduct business anywhere. Use of internet allows

small businesses to project virtual storefronts to the world. Heeks and Duncombe (2001).Operating

within an e-business framework offers a more cost-effective model, with feasible elimination of several

steps of the traditional sales process. Powell and Dent-Micallef (1995)

Besides all factors, e-ntrepreneurplays a vital role. If an entrepreneur has no awareness, education and

interest in investing in etail opportunity, all other factors such as technology, government policy and

human resource could not boost e-tailing scenario in Pakistan to an impressive level. Entrepreneurs

must be educated about the technology, risk and opportunity lies in e-trailing front which could lead in

aggressive growth of etailing industry in Pakistan. Generally businesses assume eCommerceas high tech

complex system, which is not the case. Various online offerings from companies like Adobe, Intuit and

eBay have made the ecommerce quiet simple, affordable and secure, they offer complete hosted

solution which includesall core modules, plus the extended modules such as web analytics, accounts and

support system. These systems are scalable to enterprise level as and when required.In addition to

technology matters, entrepreneurs must understandthat etail setup cannot achieve maturity in terms of

storefront performance, business processes and sales results in first few weeks; it might takes weeks,

months and years to acquire optimum results. Perhaps, proper action plan could minimize the time to

achieve success in short term. Action plan could include market analysis, website usability test,

marketing channels evaluation and much more. Amoroso and Sutton (2002) found that small

orgnaisations needs to focus on providing their customers with a set of Web applications / services that



best serve the customers, rather than using a hit-and-miss approach. They found evidence to support

that the greater the degree of clarity of e-business service offerings, the more the need to have these

Web based applications/services is crucial to building a quality internet presence, especially important in

small organization. Organizations that focus on key online application/services will have a greater

degree of success. These applicatons/services will need to be planned in advance.

Local awareness towards eBusiness or e-tailing is very important. Having online store and offering offline

prices will never attract customers, the online store should bring value to the customers interms of

discount, expedite deliver and so on. These will attract and retain customers, some of the latest

marketing tools such as facebook and twitter could help retain customers easily and is easy way to

communicate with customers to inform about the products and new offerings. Through online business,

the supply chain or the value chain also becomes shorten whereby, manufacturer now directly reaches

customers. This could be achieved by developing strategies to adopt and market plan to reach more

customers and achieve higher conversion.

In April 2001, during the dot-com wave of the late 1990s and early 2000s, Wall Street editor Allan Sloan

summed up the firms' strategies by saying "the buzz phrase in 1999 was 'top-line growth.' That means

increasing sales-but not necessarily making profits" (Newsweek, press release, April 1, 2001).

Profitability should be main focus of the e-tailing business, many businesses invest huge money in e-

tailing just to achieve high sales which doesn’t bring profitability to the business. Online businesses must

consider lessons learnt from the past experience.

Besides profitability strategies, there are six other strategy that an etailer must consider, they are: (1)

promotional activities, (2) offline customer service center and distribution center expansion, (3) pricing,

(4) product line expansion, (5) service improvement, and (6) foreign expansion. Darren FilsonSource

(2004). Having an online presence alone is not rewarding but, it should perform like an offline business

whereby, online facility should be able to serve customers with RMA (Return Merchant Authorization),

Support and Parcel Tracking. The online business should be tightly integrated with offline business.

Those online businesses that do not fulfill the customer requirements will not retain or bring new

customers to the webstore. Many stores failed to maintain online as their online store doesn’t

assimilate with offline strategies and they both work in isolation, rather than working as one system

inorder to serve customers and keep them coming in again and again.



3. Research Methodology

In order to evaluate macro barriers,reports from State Bank, World Bank and other leading organization

will be referredand compared with successful economies to evaluate Pakistan’s retail sector. Factors

such as e-readiness rating, market size and consumer trend towards electronic transaction which

includes ATM, credit card and mobile transaction, business environment and culture will be taken into

consideration. Academic studies will also be considered to identify the eCommerce growth as a whole

and especially in developing countries.

A survey questionnaire will be designto findout coefficient between factors such asie Technology,

Human Resource and e-ntrepreneurship

3.1 Survey Questionnaire Format

Online Retailers selling goods to local and international customers will be identified using strata

sampling method. A questionnaire will be modified version of Web Business Evaluation Criteria (Wei-His

and Robert, 2004) to evaluate micro influential factors that can boost e-tailing in Pakistan.

The questionnaire will consist of

3.1.1. Technology Analysis: To evaluate if thewebstoreis using modern technologies, with worldclass

user interface which include: dynamic features like AJAX, consumer monitoring, wish-list and

importantly, if the server can absorb high traffic/transaction and so on. Further do the web-business

have proper marketing and maintenance plan to reach potential customers locally and globally through

digital marketing covering business directories, social media, groups and through offline marketing

including magazine, coupons, etc

3.1.2 Human Resource: Do the business have team of HR specialized in online selling which could

include webmaster, graphic designer, CRM, marketing, order processing associate, etc and how future

training and development needs are addressed

The webstores were evaluated if they have



3.1.3 e-ntrepreneurship :How seriously online business is taken into consideration. Does it have all

standard business processes like Refund Policy, Order Processing, CRM, Feedback and Support systems

and details about the product, and Guide on how to order and so on? Further through this section

survey e-ntrepreneurs will be evaluated to analyze how serious they are with online setup and do they

invest in similar pattern as they invest in offline store interms of maintenance, development and

marketing



4. Method of Data Analysis

There will be 2 sets of data.

I) Collected through e-tailing store evaluation survey. The data will be evaluated on the

score of 100 to findout which e-tailing store has adequate score and if most of the store

have or not have adequate scores will reflect that there is ecommerce infrastructure

available but the stores are not serving the customers as per their need which includes

ease, security, customer favored policies for exchange and refund and so on

II) Secondary data collected from various sources to compare Pakistan with other

emerging economies with successful e-tailing track record using following table.

To findout co-efficient between macro factors of e-tailing ie Government Policy

Country GDP in Billion

$

Retail and

Wholesale

R&W as % of

GDP

Internet

Based Sales

% of Retail and

Wholesales

Pakistan 166 28.22 17.5 NA

To findout co-efficient between micro factors of e-tailing ie Technology, HR and e-ntrepreneurship

Survey Organisation HR Technology e-ntrepreneurship



5. Ethical Issues

The ethical issues that may arise during the research project could be

1. Comparing old figures of x data with new figure of y data and jumping to a decision.

2. Not considering the difference of places while concluding the article ie the cognitive approach

towards etailing is different in different countries and can’t be compared equal at any time



6. Research Limitation

If substantial time and financial resource is made available, the research could further explore

parameters which surface Pakistan’s capabilities to establish a successful e-tailing sector.

The research is limited to Karachi only and through various research paper, if country wide travel is

arranged and various online stores are met in personal, the research could become more specific

Further focus group discussion with Public Administrator, State Bank and technocrats who influence IT

infrastructure in Pakistan could have added value to this research.



References

A.R.Kemal, The Pakistan Development Review, 37 : 4 Part II (Winter 1998) pp.37:4, 849-859

Darren FilsonSource. (2004), The Impact of E-Commerce Strategies on Firm Value: Lessons

from Amazon.com and Its EarlyCompetitors, The Journal of Business, Vol. 77, No. 2, Markets

and Marketing (Apr., 2004), pp. S135-S154

Heeks, R. and Duncombe, R., (2001). Information, Technology and Small Enterprise: A Handbook for Entrepreneurs in Developing Countries, Institute for Development Policy and Management University of Manchester

Murray E. Jennex, Ph.D., PE & Donald L. Amoroso, Ph.D. eBusiness and Technology Issues for Developing Economies: A Ukraine Case Study

Quelch, J. A., and Klein, L. R. "The Internet and International Marketing," Sloan Management Review, Spring 1996, pp. 61-75.

State Bank of Pakistan, SBP FY 2009 Report, Pg. 31, 2010, viewed 10 December, 2010<http :// www . sbp . org . pk / reports / annual / arFY 09/ Chp -2. pdf >

State Bank of Pakistan, SBP FY 2Q 2010 Report, Pg.69, viewed 15 Dec, 2010<www.sbp.org.pk/reports/annual/arFY10/Vol2/Chapter5.pdf>

US Census Bureau.Quarterly Retail E-Commerce Sales. 2010, viewed 15 Dec, 2010. <http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf>.

Power T. Micalled, A.D., (1997), Information Technology as Competitive Advantage: The Role of Human, Business and Technology Resources, Strategic Management Journal, Volume 18, Number 5, pp. 375-405


http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf

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Research Proposal