EVALUATION OF THE ROLE OF E-COMMERCE IN REDUCING OPERATIONAL COST IN AN ORGANIZATION
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
E-commerce is the practice of transacting business online between diverse entities to achieve
a corporate or personal goal. The promotion and purchase of goods and services over the Internet is a vital
component of E-Commerce, often known as electronic trading (Rhodes & Carter, 1998).
There have been numerous reports about the volume and success of online commerce.
Every computer might turn into a portal open to every business, big and small, around the world if it is
successful in creating an atmosphere in which e-commerce can thrive and prosper.
The Internet is a method of electronic communication that has the ability to significantly cut down on operational costs, real transaction times, and processing times.
Internet-based E-Commerce has gained popularity as a way to cut operating costs and as a
highly promising method of generating income (Levis, 1996). A common foundation may be developed for E-Commerce apps because to the web’s widespread use and the accessibility of browsers across many platforms, especially in the enterprise.
This shared platform has lessened the importance of problems with software installation and distribution,
promoting the growth of e-commerce over intranets, extranets, and the internet.
E-commerce presents potential to establish new enterprises that offer information and other knowledge-based intangible products as well as new channels for the global sale of tangible commodities (Rhodes & Carter, 1998).
Although most e-commerce now takes place between corporations and other organizations, services geared
toward individual customers are quickly developing. The most prominent illustration of this is the Internet, which has played a significant role in the spread of E-Commerce by fostering a shared environment for all types of
electronic transactions.
E-commerce refers to all interactive business transactions that are made possible by computer networks.
E-commerce is rising as a result of the increased accessibility of these networks to businesses and
individuals, as well as the growing variety of low-cost ways that enterprises can trade electronically
with both consumers and other organizations (Bartell et al, 1999).
With the main goal of lowering operational costs, business-to-business E-commerce currently appears to still have a higher volume than business-to-consumer E-commerce, although this may change in the future. Due to the fact that e-commerce increases economic efficiency, these trends are significant for both the global economy and the economies of individual nations. E-commerce benefits the economy in five significant ways. These include shortening distances and timelines, reducing distribution and operational costs, accelerating product development, giving buyers and sellers more information, and increasing customer and supplier choice (Turban et al, 2000). Yet, the focus of this study is on how E-Commerce helps organizations cut operational costs.
However, in addition to the actual number of transactions, offline retailers must account for a vast array of company expenses when calculating operational costs. The cost per transaction is higher when there are fewer transactions. On the other hand, a huge volume of transactions can overwhelm the staff and distributors. Whether one order or thousands come through, the operational costs in an E-Commerce business are the same everywhere.
However, in addition to the actual number of transactions, offline retailers must account for a vast array of company expenses when calculating operational costs. The cost per transaction is higher when there are fewer transactions. On the other hand, a huge volume of transactions can overwhelm the staff and distributors. Whether one order or thousands come through, the operational costs in an E-Commerce business are the same everywhere.
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1.2 STATEMENT OF PROBLEM
In the media, business management, and informatics circles, electronic commerce is a hot topic.
The financial services and retail industries may be the ones where its effects are most obvious.
E-Commerce efforts have proliferated rapidly in recent years.
Innovative smart cards for E-commerce, remote payments and electronic checking,
online trading of stocks, bonds, and associated financial instruments, online banking,
and online retailing are a few of these endeavors (e-tailing). The money received from each transaction
will pay for the item; it will also contribute to the salesperson’s salary, credit card fees, lease on the storefront, electricity, telephone, and other operational costs. In contrast to brick and mortar businesses, its impact on lowering operational costs has been studied in a variety
of ways. For instance, the money from each transaction will go toward paying for the item as well as the salary of the salesperson, credit card processing fees, storefront lease, electricity, telephone, heating/cooling, taxes, displays, repairs, and building maintenance. Yet the money from an online sale only covers the cost of the product, web hosting, shopping cart software, distribution, and not much else.
Overall, running a virtual store is much less expensive than running a physical one.
1.3 OBJECTIVES OF STUDY
The goals of this study are as follows:
To investigate how E-commerce affects an organization’s ability to operate more cheaply.
To list further advantages of e-commerce in Nigeria.
To list the restrictions and drawbacks of Nigerian e-commerce.
1.4 RESEARCH QUESTIONS
What part does e-commerce play in lowering an organization’s operational costs?
What are the additional advantages of online shopping in Nigeria?
What are the restrictions and drawbacks of online shopping in Nigeria?
1.5 HYPOTHESIS
HO: E-commerce and decreased operational costs in a firm do not significantly correlate.
HA: E-commerce and decreased operating costs in a firm have a substantial relationship.
1.6 SIGNIFICANCE OF THE STUDY
The relevance of this study is as follows:
The findings of this study will inform business executives and the general public on how E-commerce helps reduce the operational costs of commercial enterprises.
This study will add to the body of knowledge about the impact of personality characteristics on students’ academic achievement, forming the empirical base for further study in the field.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study will address the advantages of e-commerce with a focus on how it affects corporate organizations’ operational cost reduction efforts.
RESTRICTIONS OF STUDY
Financial constraints – A researcher’s ability to find relevant materials, literature, or information and collect data efficiently is often hindered by a lack of funding (internet, questionnaire and interview).
Time restraint: The researcher will do this investigation together with other academic activities at the same time.
Thus, less time will be spent on the research job.
REFERENCES
Bartell, R.L. Blackwood, N.A. Eggenschwiler, D. Nguyen, M. Schnidrig, C. Yatchman, M.J. (1999) The MediaXactt system – a framework for personalised electronic commerce services, Bell Labs Technical Journal 4 (2) 153–173.
Levis, K. (1996) Electronic commerce, British Telecommunications Engineering 14 (4) 281–285.
Turban, E. Lee, J. King, D. Chung, H.M. Electronic Commerce: A Managerial Perspective, Prentice-Hall International (UK) Limited, London, 2000.
Rhodes, E. Carter, R. Electronic commerce technologies and changing product distribution, International Journal of Technology Management 15 (1/2) (1998) 31–48.
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