T
HE EXTENT OF E
-
COMMERCE ADOPTION IN MICRO
COMPANIES
AUTHOR: MARKO DIJK
UNIVERSITY OF GRONINGEN FACULTY OF ECONOMICS AND BUSINESS SMALL BUSINESS AND ENTREPRENEURSHIP
Oppenheimstraat 39A 9714 EM Groningen 06-53 99 75 78 Markodijk78@hotmail.com Student number: 1766481
Supervisor: Prof. dr. P.S. Zwart Co-assessor: Dr. ir. H. Zhou
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BSTRACTE-commerce is getting increasingly popular in today’s society. Companies face the challenge of reacting to this phenomenon. Existing literature shows that large companies are further in adopting e-commerce than smaller companies. Micro companies have to decide how they use e-commerce in their companies. This paper contributes to existing literature by investigating to what extent micro companies should adopt e-commerce. The study was conducted by holding case studies amongst five bicycle stores. The results showed that micro companies in the bicycle industry do not see a lot of advantages in e-commerce. Bicycles have a high need to feel and see products before a purchase, and social interaction in the stores is also
important. The adoption factors showed that the companies are not ready for e-commerce to a further extent. This was influenced by the lack of IT knowledge and skills of the owners. Therefore the extent to which micro companies in the bicycle industry should adopt commerce is a static presence on the web. Micro companies in general should adopt e-commerce alongside traditional business processes. Future research should build further on these findings and study other industries and a larger geographical area.
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ONTENTS 1 Introduction ... 5 1.1 Research question ... 6 1.2 Methodology ... 6 1.3 Chaptering ... 6 2 Theory ... 82.1 Bicycle retail stores ... 8
2.2 E-commerce ... 8
2.3 Advantages and disadvantages of e-commerce ... 9
2.3.1 Advantages ... 9
2.3.2 Disadvantages ... 10
2.4 E-commerce adoption ... 11
2.5 Phases of e-commerce usage ... 14
2.6 Conceptual model ... 15
3 Methodology ... 17
3.1 Sample ... 17
3.2 Data gathering ... 17
3.3 Data analysis ... 18
3.4 Validity and reliability ... 18
4 Results ... 19 4.1 Introduction ... 19 4.2 Within-case analysis ... 19 4.3 Cross-case analysis ... 20 5 Discussion ... 25 5.1 Findings ... 25 5.1.1 Current situation ... 25 5.1.2 Advantages ... 25 5.1.3 Disadvantages ... 25 5.1.4 Adoption factors ... 26 5.1.5 Future plans ... 26 5.1.6 Conceptual model ... 26 5.2 Conclusion ... 28
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References ... 32
Appendices ... 35
Appendix A: Interview guide ... 36
Appendix B: Within-case analysis ... 38
Within-case analysis case A ... 38
Within-case analysis case B... 40
Within-case analysis case C ... 42
Within-case analysis case D ... 44
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NTRODUCTIONElectronic-commerce (e-commerce) is booming business in this day and age and, despite the economic crisis, the online market is constantly growing. For example, in the United States, e-commerce had a growth figure around fifteen percent in the last five years (Enright, 2015). E-commerce is a topic of great interest and has been studied intensely in recent years. Both large companies and small and medium sized enterprises (SMEs) have been researched (Greaves, Kipling, & Wilson, 1999; Mohamad & Ismail, 2009; Yang, Xun, & He, 2015; Zwass, 2003). This study, however, has specifically focused on a group of micro companies. This type of companies is rapidly growing in the Netherlands. In 2014, in the Netherlands, 99 % of newly founded companies were self-employed or businesses with less than 20 employees (Kamer van Koophandel, 2015). According to the report MKB in beeld (2015), micro companies now make up 92.4% of all Dutch companies. This shows that micro companies are very important for the Dutch economy and deserve more attention from researchers.
There are multiple benefits of using e-commerce: direct and indirect cost savings in communications and marketing, greater business exposure and more access to new customers and trading partners (Solaymani, Sohaili, & Yazdinejad, 2012). However, even with the many potential benefits of e-commerce, the adoption of e-commerce by SMEs compared with large companies is currently still limited (Daniel & Grimshaw, 2002; Grandon & Pearson, 2004). One of the reasons for this is that SMEs have resource constraints, which often renders business owners incapable to target different business activities at the same time (Yang, Xun & He, 2015). Other reasons are a stated lack of advice and support and a lack of skilled and qualified staff (Lewis and Cockrill, 2002). For micro companies, because of their limited size, these limitations may even be of more influence.
6 1.1RESEARCH QUESTION
Based on the aforementioned, the main question that will be answered in this study is: “To what extent should micro companies adopt e-commerce?”
The main question will be answered using the following sub questions: What are the defining elements of e-commerce?
What are the advantages and disadvantages of e-commerce for micro companies?
How should micro companies implement e-commerce in their business?
1.2METHODOLOGY
This research type is a theory development study. The current literature is mainly focused on large companies or SME’s (Al-Somali, Gholami, & Clegg, 2012; Grandon & Pearson, 2004; Mehrtens, Cragg, & Mills, 2001; Wagner, Fillis, & Johansson, 2003). This study focuses specifically on micro companies to find out to what extent they should implement e-commerce. Micro companies are defined as companies with less than ten employees (The Commission of the European Communities, 2003). A few researchers studying e-commerce have focused on SMEs (companies with less than 250 employees) (Bharadwaj & Soni, 2007; Lewis & Cockrill, 2002; Wagner et al., 2003). Micro companies fall within the SME category as well. However, the author feels that micro companies should be studied apart from small and medium companies because there can be huge differences between a company with only one employee and a company with more than 200 employees. To answer the research
question, this study uses qualitative data, obtained by five semi-structured interviews. Semi-structured interviews contain a set of predetermined open questions, and during the interview, the interviewer goes further into detail by asking questions based on the interviewees answers (DiCicco-Bloom & Crabtree, 2006). The study makes use of case studies. Case studies are suitable for theory development because of the possibility of generating new theory
(Eisenhardt, 1989). Case studies can be done with a single case or with multiple cases (Yin, 2009). In order to gain a deeper understanding of the process, this study performed a multiple case study (Miles, Huberman, & Saldana, 2014).
1.3CHAPTERING
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HEORYThis chapter provides a review of the literature on E-commerce. It discusses what previous researchers have found on the topic. Furthermore, it defines the variables used in the research to answer the research question. The chapter also discusses the theory with regards to micro companies and the cycling industry this study focuses on.
2.1BICYCLE RETAIL STORES
Currently, there are almost 2,400 bicycle and moped stores in the Netherlands (Rabobank, 2015). In 2014, bicycle retail stores in the Netherlands sold 1,051,000 new bicycles
(BOVAG-RAI, 2015). This is an increase of 4.2 % compared to 2013 (BOVAG-RAI, 2015). Electric bicycles have gained popularity amongst customers in the cycling world (Rijwiel en Automobiel Industrie Vereniging, 2015). The ratio of bicycles sold by specialized bicycle retailers and other retailers such as department stores is 71% against 29% (BOVAG-RAI, 2015). This is an increase of 3% for the specialized bicycle retailers. This could be a sign that customers want the knowledge of the specialized retailers and think they are more reliable than department stores (Rijwiel en Automobiel Industrie Vereniging, 2015). Bicycles are, much like cars, a product that a customer wants to see and feel first (Rabobank, 2015). Therefore, Rabobank expects the selling and delivery of bicycles to continue being done through retail stores predominantly. However, in 2014 customers bought 15% of the new bikes online, in 2013 this was only 9% (BOVAG-RAI, 2015).
2.2E-COMMERCE
9 network to simplify, improve and speed up particular stages of the business process, i.e. the buying, selling and delivery of goods and services” (Lewis & Cockrill, 2002, p. 197).
Nowadays, with the widespread adoption of the internet, almost every product
thinkable can be bought online with just a few mouse clicks and the product will be delivered to the doorstep while the customer sits comfortable in their own home. In the first half of 2015, Dutch consumers spent almost 8 billion euros on online products and services. This is a growth of almost 19% compared to 2014. The total retail sector only grew over one percent in the same period (Centraal Bureau voor de Statistiek, 2015). The total products sold on the internet of 3.91 billion now makes up 8.5% of the total retail goods sold in the Netherlands (Thuiswinkel.org, 2015).
According to Zwass (1996), e-commerce can be divided into a hierarchical framework consisting of three meta-levels Infrastructures, services and products & structures. Each of the lower levels delivers a well-defined basis on which the other levels build further upon. In order to not delve into all the different aspects of e-commerce this study focuses on the product and structures level. This level can be put into three categories: (1) business to customer commerce (B2C), (2) business-to-business (B2B) and (3) intra-organisational business (Zwass, 1996). This study focuses on the first category, business to customer
commerce, in order to get a good view on the consumer side of e-commerce. This category of e-commerce is often used as a method to replace or improve the traditional market channels by opening web shops (Molla & Licker, 2001).
2.3ADVANTAGES AND DISADVANTAGES OF E-COMMERCE
E-commerce has several advantages and disadvantages for businesses, and these will be discussed in their respective order.
2.3.1ADVANTAGES
10 The second big advantage is that e-commerce made the provision of information about products and services easier. E-commerce is identified in being better than traditional methods, like telephones and faxes, in terms of communicating information (Mehrtens et.al, 2001). Companies can now target specific customers on their website and present information specifically for that customer. There is also more dialogue possible between the customer and the company. This two-way dialogue can be used to personalize the products according to the customers’ requirements (Ghosh, 1998). The customers can pick in what order or arrangement they want information presented (Molla & Licker, 2001).
One more advantage is that e-commerce can lead to cost benefits. According to Dubelaar, Sohal, & Savic (2005), e-commerce can lead to low cost in information exchange, low transactional cost and low marketing cost. These cost reductions can occur due to better efficiencies thanks to e-commerce (Bakos, 1998).
2.3.2DISADVANTAGES
A lack of social interaction is one of the disadvantages of e-commerce. In an online setting, unlike the traditional shopping experience, no personal contact is made with the customer. This can be seen as a disadvantage because human interaction with an employee, giving personal services to the customers, can be a pleasing factor for customers (Otto & Chung, 2010).
The second disadvantage, which is in line with the previous, is touch, feel and immediacy of the products. Online, a product can only be seen on pictures which may give a skewed image of the reality. Next to that, some products, like clothing and shoes, need to be in a certain size to be able to fit to the customer. Often after buying a product online the desired item does not fit and needs to be sent back. This results in a lot of extra costs for the store owners. Being able to bring the product with you immediately after purchase is an advantage for traditional shopping(Otto & Chung, 2000). Online orders can take a day or more to be delivered and thus implies waiting time for the customer (Otto & Chung, 2010).
Furthermore, shipping costs are also seen as a disadvantage. These costs are added to the price of the product by the online seller (Otto & Chung, 2010). These are extra costs that do not exist when a product is bought in a traditional store and can therefore be a weakness for e-commerce.
Security is also a disadvantage of e-commerce that needs to be taken seriously.
11 Companies that wanted to take security measures to prevent such activities faced high cost implications (Lewis & Cockrill, 2002).
Advantages Description Disadvantages Description
Globalisation E-commerce allows companies to reach customers all over the world much easier and cheaper than before. Especially a benefit for companies focusing on a niche.
Social interaction No human contact during online shopping which could be a negative experience for some customers.
Provision of information Communicating information with e-commerce is better than traditional methods and specific customers can be targeted in a personalized manner easier.
Touch, feel and immediacy In a brick store products can be touched and fit in contrary to a web shop where only pictures can be seen. Products can be immediately taken home most times as well instead of waiting to be delivered. Cost benefits Cost reductions due to
efficiencies created by e-commerce.
Shipping costs Extra costs added to the product for shipping it to the customer. This can withhold customers from purchasing goods.
Security Stolen personal
information and payment information used for fraud can be a serious danger for e-commerce.
Table 1 Overview advantages and disadvantages of e-commerce
2.4E-COMMERCE ADOPTION
Several researchers have written about e-commerce adoption (Al-Somali et al., 2012;
12 Pearson, 2004). Lewis & Cockrill (2002) stated that e-commerce innovation is limited in small and micro companies because of resource constraints. Resource constraints can be the reason for owners not being able to target different business activities at the same time (Yang et al., 2015). For SMEs the implementation costs and expertise, especially beyond an initial web page, are a big limitation (Wagner et al, 2003). Running costs, once the e-commerce is implemented, are also a concern for the owners (Department of Trade and Industry, 2000). Another high cost is that of consultants (Lawson, Alcock, Cooper, & Burgess, 2003). The companies are often too small to have an ICT employee themselves and they might not have enough experience to trust a consultant to give advice to the company. It often occurs that the process of selecting, implementing and evaluating suggested ICT related answers is
problematic (Solaymani et al., 2012).
The second factor, compatibility, is defined as the fit between e-commerce and a company’s culture, values, and preferred work practices. E-commerce should be accepted by the personnel and fit with the values and culture on the work floor. E-commerce also should be possible to align with current technological systems and work procedures (Al-Somali et al., 2012). The better the compatibility is perceived by the involved people of an innovation, the better the adoption rate (Rogers, 1995).
The next factor, perceived ease of use, is defined as to what extent, using e-commerce, would be free of effort as believed by the person responsible for using it (Davis, 1989). Davis claims that, under the same circumstances, an application will likely be chosen if it is easier to use than another application. According to Wagner et al. (2003), most small businesses
already made use of e-mail and web pages, but no extra features of e-commerce were implemented. The exceptions to this trend, which should not be a surprise, are the high-tech companies (Wagner et al., 2003). These companies have more technologically skilled people in the company. This improves their perceived ease of use which possibly results in the higher adoption rate.
The fourth factor, perceived usefulness, is, according to Davis (1995), "the degree to which a person believes that using a particular system would enhance his or her job
performance”. This factor is perceived to be good by the user when the use-performance relationship is positive (Davis, 1989).
13 Organisational readiness Compatibility Perceived ease of use Perceived usefulness External pressure E-commerce adoption
14 2.5PHASES OF E-COMMERCE USAGE
A study by Lawson et. al. (2003), carried out amongst SMEs, found that SMEs adopt e-commerce in a set of sequential phases. Other studies also see e-e-commerce adoption as a process of sequential phases (Al-Somali et al., 2012; Lawson et al., 2003; Lewis & Cockrill, 2002). Chau (2003) acknowledged however that SMEs do not have to start at phase 1 and go through all phases. It is possible to start at any phase depending on the choice of the
organisation. Table 2 gives an overview of these studies and their phases.
Authors Model used Phases
Chau (2003) Four-phase model of SME e-commerce utilization and business transformation
1) Static presence on the web
2) E-commerce alongside traditional business
3) Integrating e-commerce into the business processes 4) Creating a virtual business structure
Lawson, Alcock, Cooper, & Burgess (2003)
Model of Internet Commerce Adoption (MICA)
1) Promotion: promoting products and services
2) Provision: interaction possible (soft barrier to go to this stage because e-commerce can be done alongside existing business processes)
3) Processing: online buying, selling and payments possible (hard barrier to go to this stage because business processes need to be aligned)
Al-Somali, Gholami, & Clegg (2015)
Stage Oriented Model (SOM)
1) Non interactive adoption: No online capabilities, internet & e-mail access or static web presence
2) Interactive adoption: interactive website presence
3) Stabilisation: full transactional web presence and integrated web status
Lewis & Cockrill (2002)
Six steps of the ladder (Department of Trade and Industry, 2000)
1) Messaging: using e-mail to send messages
2) Online marketing: static website or e-mail to inform customers about products and services
3) Online ordering: possibility of interaction and placing an online order
4) Online payment: Online transaction with sending or receiving an invoice and paying it online.
5) Order progress/online sales support: supporting the customer-supplier relationship through e-commerce
6) E-business: e-commerce fully integrated into the business process
15 All models have in common that they start with a very basic static e-commerce
presence and they end with e-commerce fully integrated into the business processes. The difference is the amount of stages in-between ranging from three to six. The SOM and MICA models are made for B2B and the six steps model is too detailed for the bicycle industry. This study uses the four-phase model of SME e-commerce utilisation and business transformation (Chau, 2003). The phases are a good representation of the replacing or improving of traditional market channels, the method where B2C is used for.
These are the 4 phases of Chau (2003):
Phase 1: A static presence on the web. The company has a static presence on the internet with email and a website. However, the website only shows information about the company and the products and does not offer interaction.
Phase 2: E-commerce as an addition next to traditional processes. This phase offers interaction for the customer. It adds alternative trading systems and extra communication possibilities. However the systems are not fully linked with the organisations systems.
Phase 3: E-commerce integration with traditional processes. Systems are aligned with already existing systems in the company. The e-commerce activities will be integrated into the
existing business activities.
Phase 4: Full e-commerce integration. This phase is where the company makes no distinction between online and offline and is completely dependent on e-commerce when doing business.
2.6CONCEPTUAL MODEL
As mentioned, e-commerce can be implemented in 4 phases. This study aims to find out to what extent micro companies should implement these phases of e-commerce. Based on the literature, the researcher proposed a research model (figure 2). As written in paragraph 2.3, there are multiple advantages and disadvantages of e-commerce. These can be influences for a business owner to desire the use of commerce. The advantages and disadvantages of e-commerce can have varying importance on each individual company. The advantages and disadvantages have to be carefully weighed against each other. When the balance is negative, it is unlikely that a company will choose to adopt e-commerce. A positive balance will make a company eager to adopt e-commerce to a next phase. However, when a company wants to adopt commerce there are five adoption factors that influence the decision to adopt e-commerce (Grandon & Pearson, 2004). When these factors are low the company is not ready to adopt commerce. When these factors are high the company is ready for adopting
16 adopt e-commerce, not only the adoption factors are in scope, but also to what extent these entrepreneurs experience the advantages and disadvantages of e-commerce, as shown in the conceptual model below.
In order to be as objective as possible in the interviews, unaided question were asked about advantages and disadvantages and adoption factors of e-commerce. After that the owners were asked what their opinion was on the variables found in the literature. This can give some insights into the justness of the conceptual model and possibly give new insights not found in the current literature.
Figure 2 Conceptual model Advantages - Globalisation - Provision of information - Cost benefits Disadvantages - Social interaction
- Touch, feel & immediacy - Shipping costs
- Security
E-commerce Adoption - Phase 1: A static presence on the web - Phase 2: E-commerce as an addition next to traditional processes
- Phase 3: E-commerce integration with traditional processes
- Phase 4: Full e-commerce integration Adoption factors
- Organizational readiness - Compatibility
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ETHODOLOGYThis chapter will describe the research design used in this research. It describes the sample used in this study. Next, the data gathering will be explained. This is followed by an explanation of how the data was analysed. The chapter is concluded by a reliability and validity paragraph.
3.1SAMPLE
The companies chosen for the case studies are micro companies. Micro companies are companies with less than ten employees (The Commission of the European Communities, 2003). The study focused on retail companies because of the B2C e-commerce category. In particular specialized bicycle retail companies were studied. Specialized bicycle retailers are companies whose main turnover is selling bicycles, mopeds and accessories and by turnover generated in the workshop by repairs and maintenance on said products (Rabobank, 2015). One of the cases studied is the author’s parents company. Therefore it can be stated that the selection procedure is not random and had a selection bias. The author used his parent’s network to contact four other case companies. The companies are all micro companies located in the north of the Netherlands, specifically in the provinces Groningen (3) and Friesland (2).
3.2DATA GATHERING
18 3.3DATA ANALYSIS
In order to analyse the data the transcripts were processed within-case first. Within-case study has as goal to describe, understand and explain the phenomena researched in each single case (Miles et al., 2014) Each single case was put in a tabular display with the same codes as the interview guide in order to make a clear overview for the researcher. After that a cross-case analysis was performed. The advantage here is that multiple cases can be compared which adds to the generalisability of the study (Miles et al., 2014).
3.4VALIDITY AND RELIABILITY
In order for a study to be valid, the relationship between the results and the way it was
generated needs to be in order (Aken, Berends, & Bij, 2012). Construct validity is covered by using the theory as a guidance for the concepts. The interview guide follows the theory and therefore the measuring elements should be as what is intended to be measured. The chain of evidence which this study uses also ensures the construct validity (Yin, 2009). Students can ensure construct validity by themselves by evaluating the measuring elements and data collection techniques. Also, experts can be asked for their opinion on the measuring
instrument (Aken et al., 2012). Therefore, the supervisor of the study received the interview guide beforehand to give his opinion. The internal validity is ensured by presenting the data in a systematic way by within-case and cross-case analysis.
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ESULTSThis chapter presents the results of the case studies performed at the five companies. Firstly, it shortly introduces the companies. Secondly, paragraph 4.2 gives an explanation of how the within-case analyses were completed. Finally, the cross-case analysis, where the five cases were compared to each other, is presented.
4.1INTRODUCTION
The companies are all located in the north of the Netherlands, three in the province of Groningen and two in the province of Friesland. Company A is a bicycle store located in a small village and was founded in 1933. The company sells new and second hand bicycles and repairs them. The company currently has two employees (one fulltime and one part time), that are, incidentally, a husband wife partnership. Company B was founded in 1934 and is located in the centre of a city. Next to selling normal bicycles, they specialise in sport bicycles for racing and mountain biking. The company is currently run by two brothers who are the third generation in the family company. It currently employs nine people and is the largest
company in the sample. Company C has been around for 40 years already and is located on the outside of a city. The company started off by selling second hand bicycles but also sells new models. At present, there are five fulltime and one part time employee. Company D is located in a small city centre and employs four people. It was founded in 1954 and is a family company. Company E is a small company that was founded in 2013 and employs one person. The owner had previously worked in a bicycle store but wanted to set up his own store. The company sells and repairs second hand bicycles. Now that the companies have been
introduced, the analysis of the cases will follow.
4.2WITHIN-CASE ANALYSIS
20 4.3CROSS-CASE ANALYSIS
The cross case analysis compares the results of the within-cases with each other. This was done in order to find equalities and differences between the five cases. The same structure of the interview guide was followed.
B1 & B2 Current e-commerce situation B1. Current e-commerce situation
The companies differ in their use of e-commerce. Company A, B and E all have a static website which displays information about the company and/or products. This means they are in phase 1: A static presence on the web with email and a website. However, the website only shows information about the company and the products and does not offer interaction.
Company C and D both make use of a third party web shop. Company C also has its own web shop selling children’s bicycles. Company D has its own website which is a static website. They also joined a web shop collective which represents 150 bicycle shops in the Netherlands. Both companies C and D have not integrated their web shops with the other business
processes and are, therefore, in phase 2 of e-commerce: E-commerce as an addition next to traditional processes.
B2. Satisfaction
Company B, C and E are satisfied with the current e-commerce phase they are using. Company A would like to have a faster changing second-hand bicycle assortment to put on his website. Company C has some trouble with the children’s bikes web shop because it is becoming increasingly difficult to run. They are also not very active with the supplier’s web shop because they see it more as an addition to the physical shop.
C1 & C2 Pre-conceived advantages and disadvantages
C1. Pre-conceived advantages
21 C2. Pre-conceived disadvantages
The companies came up with different results to this question such as, lower profit margins due to e-commerce, transparency of e-commerce, time spent on e-commerce and stock necessity.
C3-C5 Advantages based on the literature
C3. Globalisation
Globalisation is not a goal the case companies strive for. They are very reliant on their
regional customer base. Occasionally some German customers stop by in the shop because of the proximity of Germany. This is however not an e-commerce advantage. Company C stated that they will occasionally assist Belgian customers in their store. Company B regularly gets requests, by e-mail, from foreign customers. This can be attributed towards the fact that they are specialized in sport bicycles. All the companies’ websites were in Dutch; this limits the reach of the websites with foreigners.
C4. Information provision
All the companies agree that this a great advantage of e-commerce. They all make use of the extra information provision a web site can offer. Some use it to a greater extent than the others. Company B and C also send out newsletters with special offers.
C5. Cost benefits
The owners do not see many cost benefits in the use of e-commerce. They did however mention that marketing cost benefits affect them. Because advertisements in papers are expensive and advertising through e-commerce is cheaper with a bigger reach.
C6 – C9 Disadvantages based on the literature
C6. Social interaction
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C7. Touch, feel and immediacy disadvantage
All the companies agreed this is a disadvantage of e-commerce. Bicycles are a product that people want to touch and feel first. A test ride is often done before purchasing the bicycle. The owners also think that the extra service they can offer in their shop adds to this. For example, company C has a measuring system where the full body gets measured for sport bicycles. This free service makes sure the bicycle is a good fit with the customer, this cannot be offered online.
C8. Shipping costs disadvantage
Most of the companies do not ship products, therefore this is not a disadvantage to them in this phase. According to company C, online shoppers want the convenience of online shopping, but refuse to pay extra for it in the form of shipping costs. The companies also mentioned that shipping costs for a bicycle can become undesirable due to their size.
C9. Security disadvantage
Not one of the companies thought security was a disadvantage of e-commerce. Owner B mentioned that certification marks can be faked by shops. Web sites like marktplaats.nl are more prone to fraudulent activities according to him.
D1 & D2 pre-conceived adoption factors
D1. Pre-conceived positive adoption factors
The most common factor stated by the companies was that using the internet is a way of shopping these days. Companies have to follow this development to stay close to customers. Another reason, in line with this, is that it is an approach to present the company online to people. There are also personal reasons, for example, owner C had a personal interest in website building. He, therefore, made a company website in his spare time. This was the reason for Company C to adopt e-commerce.
D2. Pre-conceived negative adoption factors
23 D3 – D7 Adoption factors based on the literature
D3. Organisational readiness
Company A has the financial resources to invest in a web shop. The owner said that setting up a good web shop costs around € 35.000. He is wondering if it is worth the investment as there is a lack of technological resources in the company. The owner says technological knowledge should be bought or hired and this is another extra cost to the already high implementation costs of a web shop. He also states that rewards are low for the costs that are involved with a web shop. Company B is technologically ready for the next step. However, he still postpones this for other reasons. Company C feels his company is accommodated enough to progress to the next phase of e-commerce. Owner D says he would rather join a franchise than create his own web shop. He thinks it is very difficult to realize as a small entrepreneur due to the costs and the time it would take. He stated the following, “There are a lot of examples of companies who focused on web shops but did not make it. It is a big investment and it is very hard to be the cheapest and the yield is not high”. The owner of company E said his company is not ready for a next phase.
D4. Compatibility
Three companies admitted that e-commerce does not fit with their respective companies. Their reasoning behind this admission was that they prefer to give personal service in the shop, or that they are too small scale for e-commerce. Their processes are old-fashioned and they are not ready for the modernization that e-commerce would bring. The other two companies said the compatibility is satisfactory with the current phase of e-commerce; the next phase, however, would not fit well with the company. Three owners also state that business on the internet is competitive with offering the cheapest prices, which is very difficult to achieve as a small player in the market.
D5. Perceived ease of use
Three companies answered that the perceived ease of use is difficult for them. Three owners even said they are substandard with the use of computers because they feel that they,
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D6. Perceived usefulness
The interviewees were unsure about this question. Three owners agree that when it comes to a web shop it takes a lot of time and attention before it will have a positive effect on the use-performance relationship.
D7. External pressure
The owners do not feel much pressure from the outside, they answered. Only the owner of company C felt pressure from customers. He feels that customers demand a bigger assortment with different colours, as opposed to a couple of years ago.
E1 Future e-commerce situation
E1. Future e-commerce plans
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ISCUSSIONThis study aimed to find out to what extent e-commerce should be used in micro companies. These findings will be discussed first followed by the conclusion. Additionally theoretical and managerial implications will be explained. The chapter concludes by addressing the research limitations and further research.
5.1FINDINGS
This section discusses the findings based on the aforementioned results.
5.1.1CURRENT SITUATION
The case companies are not far in adopting e-commerce based on the current situation. Three companies are still in phase 1 and two are in phase 2 with the help of a third party. Only one company has their own web shop, specializing in children’s bicycles. The owners are quite satisfied with the current situation in their companies.
5.1.2ADVANTAGES
When asked about the pre-conceived advantages, the responses came down to information provision advantage. The other two advantages, globalisation and cost benefits, are not seen as big advantages of e-commerce by the owners. The reason for this lies in the fact that micro companies are too small to benefit from these advantages. SMEs usually do not possess the essential resources needed to be successful abroad (Knight, 2000). Efficiency improvements and cost benefits seem to be very small in companies that have many small customers and do not use a lot of information and invoices (Wagner et al., 2003).
5.1.3DISADVANTAGES
The company owners did not come up with the same disadvantages as found in the literature. They agreed with half of the disadvantages when these were introduced. Touch, feel and immediacy disadvantage and social interaction disadvantage were both acknowledged by the owners. The owners said that customers visit the store to see the product and test it first. When buying an expensive product, customers want to make sure they buy the right product. The micro companies attach a lot of value to giving service to their customers. In the shop is where they feel they can best deliver their service and not on the internet. This is backed by Cox and Dale (2001), who found that it is harder to build up a relationship through the
26 5.1.4ADOPTION FACTORS
If we take a look at the prconceived adoption factors, the biggest factor for adopting e-commerce the owners gave was the presence of the company on the internet. The
development of the internet is a phenomenon that made customers shop online. The owners want to commit to this and have a presence on the web for potential customers. This seems to be an external pressure factor from the customer even though the owners said they do not feel much pressure from the outside.
Three adoption factors are not positive for e-commerce. The owners’ perceived ease of use is low. E-commerce is not easy to use for the owners. This was also confirmed by
Solaymani et al. (2012), they found that often managers of SMEs are not familiar with the utilization of the internet in e-commerce.
The organisational readiness is questionable. This is because there is limited technological knowledge in the companies. This knowledge has to be either hired or purchased. Also the financial capabilities and time are limited resources in the micro
companies. A study of Wagner et al. (2003) underwrites this by finding that beyond an initial web design, funding and expertise are big hurdles.
The compatibility is not high in the companies as bicycle stores perform an old fashioned craftsman job, meaning their outdated business processes are conflicting with modern developments like e-commerce.
The perceived usefulness is a divided topic amongst the owners and therefore limited meaningful discussion can be brought about by this, currently.
5.1.5FUTURE PLANS
The future e-commerce plans of the companies are still uncertain. Three companies said they do not want to proceed to the next phase. The other two wish to proceed to phase 3
eventually. Not one company seemed to have a real plan for the future use of e-commerce.
5.1.6CONCEPTUAL MODEL
27 influences the e-commerce adoption question. Therefore we revised the conceptual model, by adding IT knowledge and skills as a mediator between adoption factors and phase of
e-commerce adoption. This is projected in Figure 3.
Advantages - Globalisation - Provision of information - Cost benefits Disadvantages - Social interaction
- Touch, feel & immediacy - Shipping costs
- Security
E-commerce Adoption - Phase 1: A static presence on the web - Phase 2: E-commerce as an addition next to traditional processes
- Phase 3: E-commerce integration with traditional processes
- Phase 4: Full e-commerce integration Adoption factors
- Organizational readiness - Compatibility
- Perceived ease of use - Perceived usefulness - External pressure
IT knowledge and skills
28 5.2CONCLUSION
In order to answer the research question, three sub questions were drafted. These were answered earlier in the study in order to be able to answer the main question. The first sub question asked what the defining elements of e-commerce are. The second sub question asked what the advantages and disadvantages of e-commerce for micro companies are. Third was the question how micro companies should implement e-commerce in their business. The main goal of the study was to find out how far micro companies should implement e-commerce into their company. The following research question for this study was formulated:
“To what extent should micro companies adopt e-commerce?”
The findings show two types of results. Parts of the results apply to bicycle stores only, other parts may well apply to different types of micro companies as well. Therefore, this chapter is split in two parts. The first part contains industry-specific conclusions, applicable only to bicycle stores and related micro companies. Part two describes the general conclusions, applicable to all micro companies.
Bicycle stores
For micro companies the answer to the research questions depends largely on the branch the company is in. This was shown by Wagner et al (2003) who found that high-tech companies were steps ahead in e-commerce implementation. Wymer & Regan (2011) suggested that the branch a company is active in affects the adoption of e-commerce. The cases in this study support these findings.
This study has shown several reasons why for small bicycle stores e-commerce can be even more challenging than for other micro companies. For one, owning such a store requires quite some old fashioned craftsmanship. The store owners in this study have focused their attention on repairing and selling bicycles rather than digital skills. They therefore lack the appropriate knowledge to move to a next phase without outside help.
Secondly, bicycles are a product which customers want to feel and touch before buying. Therefore, many customers still prefer buying their new bicycle at an actual store (Rabobank, 2015). This of course is an advantage to these retailers, but also lowers their need to move into e-commerce.
Third, the size and weight of a bicycle make them quite expensive to ship, which is another reason why local dealerships can still be profitable without a web shop.
29 present company information and information about their products and services on the
internet. Considering these findings, an appropriate phase for small bicycle retailers is phase 1, a static presence on the web.
General
This study found that for micro companies, the main advantage of an online presence is the information provision advantage (Mehrtens et.al, 2001). Having a website allows these companies to communicate with many more potential customers than was possible through traditional communication channels. However, several factors influencing the e-commerce adoption decision were found unfavourable for micro companies. The required investments are very high, while micro companies are often low on resources. Also, the size of micro companies hinders their possibilities to gain efficiency benefits of e-commerce. Micro companies have to rely on the knowledge and decisions of the owners, who are often not familiar with e-commerce. If a micro company is really insisting on going to phase 2, E-commerce alongside traditional business, based on the cases in this study, it should try to do so with the help of third parties and not with an own web shop in order to reduce the initial costs. The involvement of third parties does however lower autonomy and profit margins. Looking at all the findings, the extent to which micro companies with an existing offline presence should generally adopt e-commerce is phase 2, e-commerce alongside traditional business.
A final recurring subject in this research is the IT knowledge and skill set of the company owner. The results of this study tempt us to propose that this may well be the most important factor influencing the appropriate e-commerce phase for a micro company to be in.
Two out of five of Grandon and Pearson’s (2004) adoption factors regard the owner’s perceptions; perceived usefulness and perceived ease of use. Two other factors, organisational readiness and compatibility, also largely depend on the fit between a person and a system, which of course works from both sides. In conclusion, the factors which determine why a bicycle store is less active online than a high-tech company (Wagner et al., 2003) may well be strongly mediated by the owner’s IT knowledge.
Theoretical implications
30 advantages and disadvantages in this study are applicable to e-commerce in general, while both the adoption factors and e-commerce adoption phases are focused specifically on SMEs (Grandon &Pearson, 2004; Chau, 2003).
First, this research found that the general advantages of e-commerce do not to a large extent influence the decision making processes of small bicycle retailers. Two of the three advantages mentioned in this study, globalisation (Lewis & Cockrill, 2002) and cost benefits (Bakos, 1998) are no drivers for the five owners in this research, and may well not be drivers for other micro companies either. Apart from security (Lewis & Cockrill, 2002), the
disadvantages do play a role in the decision making process of these small business owners. Both a lack of social interaction and the difficulty of shipping large items make owners of micro companies hesitant to further invest in e-commerce (Otto & Chung, 2010). These results implicate that to some micro companies, a different set of advantages and disadvantages may apply than to others.
Second, the results regarding both the adoption factors and phases support the theory from a micro company perspective. That is, the e-commerce activities in this research are indeed influenced by Grandon and Pearson’s (2004) five adoption factors. Furthermore, as this research concludes that in general micro companies should not move beyond phase 2, e -commerce as an addition next to traditional processes, the results support the claim by Chau (2003) that SMEs do not have to start at phase 1 and go through all phases.
Third, the results of this study indicate that theory regarding e-commerce with regard to SMEs is applicable to micro companies as well. Both the e-commerce adoption factors by Grandon and Pearson (2004) and the e-commerce phases by Chau (2003) showed to be very suitable to assess e-commerce in micro companies.
Lastly, this study adds to the theory that especially in micro companies, the IT knowledge and skills of company owners are of great importance to the e-commerce phase their company can reach. As their resources are limited and as they have to make important decisions regarding e-commerce individually, these skills are likely to be an important mediating factor.
Managerial implications
31 Secondly, this research adds the owner’s IT knowledge and skills as another important factor. Moreover, this is a factor which these owners can influence, by educating themselves on the topic. Lastly, this research supported that the type of company is an important factor as well. Not all companies are equally suitable for e-commerce.
5.3RESEARCH LIMITATIONS AND FURTHER RESEARCH
32
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36 APPENDIX A:INTERVIEW GUIDE
A. Introductie
1. Kunt u het bedrijf kort beschrijven?
B. Huidige situatie
E-commerce: Het gebruiken van elektronisch netwerk om (delen van ) het bedrijf proces te
versimpelen, verbeteren of te versnellen. Bijvoorbeeld kopen, verkopen of afleveren van goederen en diensten.
1. Maakt u gebruik van E-commerce? a. Ja? Op welke manier?
b. Nee? Door naar C.
2. Bent u hier tevreden over?
C. Voordelen & nadelen E-commerce
1. Welke voordelen ziet u in het gebruik van E-commerce en hoe heeft dit meegespeeld in uw beslissing e-commerce (niet) te gaan gebruiken?
2. Wat zijn nadelen van E-commerce en hoe heeft dit meegespeeld in uw beslissing e-commerce (niet) te gaan gebruiken?
Voordelen:
3. In hoeverre is de toegang tot markten over de hele wereld zonder grenzen een voordeel van e-commerce voor uw bedrijf?
4. In hoeverre is het presenteren van informatie (specifiek voor bepaalde klanten) via internet een voordeel voor uw bedrijf?
5. In hoeverre zijn kostenvoordelen (zoals informatievoorzieningen, transactiekosten en marketing kosten) een voordeel voor uw bedrijf?
Nadelen:
6. In hoeverre is minder persoonlijk contact een nadeel van e-commerce voor uw bedrijf?
7. In hoeverre is het niet kunnen aanraken en voelen van producten en onmiddellijk meenemen van producten bij e-commerce een nadeel voor uw bedrijf?
8. In hoeverre zijn verzendkosten een nadeel voor uw bedrijf bij e-commerce? 9. In hoeverre is veiligheid een nadeel bij e-commerce voor uw bedrijf?
D. Factoren van het aannemen van e-commerce
37 2. Wat waren de factoren die u deden overwegen om e-commerce niet in te voeren?
Hoe denkt u over de volgende factoren van uw bedrijf met betrekking tot het invoeren e-commerce? 3. Organisatorische gereedheid (technologische en financiële middelen die het bedrijf ter beschikking heeft)
4. Compatibiliteit met uw organisatie (Sluit het aan bij de cultuur en de waardes van het bedrijf) 5. Gebruiksgemak (Denkt u dat het makkelijk te gebruiken is voor u)
6. Ervaren nuttigheid (denkt u dat het invoeren een positieve uitwerking heeft op de prestaties) 7. Externe druk (druk van buitenaf door bijvoorbeeld klanten, potentiele klanten, leveranciers of concurrentie)
E. Toekomst
1. Bent u van plan e-commerce verder in te voeren dan u nu gedaan heeft? a. Zo ja, Tot in welke mate wilt u dat doen en waarom?
38 APPENDIX B:WITHIN-CASE ANALYSIS
WITHIN-CASE ANALYSIS CASE A
A. Introduction
Code Subject Results
A1 Company description
Company A is a bicycle store that has been established 32 years ago. It is located in a small village. Its business is selling bicycles, parts and
accessories and repairing them. The company currently has 1, 5 employees, which are the husband and his wife who have a partnership. The owner’s duties are repairs and sales and the wife’s duties are supportive of nature.
B. Current situation
B1 E-commerce usage
The company currently has a website which is not used to full potential according to the owner. The website only lists used bicycles, the services and company information. Company information like duration of existence, opening hours, basically presenting the company.
It also states what bicycles are sold: city bikes, sport bikes and e-bikes. The site does not offer the placing of orders or the selling of products online. B2 Satisfaction The owner is not satisfied with the current situation. That is largely because
of the offer of second-hand bikes. That should be constantly changed on the website but the sales velocity is not too fast at this moment.
C. Advantages and disadvantages
C1 Pre-conceived advantages
To be able to reach people who live further away than the original customer base. People shop online more often this can be an advantage.
C2 Pre-conceived disadvantages
The profit margins are becoming lower thanks to e-commerce. This is also stated in bicycle journals according to the owner.
C3 Globalisation advantage
That does not affect company A. The company is too small scale for this. C4 Information
provision advantage
The company provides information on the website about the company. However no further action is taken to target specific customers with e-commerce.
C5 Cost benefits advantage
The owner states that cost benefits advantages due to e-commerce are irrelevant for this company.
C6 Social interaction disadvantage
This is currently not an issue at company A. This is mainly because of the current e-commerce process the company uses.
C7 Touch, feel and immediacy disadvantage
Customers still go to the specialized retailers for e-bikes. Normal bikes are increasingly sold through e-commerce. However customers still want the service which a brick store offers.
C8 Shipping costs disadvantage
This is irrelevant due to phase of e-commerce the company is in. C9 Security
disadvantage
This is irrelevant due to phase of e-commerce the company is in.
D. Adoption factors
D1 Pre-conceived positive factors
The owner feels that people are more and more focusing on internet and as a company you should adjust to that. It is pretty much imposed upon the company to adopt e-commerce. Although it does not improve your profit margin.
D2 Pre-conceived negative factors
They do not exist; you are being forced into adopting. The computer age has power over us. People used to buy 85% of the bicycles at a specialized bicycle store. This is now declining. You have to adopt in order to compete otherwise you will end up missing the boat.
D3 Organisational readiness
39 shop. That is an investment the owner does not want to make currently because of the uncertain succession of the company.
D4 Compatibility There is no e-commerce compatibility at company A. The owner feels that the company is too small scale for that. It requires more stock. When the company joins a supplier with a web shop, the profit margin drops which is already not that high. The profits don’t add up to the investment needed to create a web shop.
D5 Perceived ease of use
The owner feels he is not skilled enough with the computer for it to be easy. It is the question if you want to put effort into it with the uncertain
succession of the company. D6 Perceived
usefulness
When you really commit to e-commerce profits can be made. However, It requires a lot of effort and you constantly have to have an employee responsible for it. The investment for a good web shop is already around 35.000 euro. You also do not have a good performing web shop straight away. In the northern part of the Netherlands there are not many web shops yet that are a threat to us.
D7 External pressure
The owner does not worry about this a lot. He states that he still makes reasonable profits. However the numbers of sales are decreasing. He thinks this is caused by e-commerce sales. More profit has to be made through repairs now and by keeping profits on new bicycles as high as possible. That is a tactical game which keeps his profit margin reasonable. However if the online prices keep on decreasing this becomes harder and could result in less sales.
E. Future situation
E1 Future e-commerce plans
40 WITHIN-CASE ANALYSIS CASE B
A. Introduction
Code Subject Results
A1 Company description
Company B is a bicycle store located in a city since 1934. Currently run by the third generation. The owners are two brothers who run the shop together with 7 employees. Business exists of selling city bicycles, race bicycles, mountain bikes, e-bicycles, high speed e-bicycles and repairing bicycles. The company is more orientated towards sport bicycles.
B. Current situation
B1 E-commerce usage
Company B has a website which presents a part of the product range. It is used to inform the customers about who the company is, what it does and what the customer can expect. There is no possibility to buy products from the website. Company B specifically chose not to use a web shop at this point because it feels that the products are very specialized. The bicycles can be very different in sizes per brand. The owners feel that they can inform the customers better in the shop which results in more satisfied customers. The checkout system with inventory system integrated is quite complicated and that is another reason for not implementing a web shop already.
B2 Satisfaction Yes, the customers are better informed when they enter the store. This means that it saves a lot of time for both parties because the products are better known and the customer already has narrowed down his possibilities.
C. Advantages and disadvantages
C1 Pre-conceived advantages
Because of the ability to better reach customers. Modern times are making advertisement in papers less attractive. Internet is a means to reach more people.
C2 Pre-conceived disadvantages
A disadvantage which can also be an advantage is the openness and transparency e-commerce offers. Customers are better informed and need less information from the personnel than in the past. This can be seen as a disadvantage. However, the interviewee sees it as an advantage.
C3 Globalisation advantage
The company occasionally gets request by mail from other countries like England, United States or Australia to deliver a bicycle. This is not frequent but they do fulfil the requests.
C4 Information provision advantage
The company makes use of newsletters and Facebook. This is not done very intensive yet. The owner does see a potential benefit in it although some people can see it as spamming as well.
C5 Cost benefits advantage
Marketing wise it can be a cost benefit. Advertising in the papers is expensive. The amount of paper advertising and other advertising has gone down compared with the last 5 to 10 years. E-commerce is a much faster means of reaching customers.
C6 Social interaction disadvantage
For the older generations this may be a disadvantage. With the arrival of internet it is way faster and easier to get information than in the past. It does not matter if the person received information from a salesman or on a website.
C7 Touch, feel and immediacy disadvantage
This is the reason company B does not use a web shop yet. They use a measuring system to find out the perfect settings for the bicycles adjusted to the body size of the user. The shop also insists on taking the bicycle for a test ride. This service makes sure that the bicycle fits the customer and he/she will enjoy it. This results in satisfied customers who will hopefully give word to mouth advertising for the company. This is a great advantage for a brick store.
C8 Shipping costs disadvantage
41 expensive to ship. Bicycles are big and cost a lot more to send so that can be a disadvantage for bicycle shops.
C9 Security disadvantage
When you own a decent web shop this does not have to be an issue. On websites like markplaats.nl people have to be careful because fraud is less easy to detect on it. Certification marks on web shops can be fake so that is something to watch out for.
D. Adoption factors
D1 Pre-conceived positive factors
Expanding the store and present the company to the public with its services and products.
D2 Pre-conceived negative factors
There were no barriers to adoption. The owners wanted to go further in presenting the company.
D3 Organisational
readiness
The company has the required technology with the checkout system which has inventory control in it. A web shop requires a lot of discipline which, at the moment, is maybe not as good as preferred. The inventory system sometimes is forgotten which causes it to be incorrect at times.
D4 Compatibility The company cares a lot about giving service and information to customers in the shop. Therefore the compatibility with the company at the moment is not very high.
D5 Perceived ease of use
At the moment the checkout system is not understood 100%. This is a process that needs some time. The owner thinks that eventually it is easy to use but in the beginning it can give some problems.
D6 Perceived usefulness
The owner feels that bicycles will be a market that will mostly be continued in brick stores instead of web shops. But web shops had a huge growth in the last years, but are stabilizing now so they are useful. But one only knows for sure when it is implemented in the store.
D7 External pressure
We already co-operate with suppliers for several years with systems and such. Personally, the owner does not feel any external pressure.
E. Future situation
E1 Future e-commerce plans
