MEASURING THE EFFECTIVENESS OF ONLINE SHOPPING (A
CASE STUDY OF KONGA)
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Globalization and the growth in new technological
developments (Ramayah and Ignatius, 2005) has commenced a new era of e-commerce
which is viewed by Kalakota and Whinston (1997) as trading of information,
goods and services mostly via the internet, leading to the growth of online
shopping or e-shopping. These rapid changes in e-commerce has changed the way
businesses and customers consume, customize and distribute products
(Al-Maghrabi, et al., 2011) creating a lot of competition among the online
retailers market (Celik, 2011; Zhou, et al., 2007) whereby lot of retailers are
competing against an overcrowded market (Celik, 2011) resulting in the effort
of retailers worldwide in consolidating their businesses (Ramayah and Ignatius,
2005) in order to strengthen their scope of success in the online market and
gain advantage of the challenges they face today. Due to the low cost of
managing these businesses it gives rise to a new and powerful channel for
information and communication to both businesses and consumers (Al-Maghrabi, et
al., 2011) as well as manufacturers and distributors using the internet as a
tool for business (Celuch, et al., 2007). Furthermore, customers have
flexibility and wider choices of products. And they are able to access to
numerous information from different sources, comparing prices, shopping at
their own convenience creating higher chances of switching from different
e-tailers and e-service providers. Thus, through online shopping customers have
accessibility to a greater selection of products at their convenience without
the restriction of time and space (Brynjolfsson and Smith, 2000). Hence, it
raises the challenges of retaining and attracting the customers for the online
retailers. In order to attain this it is important for online retailers to
understand the effectiveness of online shopping by identifying the factors that
encourage the consumers to shop online which leads them to complete their online shopping (Al-Maghrabi, et al., 2011).
The online shopping acceptance also varies between developed and developing
countries (Celik, 2011) and there is still a huge research gap among these
countries which limits the generalization of research results from developed
countries to developing country context (Syed et al., 2008).
Online shopping is becoming quite popular in
Nigeria, due to its relative convenience and the reasonable prices of goods and
services available online. In a city like Lagos with an estimated population of
21 million people, the conventional means of shopping, which involves
physically visiting stores, can be tedious and time – consuming. In
2014 Nigeria recorded over $2 million worth of online transactions per week and
close to $1.3 billion monthly. Nigeria’s e-commerce market is developing
rapidly, with an estimated growth rate of 25 percent annually.
According to an online
researcher, e-marketer, while online shopping across the rest of the world is
growing at 16.8 per cent, Africa’s online shopping space is growing at a rate
of 25.8 per cent – making it the fastest growing in the world. Nigerians are
notorious for their love of online shopping. The Euromonitor Nigeria in a 2011
report revealed that Nigerians spend $6.3 billion per year on clothing. In a
recent survey conducted by Philip Consulting 38 percent of Nigerians prefer to
buy products through the internet. Middle class consumers are the biggest
purchasers online. Nigeria’s middle class now accounts for 28 percent of the
population, and the middle class are well educated, with 92 percent having
completed a post-secondary school education. This middle class is brand
conscious and tech savvy and their technology of choice is a mobile device.
Also in some advanced countries of the world,
online shoppers were distributed into five major job categories which were, top
management executives, other white collar workers, business man and
self-employed, blue collar workers, retired and unemployed and housewives. In
which top management executives were among the heavy online shoppers (Ong,
2010).
Konga.com
which is a case study in this research is a Nigerian electronic commerce
company founded in 2012 with headquarters in Yaba, Lagos. They started with 20
staffs. It offers a third-party online marketplace, as well as first-party
direct retail spanning various categories including consumer electronics,
fashion, home appliances, books, children’s items, and personal care products.
In January 2015, Konga was ranked as the most visited Nigerian website by Alexa
Internet. According to CEO Sim Shagaya, Konga “leads the field in Nigeria
today [early 2015] in Gross Merchandise Value,” a metric measuring the
total value of merchandise sold through a particular marketplace. Konga
announced it acquired the assets and mobile money license of Zinternet Nigeria
Limited in June 2015, thereby meeting the Central Bank of Nigeria’s legal
requirement for the provision of mobile payment services. The acquisition will
support KongaPay, launched in August 2015, Konga’s solution to facilitate
uptake of cashless electronic payments.
1.2 STATEMENT OF THE PROBLEM
Online
shopping is becoming popular throughout the world including Nigeria. This study
is to ascertain the factors that contribute to the effectiveness of online shopping
among Nigerian consumers using Konga as a case study. Previous studies
examining the role of Subjective norms (SN), previous purchase experience (PPE)
and perceived risk (PR) were inconsistent and a higher proportion of the
findings were with respect to consumer’s behavior in the West which cannot be
directly applied to a cross-cultural context. The purpose of the study is to
investigate the relationships between these variables and the variables of
models that are associated with effectiveness of online shopping in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The
following are the objectives of this study:
1. To
examine the effectiveness of online shopping in Nigeria.
2. To
determine the level of patronage for the online stores in Nigeria.
3. To
identify the factor militating against online shopping acceptance in Nigeria.
1.4 RESEARCH QUESTIONS
1. What
is the effectiveness of online shopping in Nigeria?
2. What
is the level of patronage for the online stores in Nigeria?
3. What
are the factors militating against online shopping acceptance in Nigeria?
1.6 SIGNIFICANCE OF THE STUDY
The
following are the significance of this study:
1. The
outcome of this study will educate the Nigerian general public on the effectiveness
and advantages of shopping online.
2. This
research will also serve as a resource base to other scholars and researchers
interested in carrying out further research in this field subsequently, if
applied will go to an extent to provide new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This
study on measuring the effectiveness of online shopping a case study of Konga
will cover all issues related to online purchases of goods with a view of
ascertaining the effectiveness and reliability of such services.
LIMITATION OF STUDY
1. Financial constraint– Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
and interview).
2. Time constraint– The researcher will simultaneously engage in this study
with other academic work. This consequently will cut down on the time devoted
for the research work.
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