consumers’ perceptions about e-commerce activities of

International Journal of Academic Research in Business and Social Sciences June 2013, Vol. 3, No. 6

ISSN: 2222-6990

134 www.hrmars.com/journals

Consumers’ Perceptions about E-commerce Activities of Bosnian Companies

Muhammed Kürşad Özlen International Burch University, Bosnia and Herzegovina

Lejla Mujkid International Burch University, Bosnia and Herzegovina

Jasminka Ahmetaševid International Burch University, Bosnia and Herzegovina

Abstract The importance of e-commerce for the companies and the economies is very clear now for human beings. Therefore, as a result of fierce competition outside every organization is seeking the ways in order to remain competitive. Despite the e-commerce issue has already become an old consideration; this study wants to evaluate this issue from the consumers’ perspective. Therefore, the survey is conducted on the people living in four different cities of Bosnia and Herzegovina. The results mainly provided very poor positive perceptions about Bosnian companies’ web presences and their online activities. Keywords: consumer perception, e-commerce, survey, descriptive analysis 1. Introduction As a result of exponentially growing interest on e-commerce, companies are investing on structuring e-platforms in order to enhance their business. The research on e-commerce and e-channels has been performed well for globally operating companies. However, the scenario in Bosnia and Herzegovina (BiH) also takes the attention. Since BiH has been trying to overcome the problems from different perspectives after the war, it may be interesting to evaluate e-commerce considerations of the companies in a very chaotic environment from consumers’ side. Therefore, this study aims to identify the perceptions of Bosnian consumers about (1) how much Bosnian companies involved with e-commerce with their websites characteristics, (2) company internet services, (3) company products, (4) company internet usage for their work, and (5) their customer’s psycho-geographical segmentation while producing their products. In order to evaluate these research questions, developed survey questionnaire is conducted on the employers of Bosnian companies which have presence in internet. The surveys are distributed to the respondents in four different cities of Bosnia and Herzegovina including Sarajevo, Zavidovici, Gracanica and Zenica.


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The remaining of the paper is structured as follows: The second part discovers the related literature. The third part provides the information of the data collected. The findings are presented in the fourth section. Finally, the paper is ended with the conclusion where the limitations and the implications of the research are addressed. 2. Literature Review The execution of business transactions over the Internet is called E-business. E-business activities enhance supply chain performance over the Internet across by enabling sharing information, sales activities, ordering and order tracking, etc. Companies can also use the Internet to display all its product variety and to increase the collaboration in product design (Chopra and Van Mieghem, 2001). Supply chains can be defined as the established direct link among three or more organizations in order to enhance the flows of products, services, money, and information from a source to the end customer (Meltzer, 2001). E-commerce is useful in the revolutionary world related with supply chain management by increasing the usage of computers, networks, people, and business goals for selling products, services, and information; is an innovative way to cut costs, enlarge markets and profitability, and improves shareholder return relative to traditional business methods (Palmisano, 1998). This refers to e-commerce which is the trade of goods and services in electronic environment (Dolbert et al, 1998). Furthermore, Laudon and Traver (2001) defines e- Business as the ways of enabling company transactions and processes in digital environment by the use of information systems. Golicic, Davis, McCarthy and Meltzer (2002) aimed to explore “The interface between e-commerce and supply chain relationships” by considering the past research about companies’ reaction to uncertainty by developing and maintaining relationships among supply chain members. They conducted their research with eight e-commerce companies in order to assume theoretical relationships about the impact of e-commerce on the management of supply chain relationships. They identified that extremely uncertain perception of e-commerce environment because of increased information visibility and dynamic market structures. Their findings also supported the application of transaction cost analysis and the resource dependence theory by explaining inter-organizational relationship formation in e-commerce. They concluded that the e-commerce makes the business environment more dynamic and uncertain than before. Cohen (2002) tried to explore how companies use supply chains to support after-sales service operations for a range of industries from computers to automobiles. According to Cohen (2002), supply chains must be designed by evaluating the critical company products and their cost to the consumer. He suggested that components of critical products or services must be provided by supply chains. Cohen (2002) also stated the importance of location choice as another key issue in the supply chain where a company should stock the parts. Cohen (2002) reported that the field is extremely evolving with the introduction of e-commerce, because, "technology has reached a point where large-scale optimization has become possible in real


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time". Finally, he concluded that developing vast networks connecting company operations with the systems of their suppliers and customers has now become possible. Johnson and Whang (2002) claimed that companies are opening Internet channels more and therefore more buyers are ordering over the Internet through more sophisticated applications. These both enhance handling transactions and generation of huge amount of data which cause information overload. However, they suggest that this can generate an opportunity to develop solutions about aggregating, summarizing and interpreting them in a manager-friendly way. Burt and Sparks (2003) aimed to explore the interaction between the retail processes/procedures and e-commerce. They identified that pursuing Internet-enabled advantages and cost reductions in operations can enhance competitive position in process, structure and relationship terms, consumer reactions to the new real and virtual offers as fundamental to the success and failure are not fully understood yet, and both the quality and the presentation of existing retail floor space needs to be enhanced in order to provide retail functions. They commented on the uncertainty of future e-commerce and e-retailing and their impact, assessments. They stated that the real benefits of e-commerce are dependent upon the ways of performing tasks and activities through the retail channel and their impacts on ownership, costs and efficiency. They suggested developing new business models and formats with retailers and E-commerce to enhance the activities of all sorts. Lee and Han (2009) aimed to explore “E-Business Model Design and Implementation in Supply-Chain Integration” such as business-to-business (B2B) cooperation, e-service aggregation, and dynamic re-configuration of business roles. They reported that through e-business, many of the core supply chain concepts and principles could have been put in practice in a much more effective way. According to them, these concepts include: information sharing, multi-party collaboration, design for supply chain management, postponement for mass customization, outsourcing and partnerships, and extended or joint performance measure. Wagner and Sweeney (2010) researched the role of E-Business in Supply Chain Management and identified that many organizations still lack an effective ICT infrastructure in order to organize, support and facilitate the highly complex and often rapidly changing interfaces among the organizational entities and disciplines involved in business processes. Furthermore, they suggested for the organization embarking on an e-business initiative the consideration of a sensible alignment of technology (as an enabler) with their business strategy in order to be successful. They concluded that e-business can drive new organizational forms (such as virtual organizations), fulfill inter-firm context tasks and allow them to improve their supply chain processes. They suggested that e-business plays a very important role in SCM integration. Kumaran and Ganesan (2011) also researched the influence of E-Business in SME’s Supply Chain Management and identified the power of e-business technology for communication at the buyer-supplier interface. They suggested e-business in SME’s supply chain management in order to enhance company performance by increasing speed, accurate and intelligent decision making in order to form strategies for purchasing decisions, portfolio responsibilities, and


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customer demand forecasts and lead time reduction. They reported SME’s should be capable of developing internal control systems aligned with the varying needs of their customers and the supply chain in order to be survived. They recommended using various types of commercial ERP systems to SMEs in order to enhance their SCM. Nikakhtar and Jianzheng (2011) explored e-commerce in supply chain management and presented a detailed consideration of e-commerce process in describing supply chain and all its necessities and requirements in today’s competitive world. They also explain the ways of achieving competitive advantage by the use of electronic supply chain. They suggested customer focus strategy to programmers and decision makers. They suggested effective supply chain which benefits from electronic tools for further coordination and integration of supply chain. Yang (2012) realized effective supply chain management as the strategy choice to enhance firm competitiveness and suggested e-commerce to provide important means for effective operational supply chain management. They suggested the use of network platform in order to fully relate the customers, retailers, manufactures, suppliers and employers, improve greatly the level of enterprise management, manage both supply and demand, collect market information in a very short time, improve the product rate and economic benefit, reduce the production cost and fasten the circulation of the products, and enhance the core competitive force of enterprise. He concluded that by the help of e-commerce technology, supply chain management can be further developed and the enterprise can catch market opportunities. Alrubaiee, Alshaibi and Al-Bayati (2012) researched the interrelationships among B2B E-Commerce Benefits, E-Marketplace Usage and Supply Chain Management by examining the mediating impact of e-marketplace usage on the relationship between e-commerce benefits and supply chain management through the companies in different industries by employing covariance-based structural equation modeling. They identified a strong and positive effect of e-commerce benefits on e-marketplaces usage but no significant direct link between e-commerce benefits and supply chain management. They concluded that e-commerce provides many benefits to both sellers and buyers; sellers can access widely distributed narrow market segments while buyers can benefit by accessing global markets with larger product availability from a variety of sellers at reduced costs. Finally, they recommend that managers should focus on making B2B e-commerce as well as e-marketplace usage an integral part of their business strategy. E-commerce fraud Since it is usual for any set up system, one of the biggest concerns in online purchasing procedure is the threat of credit cards being stolen. It is definitely not the fundamental disaster as the experts forecasted. Curry (2000) reported that online purchasing systems have been extremely successful. He also reported that the occurred frauds are simple variations of standard consumer fraud and simple mail or telephone order (MOTO) fraud.


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3. Data and Methodology Scale Development and Data Collection This study develops a survey questionnaire based on the reviewed literature. The considered variables and sub-items are provided in Table 1. The references used while developing the questions are also observed from the table. While developing the survey questions, a 7-point Likert scale is found to be appropriate. The surveys are distributed by hand and through e-mail. The people in four different cities, Sarajevo, Zavidovici, Gracanica and Zenica, are targeted in order to conduct the survey. Finally, when 200 responses are obtained as a result of one month survey collection period, the conduction of the survey is stopped. The number of responses is found to be proper in order to represent the target population. The collected responses are encoded and inserted into an excel spreadsheet and analyzed descriptively. Table 1 Variables, Sub-items and References

Variables Sub-items References

Company website characteristics

security

Lightner (2003)

information quality

information quantity

price

speed

Company Internet Use

experience

Toress & Martins (2004)

internet access

frequency

frequency of purchase

internet shopping use

Company Internet Services

buying online

Mafe & Navarre (2003)

browsing online but buying in store

entertainment

convenience

information search reliability

Company Product Offer

product guarantee

Toress & Martins (2004)

possibility to return

price reduced products

diversity of products' brands

Psycho-geographical Segmentation

social class

Murray (2011)

Life-style

personality

amount of purchase

browsing


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4. Results Demographics The survey participants are observed to be half male (98) and half female (102). 139 respondents are below 40. Since there is a young population, the level of their education seems low (170 respondents have high-school and graduate degrees-almost equal amount). Questionnaire analysis The questionnaire consists of four questions about company web characteristics, company internet use, company internet services, company product offer and psycho-geographical segmentation. Every question is rank with answers from one to seven; where one represents as strongly disagree while seven is for strongly agreed. Company Website Characteristics The respondents are observed to very slightly agree in general to this part of survey questionnaire. According to their responses, company websites could not provide secure transactions environment for customers and has very poor characteristics such as including very low level of qualified and necessary information, it is not quick to open, and it cannot provide the comparison of products and product characteristics (Table 1). Table 2 Company Website Characteristics

Items Mean Std. Deviation

Bosnian companies’ website provides a secure environment and transactions for customers

3.96 2.336

Bosnian companies’ website includes qualified information 4.33 2.020 Bosnian companies’ website gives the ability to compare the products and their characteristics

4.41 2.067

Bosnian companies’ website includes necessary information 4.47 2.005 Bosnian companies’ website quickly opens and provides speedy transactions

4.56 2.029

Company Internet Usage The companies are perceived to be poorly using internet for their product information search and company related job. Moreover, the staff is also believed to be poorly skilled in order to use internet and they are not trained to do so (Table 2). Table 3 Company Internet Usage


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Bosnian companies’ staff is very confident with their abilities to use the internet or web

4.36 2.049

Bosnian companies’ staff can search internet for product information

4.48 2.045

Bosnian companies’ staff use internet frequently for company related job

4.50 2.010

Bosnian companies’ staff are trained for using system for buying and selling activities

4.50 2.050

Company Internet Services The companies are observed almost not provide buying both online and from stores. However, the websites seem slightly provide fun, possibility to search product information and a convenient online shopping environment (Table 3). Table 4 Company Internet Services


Bosnian companies’ provides buying both online and from stores

4.42 2.011

Bosnian companies’ provides a convenient environment for online shopping

4.63 1.919

Bosnian companies’ website provides searching product information

4.71 1.904

Bosnian companies’ website is designed to provide fun while shopping online

4.70 1.987

Company Product Characteristics According to the respondents’ answers, the companies are observed to be able to weakly guarantee for the quality of their products and paying back if they are returned. Furthermore, they are observed to be able to offer a variety of products (Table 4). Table 5 Company Product Characteristics



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Bosnian companies’ can give guarantee for the quality of its products

4.56 1.979

Bosnian companies’ can offer vast variety of products with different brands

4.64 2.030

We guarantee paying back when the product is returned by the customers

4.65 1.974

Customer's Psycho-Geographical Segmentation By considering the responses, it can be asserted that the companies almost do not produce for a specific customer group and do not offer products which are designed by considering the customer’s personality (Table 5). Table 6 Customer's Psycho-Geographical Segmentation


Our products are preferred by mainly upper level of customers

4.56 2.104

We produce for a specific group of customers 4.42 2.130 We produce by considering the customer's specific personality

4.48 2.171

5. Conclusion This research has been motivated by the need to explore the current situation of globally employed e-commerce in Bosnia and Herzegovina from the eyes of consumers. The results reveal very poor level of website characteristics of Bosnian companies, companies’ poor level of internet usage in their activities; they can slightly provide Internet services to their customers. They furthermore are found to design their products by considering the psycho-geographic segmentation of the customers. This study has been limited in that it could not cover vast variety of cities in Bosnia. However, the targeted cities can be considered as the biggest cities of Bosnia. This study may be useful in that it could provide preliminary information about the current stages of companies in the region from the perspectives of consumers. Further studies may develop similar scales and test their perceptions about the companies. This study strongly suggests that since there is a very weak positive consideration of their customers, Bosnian companies should employ existing technologies and methodologies into their strategies and systems in order not to be fallen very behind of global competition. They may also consider their consumers’ wishes and needs while structuring their strategies and production.


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Corresponding Author Muhammed Kürşad Özlen International Burch University, Francuske Revolucije bb, Ilidža/71000 Sarajevo, Bosnia and Hezegovina Tel: +387 33 944 400, Fax: +387 33 782 131, E-mail: [email protected] References Alrubaiee, L., Alshaibi, H. and Al-bayati, Y. (2012). Relationship between B2B E-Commerce Benefits, E-Market- place Usage and Supply Chain Management. Global Journal of Management and Business Research, Burt, S. and Sparks, L. (2003). E-commerce and the retail process. Journal of Retailing and Customer Services, Chopra, S. and Van Mighem, J.A. (2000). Which e-business is right for you supply chain? (Forthcoming in Supply Chain Management Review). Civic Consulting Subcontractors TNS opinion – Euro monitor International (2011). Consumer market study on the functioning of e-commerce and Internet marketing and selling techniques in the retail of goods Cohen, M. (2000), E-Commerce Will Transform Supply Chain Management Curry, S. (2000), “An Inside Look at E-Commerce Fraud, Prevention and Solutions” Dolber, S., Cheema, S. and Sharrard, J. (1998). Resizing on-line business trade, The Forrester Report, November, pp. 1-13. Golicic, S.L., Davis, D.F., McCarthy, M.C., Meltzer, J.T. (2002). The interface between e-commerce and supply chain relationships. Johnson, M.E. and S. Whang, (2002). E-business and supply chain management. Kumaran, A.L. and Ganesan, R. (2011). Influence of E-Business in SME’s Supply Chain Management. European Journal of Social Sciences, Laudon, K.C. and Traver, C.G. E-commerce, Business, Society, Technology. Prentice Hall, Upper Sadle River. Lee , M.C. and Han, M.W. (2009). E-Business Model Design and Implementation in Supply-Chain Integration. Proceedings of 2009 International Symposium on Web Information System and Applications


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Meltzer, J.T., William, D.W., Keebler, J.S., Min, S., Nix, , J. N. W., Smith, C. D., and Zachariah, Z.G.. (2001). Defining supply chain management. Nikakhtar, N. and Jianzheng, Y. (2011). Role of e-commerce in supply chain management to minimize costs. African Journal of Business Management, Parvatiyar, A., Sheth, J.N. (2001), “Customer Relationship Management: Emerging Practice, Process, and Discipline”, Journal of Economic and Social Research Wagner, C. and Sweeney, E. (2010). E-Business in Supply Chain Management. Electronic Supply Network Coordination in Intelligent and Dynamic Environments: Modeling and Implementation Yang, M. (2012). Supply Chain Management under E-commerce Environment. International Journal of Innovation, Management and Technology,


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Appendix Supply Chain Management Survey Questionnaire

Please answer all questions For each numeric question, circle the number that best reflects your opinion of the factor judged 1=strongly disagree, 2=disagree, 3=neither, 4=agree, 5=strongly agree Circle only one number for each scale

Demographics

a Your department/unit:

b Your current position/role in dept/unit:

c How long have you been in current position/role?:

d Your highest education level: Doctorate Master Undergraduate Other______

e Gender: Male Female

f Age: ≤30 31-40 41-50 51-60 ≥61

Company Website Characteristics Agreement Level

a Bosnian companies’ website provides a secure environment and transactions for customers

1 2 3 4 5 6 7

b Bosnian companies’ website includes qualified information 1 2 3 4 5 6 7

c Bosnian companies’ website gives the ability to compare the products and their characteristics

1 2 3 4 5 6 7

d Bosnian companies’ website includes necessary information 1 2 3 4 5 6 7

e Bosnian companies’ website quickly opens and provides speedy transactions

1 2 3 4 5 6 7

Company Internet Usage Agreement Level

a Bosnian companies’ staff is very confident with their abilities to use the internet or web

1 2 3 4 5 6 7

b Bosnian companies’ staff can search internet for product information

1 2 3 4 5 6 7

c Bosnian companies’ staff use internet frequently for company related job

1 2 3 4 5 6 7

d Bosnian companies’ staff are trained for using system for buying and selling activities

1 2 3 4 5 6 7

Company Internet Services Agreement Level

a Bosnian companies’ provides buying both online and from stores

1 2 3 4 5 6 7

b Bosnian companies’ provides a convenient environment for 1 2 3 4 5 6 7


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online shopping

c Bosnian companies’ website provides searching product information

1 2 3 4 5 6 7

d Bosnian companies’ website is designed to provide fun while shopping online

1 2 3 4 5 6 7

Company Product Characteristics Agreement Level

a Bosnian companies’ can give guarantee for the quality of its products

1 2 3 4 5 6 7

b Bosnian companies’ can offer vast variety of products with different brands

1 2 3 4 5 6 7

c We guarantee paying back when the product is returned by the customers

1 2 3 4 5 6 7

Customer's Psycho-Geographical Segmentation Agreement Level

a Our products are preferred by mainly upper level of customers

1 2 3 4 5 6 7

b We produce for a specific group of customers 1 2 3 4 5 6 7

c We produce by considering the customer's specific personality

1 2 3 4 5 6 7

Part II: Please add here any positive /negative comments regarding the issue

consumers’ perceptions about e-commerce activities of

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