Adoption of E-commerce by small, medium and micro enterprises in Pietermaritzburg and Durban.

Abstract

There are a number of benefits associated with e-commerce adoption. E-commerce provides an opportunity for Small, Medium and Micro Enterprises (SMMEs) to expand their range of transactions and expansion into foreign markets (OECD, 2000). In South Africa, a study on online retail reveals that South Africans spent two (2) billion rands buying goods online in 2010 (WorldWideWorx, 2011a). The projected growth of online spending was 40% for 2011 (ibid). In addition, at the end of the year 2011, the number of internet users in South Africa was approximately 8.5 million (Goldstuck, 2012). Furthermore, the installation of new undersea telecommunications cables in South Africa that will lead to an increase of the internet bandwidth at a cheaper price, the granting of licenses that allows Internet Service Providers to build their own networks and the growth of cell phone internet are indicators that more South Africans will be able to access the internet in the near future. This suggests that there is a market for internet-enabled businesses in South Africa. It is in this context that this research examines the adoption of e-commerce by South African SMMEs in the Pietermaritzburg and Durban areas. Particularly, this research focuses on four (4) e-commerce options: i) customers payment by credit card through the SMME’s website, ii) customers placing orders through the SMME’s website, iii) providing customer services through the SMME’s website and iv) placing orders with suppliers over the internet. From a clustered sample of 400 SMMEs from Pietermaritzburg and Durban (200 from each area), this research examines the current usage of the 4 e-commerce options, the determinants and inhibitors of e-commerce, e-commerce readiness in terms of e-commerce enablers that are implemented in those areas and the knowledge that SMMEs from these locations have about the benefits of e-commerce. Variables drawn from the Unified Theory of Acceptance and Use of Technology (UTAUT) and the Diffusion of Innovation (DOI) theory were tested for their significance as determinants of e-commerce within the context of SMMEs. Data were collected by means of questionnaires hand-delivered to SMME owner/managers. This study reveals that there is a disparity in e-commerce adoption rate by SMMEs between Pietermaritzburg and Durban. Such difference is mainly due to the differences in size of the businesses. In addition, it was found that three UTAUT variables influenced SMMEs’ decisions to adopt e-commerce. These variables are i) performance expectancy, ii) effort expectancy and iii) social influence. The social influence factor was found to be moderated by age. In addition, i) relative advantage, ii) compatibility and iii) complexity are the DOI variables that were found to have exerted some influence in the persuasion phase of the DOI model. The UTAUT and DOI theories were tentatively adapted to reflect the findings emanating from this study. This research also found that the majority of SMMEs that adopted e-commerce had knowledge of the benefits of e-commerce. Importantly, the research found that the majority of e-commerce adopters had an e-commerce strategy in place which is in contradiction with other research findings from the reviewed literature. The research shows that the majority of e-commerce adopters in both locations have i) their own company e-mail, ii) internet access and iii) a website. However, non-adopters in Pietermaritzburg show more readiness to e-commerce adoption compared to non-adopters in Durban as the majority of them already have i) an online presence, and ii) electronic mail. As expected, the majority of e-commerce adopters have a computerised inventory of company’s products and services. There is also evidence that customers’ and suppliers’ databases are built to carry out specific e-commerce activities. Lastly, the research found that whilst low use of e-commerce by customers is the only inhibitor that significantly affects the adoption of e-commerce in Durban, in Pietermaritzburg a number of inhibitors were found to impede e-commerce adoption. These are: i) lack of conviction of the financial and business benefits of e-commerce, ii) limited knowledge of the required technology, iii) low use of e-commerce amongst customers, iv) low use of e-commerce amongst suppliers, v) low level of computerisation within the company, vi) high cost of computers and network technologies, vii) telecommunications services not dependable, viii) concerns about internet security, and ix) concerns about legal issues, contracts and liability. In light of the research findings, it is recommended that government and policy makers be involved actively in promoting e-commerce adoption by SMMEs. In addition, SMME owners are urged to consider e-commerce adoption from an early stage of their business cycles and to take advantage of existing platforms that enable them to engage in e-commerce activities.