Table of Contents
Abstract
E-commerce has aroused interests globally as entrepreneurial entities use it in various ways to support their business. Its popularity has grown in the developed world mainly because of its simplicity and its ability to expand the scope of a business. In United Kingdom, it would still be accurate to argue that the economy has been digitized since internet contributes to a significantly large share of the country’s GDP. More than 13 percent of purchases made by British shoppers are done online indicating the growing opportunity for e-commerce. The opportunity definitely attracts individuals and companies into setting up virtual businesses. However, any new technology has its equal share of challenges as the attractive opportunities that come with it. This paper therefore seeks to investigate the challenges that ecommerce startups in UK face thereby offering recommendations on the responses that entities should take for effective setting up of their e-businesses. These challenges vary from capital and financial challenges to technological challenges.
Challenges Facing E-Business Start Ups in United Kingdom
E-commerce is increasingly becoming an indispensible way of doing business especially in the European region. It offers many great opportunities and several virtual business startups have enjoyed a growing success. Information on business venturing suggests that United Kingdom is increasingly becoming involved in this kind of business approach. For the last few years, very many e-businesses have been established in the region, but the rate of failure has always been proportional to the rate of venturing. This suggests that there are great business opportunities which e-business people have identified in United Kingdom, but do not have the capacity to exploit them fully. United Kingdom has a high rate of entrepreneurial activities but technological issues and security issues are the main challenges facing the e-commerce in the country. Another reason that has been put forward in regard to the challenges is lack of adequate capital. Therefore, the rationale of this study is to highlight the challenges that exist in United Kingdom for e-business startups. Additionally, it provides an opportunity to see its particular impact on new businesses. This in turn provides the opportunity to understand the reasons behind the successes and failures of e-business starters. Therefore, the aim of the study is to undertake an empirical approach to investigate the potential financing and technological challenges that e-business starters face when venturing in United Kingdom.
Aims and Objectives of the study
Four objectives will be considered:
To investigate the sources of new e-business ventures finance in United Kingdom
To investigate whether the existing e-commerce ventures are faced with any technological and security challenges.
To examine the accessibility to information on technology and infrastructure for starters.
To assess how business starters can best respond to the opportunities and challenges they face in United Kingdom
Literature review
The internet is seen as a way that supports business transformation. According to , the internet offers opportunities for small and middle sized companies in the UK. It offers a platform for competitive edge and growth. Lawrence however notes that security issues are the biggest challenges facing ecommerce setups in the UK. In his survey, most companies agreed that network securities are a major concern for their businesses. Some of the securities issues identified in his paper include reliability of networks, unauthorized access to networks, network interceptions by third parties, and tampering of messages in networks. Many ecommerce startups end up losing on business if they fail to invest in secure internet infrastructure that ensures security of data. An insecure environment not only costs companies during business transactions but also removes confidence in customers. They lack confidence because they are unsure about the security of personal information given online.
A report by Cullen International (2011) also agrees with the fact that e-commerce is growing at a faster rate in the world. The report further acknowledges the growth mobile commerce and commerce via social media. It identifies key success factors of e-businesses to include: better transport performance, consumer empowered to buy online, and improved e-retail offers. The percentage of individuals ordering services and goods online is currently the highest in the EU, according to data from the report. Both figures for national online purchases and cross boarder purchases are high in the UK compared to other EU countries. These findings also concur with those of . However, when it comes to customer levels of trust on online shopping most customers express confidence in domestic e-retails setups compared to cross border setups. Very few customers have trust on cross border setups.
There are varying reasons that reduces the levels of customer confidence on online shopping. Customers are worried about delivery of the goods or services, scams and frauds, complains procedures, and returns of faulty goods. In addition, there are both business challenges and regulatory challenges that face e-business startups. The business challenges include security of payment system, delivery, language, and trust levels of customers. Regulatory challenges which have been identified by include fight against counterfeit and piracy, protection of personal data, collective redress, consumer right, EU contract laws, and VAT.
According to identify competitive advantage, business efficiency, increased and sustainable customer, and increased sales as the major benefits that attract various entities into e-commerce. Capital is indeed an issue that challenges startups because of the high cost of technological and internet infrastructure. In addition, Kuzic, Fisher, & Scollary (2002) also note customer service, acquisition of skilled IT professionals, and a general lack of knowledge on e-commerce are among key challenges that business startups face when venturing into the online market. Kuzic, Fisher, & Scollary (2002) classify the challenges into three distinct areas: business challenges, managerial challenges and technological challenges.
The failure of many new e-businesses may also be due to the fact that the current approaches applied by business starters to get funds are not effective. This reason brings us to the next issue that the project intends to investigate. The approaches could not be convincing as it might be with respect to an integrated approach to business planning and the business financing opportunities that the starter intends to exploit. It can be argued that many of them pursue business opportunities either without examining their viability within the online market or realizing the need to seek more capital when their ventures indicate failure. The development of a funding platform that provides e-business starters with accurate information may therefore help them to revise their strategies and attract more sources of funds. It is apparent that these business people have not realized the problems they encounter in exploiting the funding opportunities of the market. Therefore, they need to find out these problems to succeed in their business endeavors which form part of the focus of the study.
Methodology
The aim of the project is to provide recommendations giving information on the e-commerce opportunities and problems that business starters face when venturing in the United Kingdom online market. This will involve the identification of the main reasons why businesses venture into the online market and developing strategies on how to overcome the problems that they are likely to face. The literature review will consider the approaches by both successful and unsuccessful businessmen in rolling out e-retails. With regards to sourcing for funds, there will also be an investigation on the ways that business setups seek funding for setting up and sustaining their online ventures.
Research design
The study will carry out business level research into the small-to-medium size businesses. This will respond to the fact that most people start their ventures as small or medium size businesses due to financial constraints. The preferred study technique for this project will be cross sectional rather than longitudinal. The rationale for this approach is that time allocated for the study does not allow for a longitudinal research. Secondly, the aim of the study which is to find opportunities and challenges facing e-commerce ventures does not call for a long-term research, but will try to identify the need for more researches in the same field. As the aim stands, the most appropriate way to achieve it is by cross sectional research, which calls for a manageable resource expenditure. This means that the study will capture an overview of the success and failures of business starters in the online market. It will not try to follow trends overtime or to find out how they have changed. It will investigate the present procedures and their present influence.
The intention to investigate the available opportunities and challenges faced by new e-commerce ventures in United Kingdom makes this research purely qualitative. A deductive approach fits best for this type of research. Therefore, the study will employ deductive approach because of the huge body of literature on the major issues that affect e-commerce ventures. There will be an extensive use of secondary sources to obtain the overall picture of how e-businesses are run in UK from the initial stage of sourcing for funds to the final stage of sustaining the business.
Procedure
Several considerations inform the design and methods chosen for a study project. Design deals fundamentally with aims, intentions, uses, purpose, strategies, goals, plans and objectives within the limitations of resources. A library-based research will meet the needs for the literature review with the goal of exploring capital acquisition strategies and theories. It will also seek to determine the scope of research so far relating to new venture success in terms of acquisition of required IT infrastructures and adequate capital.
Questionnaire
Based on the nature of the study, a survey questionnaire will be used for purposes of collecting data for this study. Survey questionnaire is suitable because of its convenience, cost reduction, ease of administration, and the privacy of the respondents. Consent will be sought from the respondents by communicating to them the actual intention of the study. Survey questionnaires will be sent through mail. The survey questions will also be open-ended in order to get sufficient breadth and depth of replies to triangulate with the information gathered from secondary sources. Reliability of the survey data will be tested by comparing the variables under study with similar variables from previous studies while the validity will be tested by determining the extent to which the information concurs with approaches to e-commerce. Confidentiality and anonymity will be guaranteed to the respondents.
Target
This study targets business persons in the UK (Southampton) who have undertaken e-commerce initiatives and succeed or failed in their ventures. The study is targeting 50 people from the city of Southampton. It is assumed that most of the online businesses are based in Southampton however the researcher will first have to track them through their contact information on their websites. The limited number of participants is dictated by the resources available for the research
Sample
A sample of 50 businesses will be selected at random from a list of businesses/individuals who have undertaken E-commerce ventures and succeeded/failed. The research intends to find out from these participants the progress of their e-commerce ventures and the challenges they face while in operations. It will further seek information regarding the online market and their view on the sustainability of the market.
Essentially, the research will focus on the starting point of all already established e-commerce ventures especially while interviewing participants running successful ventures. The sampling considers several factors as stipulated in the following conditions:
1. The participant was or is a business person in Southampton
2. The participant must have exclusively owned or is owning an e-commerce venture
3. The participant can either be facing challenges or running successful e-commerce ventures.
Conclusion
Consideration the aims and objectives of this research, survey questionnaires will provide the easiest and most expedient way to reach the targeted audience. This can be attributed to low costs, expandable sample size, reduced implementation time, ability and the ease in programming skip patterns. This data collection tool factor also upholds the anonymity and confidentiality of the respondents. Many businesses and individuals have increasingly adopted the internet as the ideal platform for expanding their businesses. After collecting and analyzing data, the final report, together with recommendations will go to entrepreneurs and the owners of small-to-medium size with online operation for possible implementation. A research that is performed in a rigorous manner can lead to more effective practices than decisions with basis mainly on intuition, personal preferences, or common sense. Preferably, a presentation of the findings will be carried out in a report meeting. Otherwise, an email will be enough for the dispatching of the report.
The proposed investigation will point that there are several problems in United Kingdom about e-commerce ventures that have emerged in the recent years. Generally, ventures fail to prosper for some common reasons including insufficient business challenges, capital insufficiency, and technological challenges. Business financing is particularly crucial in both developing and developed nations owing to the soaring levels of productivity efficiency. However, one of the objectives of this project is to recommend on the existing opportunities and problems which e-commerce ventures in United Kingdom face.
This methodology exposes the participants to very many risks. The main risk the participants will encounter is if any of their answers that criticize the security leaks. This may have consequences on the attitude and opinion of the web developers and internet security companies. To eliminate this risk, the responses will be kept in an anonymous location. This way, the only way to access the information will be through a procedure that involves the researcher. The project thus observes research ethics in sampling as well as during data collection process.
Action plan
Gant Chart for the project schedule
S. No.
Task Name
Start
Finish
Meet the target
Could not meet the target
Proposal preparation
1st October 2012
Thursday, November 8, 2012
Yes
N/A
Submitting proposal
Literature review
Collection of primary data using survey questionnaire
Secondary data
Data analysis, analyzing and interpreting evidence
Writing the project
Ethics check list
Researchers
Name and position of researcher
Timescale of research
Title of research
Safety of researchers
Is there any conflict of interest for researchers?
Is there a possibility of researchers to be sent to insecure areas?
Safety of participants
Could the study cause discomfort or stress to participants?
Could the research induce physical harm to participants?
Is there any other way in which the research could harm participants?
Security of data
Does the data collected expose the participants to any risk?
Does the research require collecting sensitive information such as personal details and company secrets?
Who is particularly granted access to raw data?
How will raw data be stored to prevent unauthorized access?
Will there be any finding feedbacks given to participants
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