Over thousands of years that people have been engaging in commerce with one another, they have adopted the tools and technologies that are available. For example the advent of sailing ships in ancient time open new awareness of trade to buyers and sellers (Gary, 2003). For decades, developed countries like Britain, USA and Brazil etc. have been using various e-commerce tools to conduct various types of business transactions. Banks have used EFTs (Electronic Funds Transfer) to move customers money around the world and businesses are using EDI (Electronic Data Interchange) to place order and send invoices and also internet facilities have been used by business managers or staff and customers which created a good platform for them to communicate.
In terms of international and global comparison, internet usage in Nigeria is still relatively low and therefore e-commerce is still in the rudimentary stage. Study has shown that there is an increasing awareness of the benefit and potential opportunities arising from e-commerce, but there are limitations to its adoption in Nigeria. Some of factors that have hitherto hampered the adoption of e-commerce are many among which are establishing cost, accessibility, data security, network reliability, privacy and confidentiality, threat, authenticity of products, citizens income and education (Pom and Swatman, 1998; Vadapalli and Ramamurthy, 1998). While these negative factors still remain, recent study shows that e-commerce is slowly but surely taking off gradually in Nigeria and the most obvious area of progress is in one branch banking system and payment system where both single and multipurpose smart cards are generally been introduced into Nigeria banks. The initial advances have been made in e-banking and payment is actually an expositive step in that it could be the major boost to the adoption of e-commerce service generally among Nigerians in that the lack of ready access to remote payment mechanism has been one of the major factor hindering the development of e-commerce in Nigeria (Olatidoye, 2004).With these in mind, these study was undertaken to know and test which factors are the major factors affecting e-commerce in Nigeria.
According to the definition of Olatidoye (2004), E-commerce is the paperless
exchange of business information using Electronic Data Interchange, electronic
mail, computer bulletin board, FAX, Electronic Fund Transfer and similar technologies.
The information technology industries viewed e-commerce as an electronic business
application aimed at commercial transaction. It also means the conduct of business
commercial communication and management through electronic data interchange
and automated data connection system and according to earlier study, whether
companies are doing business over the internet or not, security is a serious
issue (Grant, 2001), customers engaging in e-commerce need to feel confident
that their transaction are secure from prying eyes and safe from alteration,
some information are critical to transaction while others mat not e.g., if a
customer wants to make a purchase online or by phone, a credit card number and
expiration date must be provided. Even if the customers trust the company with
private information, he may not be confident in your ability to guard that information
(Clauda et al., 2001; Jarvenpaa and Todd, 1997).
Before e-commerce came into Nigeria, the method of transaction used is known as traditional commerce which has its origin before recorded history when our ancestor first decided to specialize their everyday activities, instead of all family units to do all jobs to make their living, they developed skills in only one of these area and traded for other needs e.g., a farmer can exchange farm product with a tool making family and so on. Eventually, this bartering method gave ways to the use of currency, making transaction easier to settle. E-commerce therefore is an extension of traditional commerce which is the facilitation of commercial transaction electronically done using EDI to send commercial document like purchase order or invoice. Later it came to include activities more precisely termed web commerce i.e., the purchase of goods and services over the World Wide Web through secure server, a special server protocol, which encrypt confidential ordering data for customer protection. Presently in Nigeria, traditional commerce is still the main method of transaction, only few people are using e-commerce. An important function of e-commerce is the handling of payment over the internet. Most e-commerce involves the exchange of some form of money for goods and services. Implementation of payment system for e-commerce is still evolving in Nigeria thus the number of proposal and implementation of payment system currently compete for dominant. Regardless of the format, e-commerce is far cheaper than the mailing of paper checks. Today, four basic ways to pay for purchase that dominate both traditional and electronic business to consumers commerce are cash, checks, credit cards, debits cards, but in Nigeria today, cash and checks are the main ways used to pay for purchase but credit card is by far the most popular form of consumer electronic payment online in the developed nation. Recent survey found that more than 80% of worldwide internet consumers purchases are paid for with credit cards and this has very limited use in Nigeria. Payment card transaction follows these general steps once the merchant receives consumer payment card information.
||The merchant authenticate the payment card to ensure it is
valid and not stolen
||The merchant check the payment card issuer to ensure that credit or fund
are available and put a hold on the credit line or the fund needed to cover
||Settlement occur usually few days after the purchase which means that
funds travel between banks through the automated clearing house system into
the merchant account. Other means of payment system are electronic cash,
electronic wallet and stored value card etc.
Accessibility: In the context of e-commerce, accessibility can be defined
as the extent to which the needed technology for e-commerce are available for
individual to use. Also how easy and often citizens of Nigeria have access to
all the technology needed for e-commerce like internet, credit cards etc.
Cost of implementation: Among the factors that have been suggested to be influencing adoption decision is the cost of implementation. These can be defined as the total amount that will cost business organizations. Many organizations in Nigeria believes that the cost of implementing e-commerce is too high and that the money can be used for another purpose that will be more effective and profitable than the benefits that can be derived from e-commerce.
Privacy and confidentiality: Many people in Nigeria are afraid to divulge their personal information based on an assessment of risk and also the ease with which consumers personal information, their browsing and transaction habits can be captured online and the potential opportunities for misusing this information may raise the degree of privacy (Leo, 2004) risk to unacceptable level. Therefore it can be defined as the extent to which consumers believes that electronic commerce will not compromise his or her privacy.
Security: This is can be defined as the extent to which consumers believe
that his or her payment online is free from unauthorized access, use, alteration
and destruction. Although there is a close relationship between security and
privacy, there are still some differences, Leo (2004) showed the difference
as while privacy is related to what companies consciously decide to do with
consumers data, security is concern with any inadvertent compromise of
consumers data to a third party (e.g., hackers and identity theft) and also
from survey conducted for Cyber Source Corps (Nasdaq:CYBS) Nigeria was chosen
as the country posing the highest risk of online fraud (31%). So from these,
many Nigerians believe that their credit card information is not secure on internet.
Income: This can be defined as the amount of money available to individual or household after payment of all compulsory taxes.
Network reliability: This can be defined as the ability of company to rely on the transfer of its confidential and critical data over the internet, these can be caused due to the existence of outdated web server or application that were not carefully installed initially (Soliman and Janz, 2004). Nigerian being a developing country still suffer good communication network. There are few Internet Service Provider and even those that provide internet services provide bad services to the extent that most internet users waste most of their time browsing through the internet without signals.
Authenticity: This is the ability of the quality of goods and services displayed to be meet the way it is displayed i.e. consumers should get the exalt quality displayed on the internet. Many organization and business setup in Nigeria will just provide an attractive website, producing low quality product and given low quality service but displaying high quality goods and services so as to attract more consumers.
MATERIALS AND METHODS
Survey instrument and sampling procedure: The data used for this study
was gathered from the questionnaire designed and a random sample has been taken
from various commercial centers in the entire six geo-political zones that Nigeria
is divided into (Appendix). Participants were mainly adults
who reside in big cities and the commercial centers in these geo political zones
like Lagos, Port Harcourt and Kano etc. each with a population of over two million.
From each zone, a proportional random sampling was performed to identify about
200 potential respondents making 1200 potential respondents from all the six
zones. These 1200 respondents were later split to users and non users of e-commerce,
this was done to know the reasons why all the non users have not been using
it and to know the problems those people using e-commerce are facing and also
to know their precept if there is any advantage of e-commerce compared to traditional
commerce. Finally, of these 1200 potential respondents, only 300 respondents
were targeted for collecting the data for this study. The questionnaires were
first pre tested among convenience colleagues, students and general public to
comment on the relevance and wordings of the questionnaire items, length of
survey and time taken to complete the questions and it was also reviewed carefully
by professionals with extensive international experience. The comment and suggestion
of these professionals regarding the clarity, validity and consistency of the
question were incorporated into the survey instrument, some of the questionnaire
items were dropped, its layout was modified and the wordings of some of the
questionnaire were changed to improve its quality. Three hundred questionnaire
were finally distributed and the total of 130 responses were received which
show a response rate of 43.3% and out of these 130 received, 25 were found incomplete
and useless, 15 did not return their questionnaire at all. Therefore the total
of 90 useable questionnaires was received.
Respondent profile: Among the respondents that their questionnaires were found useful, 61 (67.8%) were male and 29 (32.2%) were female and majority of them 84 (93.8%) were between the age 20-49 and only 6 (6.2%) were over 50 years and above. Also concerning their educational background 52 (56.3%) have a bachelors degree or Higher National Diploma and about 7.7% had completed postgraduate degree showing that respondent were well educated. For clarity, frequency distribution of respondents on demographics issues is presented in the Table 1.
Also most of the respondents are member of business/cooperate organizations; only few are students, member of government organization and examination bodies. Result also showed that 70% of the respondents have heard about e-commerce before but only 32% have been using it for about 2 years or more.
|| Frequency distribution for respondents demographics
The variables used in the study i.e., cost of implementation, privacy and confidentiality, data security, citizens income, network reliability and authenticity of goods displayed were measured on a 5 point likert scale anchored by 1 (strongly disagree), 2 (disagree), 3 (neutral), 4 (agree), 5 (strongly agree). In order to access convergent and discriminate validities. The research variables were subjected to the Principal component analysis (a correlation matrix approach) using orthogonal rotation specifically varimax rotation. Also the KMO and Bartlet of sphericity was also used to test if the sample is adequate and the value of KMO in this analysis was 0.629 which confirms the appropriateness of proceedings with the analysis i.e., sample is adequate.
Table 2 shows the correlation matrix of all the variables
and it shows that all the variables correlate fairly well and none of the correlation
coefficient is particularly large, therefore there is no need to eliminate any
variable at this point. Also it can be noticed from the table that privacy and
confidentiality has the highest positive relationship and also the highest inverse
relationship exist in row 4 and 5 and column 4 and 5 which are between data
security and citizens income. The determinant was used to test for multicollinearity
and since it is greater than 0.00001, multicollinearity is not a problem for
these data. Table 3 shows all the factors extractable from
analysis along with their eigenvalues, the percentage of variance attributed
to each factors and also shows the cumulative variance of the factors and the
previous factors. In the final part of the table, the eigenvalues of the factors
after rotation are displayed and thus has the effect of optimizing the factor
structure and one consequence for these data is that the relative importance
of the two factors is equalized. Before rotation, factor 1 accounted for considerably
more variance than the other (27.790% compared to 21.101%). However after extraction,
it accounts for only 25.624% of variance compared to 23.265%, respectively.
Table 4 shows the component matrix before rotation and all
the loadings less than 0.6 are suppressed in the output so there are blank spaces
for many of the loadings less than 0.6. It can be observed from the table that
cost of implementation, citizens income and privacy and confidentiality
load on factor 1 and only data security load on factor 2. Table
5 is the table of the factor loading for each variable into each factor.
It contains the same information as the unrotated component matrix in Table
4 except that it is calculated after rotation. According to Nunnually recommendation,
all the primary factors loading should be greater than 0.5, but for this test,
all factors loading were greater than 0.7 which demonstrates a good match between
each factor and related variables. Also the variables are listed in the order
of size of the factor loadings. From this table, it can now be observed that
cost of implementation and accessibility load on factor 1 while data security
and citizens income are loading on factor 2.
|| Correlation matrix result
|| Total variance of the component
|| Component matrixa
|Extraction method: Principal component analysis, a. 2 components
|| Rotated component matrixa
|Extraction method: Principal component analysis, Rotation
method: Varimax with kaiser normalization, a. Rotation components in 3 iterations
From all the variables, only four variables were found to be factors affecting
the adoption of e-commerce in Nigeria and these factors are the cost of implementation,
accessibility, data security and citizens income. From Table
5, these variables have high factor loadings on factor 1 and factor 2 and
possibly when the cost of implementation is high, then it will affect its accessibility
by the people in the country because few company will be able to afford its
implementation and thereby there will be little resources for many people who
are interested in e-commerce to share. Also, from the table, data security and
citizens income have the highest factor loadings among all the variables
which signify that among all the factors, these two are the most significant.
It can also be said that citizens income is the main determinant to high
loadings of accessibility. The major factor affecting the adoption of e-commerce
has been the perception of poor security associated with payment method and
online business transactors in Nigeria are still worry about transmitting their
credit card information over the internet and the innovation of payment technologies
and process which should have improve the security of data and payment method
is impossible due to their cost and thereby making security problem a unique
one in Nigeria. Unless online merchant introduces some countermeasures that
will eliminate data and credit card threat and convince people about the existence
of high security standard, people altitude and adoption of e-commerce will seems
difficult or impossible in Nigeria. Also the result shows that the level of
income of Nigerians is low and this therefore makes many people to have the
intention that traditional commerce is preferable to e commerce and this will
definitely influence the accessibility of e-commerce technology like internet,
credit cards and others, they prefer using their money to buy easily accessible
and secure product than wasting it in cyber cafes prone to hackers and other
threats. It is therefore of high importance for Nigerian government to check
the standard of living and find a means of improving the level of income of
citizens so that e-commerce can be adopted fully in Nigeria.
Out of many factors that has were tested to be influencing the adoption of e-commerce in Nigeria i.e., influencing the willingness of people to use this method of transaction, four factors have been discovered to be the more significant factors. However, the study also stressed that factors such as data security and citizens income are the most significant factors affecting the adoption of e-commerce in Nigeria. The study also shows that authenticity of goods and services displayed on internet, privacy and confidentiality and network reliability are of little or no concern to people and it is also in support of prior research that security is the major factor influencing e-commerce in many developing countries (Balenger et al., 2002). This study provides practitioners and researchers with a new set of factors that are perceived to be affecting e-commerce adoption in Nigeria.
Limitation of study: Investigating e-commerce adoption in Nigeria is
relatively new and there is also limitation in the area of sampling and non
response bias, some of the organizations visited for assistance declined to
give the required information and those that did fail to keep appointment, some
did not even return the questionnaire given to them. Some of the respondent
do not know much about e-commerce and thereby filled the questionnaire the way
it pleases them
Contribution: This study provides new insight of new factors affecting e-commerce adoption in Nigeria citizens income and Nigeria being a developing country, many people still live in poverty and therefore for e-commerce users to increase in Nigeria, the bad economic situation must be checked by the government and concerning the issues of security, organizations must invent sophisticated security measures so that credit card and social security numbers cannot be accessed by the hackers. Also organization must organize an open lecture on television and radio stations to assure people that they are free of privacy and security threat.