E-COMMERCE ADOPTION IN SAUDI ARABIA: AN EVALUATION OF COMMERCIAL ORGANIZATIONS WEB SITES

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1 E-COMMERCE ADOPTION IN SAUDI ARABIA: AN EVALUATION OF COMMERCIAL ORGANIZATIONS WEB SITES Mutlaq B. Al-Otaibi Information systems department College of computer and information sciences King Saudi university P.O. Box 15459, Riyadh 11444, KSA Rasheed M. Al-Zahrani Information systems department College of computer and information sciences King Saudi university P.O. Box 51178, Riyadh 11543, KSA ABSTRACT Information Technology (IT) is rapidly growing in The Kingdom of Saudi Arabia (KSA). PC sales and Internet growth is the highest in the region [1, 2]. However, it is generally believed that e-commerce practices are not progressing at the same speed. To judge this, Saudi web practices need to be evaluated. This study is one of the first scientific studies of Saudi commercial web sites by analyzing the practices and the characteristics of those sites. It measures the tendency of Saudi organizations towards e- Commerce. Our investigation considers the marketing, human interaction, knowledge support and e-commerce dimensions within those sites. Today s Saudi e-commerce practices are generally immature, where most of the previous dimensions are either missing or very weak. This paper offers an insight into the status of e-commerce in Saudi Arabia. Despite the fact that our survey is not exhaustive, we claim that the results reached in this paper reflect -to a large extent- the current situation, and could be used by responsible authorities to find means to encourage those practices and overcome weaknesses and barriers. Keywords e-commerce, evaluation, web-sites, survey, knowledge, 1. INTRODUCTION According to the Saudi Ministry of Commerce, the growth of Internet users in KSA is substantial, where the growth ratio exceeds 122% in 2000 [1]. Number of Saudi web sites is also growing exponentially, and this calls for specialist efforts to assess the progress made in the last few years. Such an assessment will not only disclose the current challenges, weakness and achievements, but will also offer an accurate picture of our position and motivate solutions for our inherent problems and recommendations to boost Saudi web presence forward in the right direction. Saudi web sites evaluation in our study is performed carefully. Our study was conducted in three phases. Firstly, a selection process is performed to determine a set of web sites as a good sample for Saudi organizations web sites. To ensure a fair assessment, our sample consists only of large and medium-size organizations [7]. It is important to note that our research assumes that a commercial organization is a potential candidate for adopting e-commerce / e-business. Even if the organization does not actually have a strong e-commerce / e- Business service, its presence in the WWW should at least reflect its size and activity. We chose 134 sites based on this assumption, with the aim of realizing the tendency of Saudi organizations towards adopting e-commerce. A list of those sites is included in appendix A, and ranked from the most successful to the least successful according to the scores obtained during the evaluation process. Despite the overlap between e-commerce and e- Business, evaluating e-business issues is beyond our scope here, because it is usually not possible to evaluate e-business by visiting web sites, since access to e-business facilities is usually restricted to authorized people only. Secondly, we conducted a survey on the successful international e-commerce sites (e.g. amazon.com and ebay.com) with the aim of discovering the common features that contribute to the success of those sites. Results of this research are combined with other standard features for web site evaluation [3] and an evaluation form was designed. Our form has some 34 criteria to evaluate e- Commerce sites. We assembled those into 18 main features and used them to design the evaluation form. Finally, the evaluation process was carried out on the selected sample and the results were captured and then transferred to the SPSS package for analysis purposes. The researchers, according to their perception and personal judgment, performed this evaluation. Although this could be seen as an odd approach since evaluation was not a collective effort, it allowed us to ensure a high level of reliability and consistency of evaluation. Technological issues are beyond the scope of this paper, and we present them in [4]. In this research, a web site is not considered an e-commerce site unless it has facilities for describing sale items, for direct payment of cost, for tracking orders and for doing all this through the site without human intervention. These represent the minimum requirements for e-commerce in our view. Section 2 describes the four dimensions and their features. Section 3 is the main part of this paper and it provides results of our survey. Section 4 concludes our discussion. 2. DIMENSIONS AND FEATURES Features cover four major dimensions, namely the marketing dimension, the human interaction dimension, the knowledge dimension, and the e-commerce dimension. Our evaluation form consists of 18 main features and three clustering variables. Clustering variables are characteristics of the selected sites, that

2 include site purpose, estimated size, and status of pages. Purpose divides the sample into actual business and advertising sites. Estimated size divides our sample into small, medium, and large sites. Status of site divides sites into dynamic and static sites. Each of the 18 features has sub-items, and is evaluated on a 0 to 5 scale, corresponding to {Not applied, Very weak, Weak, Sufficient, Strong, Very strong}. The following four subsections discuss the four dimensions and their features. 2.1 Marketing Dimension The marketing dimension is concerned with the power of a web site in attracting customers and presenting offers in an intelligent manner. This is a major objective of a web site. Three features (feature 1 to 3) represent this dimension. The first feature is targeting the right audience through advertisement and products suitability. The second feature is about providing customercentric services, which includes determining and reaching potential customers, identifying their needs, and promoting products to meet those needs. The third feature is customizability, and it is concerned with collecting information about individual customers and providing services accordingly. Customization also means that site interface should be tailorable to individual users' needs and interests. 2.2 Human Interaction dimension Human interaction is a key issue to the success of e-commerce. The customer should be served in a comfortable environment. This can only be achieved if a number of features are supported satisfactorily. In our study, human interaction is measured by five features (features 4 to 9). The fourth feature is ease of use that includes assisting users while browsing the site, navigation simplicity, automated help and support, and clarity of site organization. The fifth feature is attractiveness, and it includes visualization approach, presented material and entertainment facilities offered. The sixth feature is obviousness. It compares a site with user experiences in the real world, so it assesses real world presentation and ability to limit user misunderstanding by utilizing deigns that are as close as possible to the real world. The seventh feature is encouragement. It includes understanding the user's tasks, and meeting user expectations. The designer must understand user tasks, goals, and mental modes before designing the site. He must use terms, icons, images and audio/video objects that best match the task in hand. The site should also offer incentives that encourage users to revisit the site. The eighth feature is availability and it includes download speed and browsing speed. The ninth feature is safety from errors that covers eliminating end user mistakes and effectiveness of aiding tools, e.g. lists and choices. 2.3 Knowledge Dimension Knowledge support is another crucial issue in web sites. A web site may be regarded as a knowledge source, a knowledge dissemination tool, and a knowledge management tool in the same time. WWW is an ideal platform for knowledge management (KM) [5, 6]. We perceive an e-commerce web site as a knowledge-support tool for customers, suppliers, managers and for employees. This gives a very wide scope for knowledge. However, in this survey, we address only three main features (features 10 to 12): richness of the site, catering for different types of customers, and support for knowledge dissemination / diffusion. Site richness evaluates the availability of information on different aspects of business. The second feature in this domain is on ability of offering appropriate information for different types of visitors. Feature number 12 assesses the tools offered in the site for knowledge exchange. These include , chatting rooms, discussion forums, file transfer / downloading tools, etc. Our concentration in this dimension is on knowledge, as a strategic asset. Some of the features presented in previous dimensions may sound similar or related to knowledge, but this is not the case. For example, providing customer-centric services in the marketing dimension does not consider the content of the site. Similarly, attractiveness focuses on the design issues and does not include content attractiveness. 2.4 E-Commerce Dimension Being the main dimension of our study, the e-commerce dimension is evaluated by 6 features (features 13 to 18). The thirteenth feature is transaction processing. Transaction processing facilities [8] are needed when the shopper proceeds to the virtual checkout counter. Software needs to calculate price, volume discounts, and shipping costs and then execute the operation on the database and generate a receipt to the customer. Feature number 14 is buying and selling facilities that include shopping items display, item description details level, complementary product offers. Feature number 15 is trust. It is concerned with site legitimacy checking, company stability information and product identification and certification. e-commerce sites usually gain consumer trust when they have a digital certificate issued from a certification authority, e.g. VeriSign. Feature number 16 is e- Payment support. There are many technologies used in electronic payment, e.g. credit cards, charge cards, e-cash, e-wallet, and smart cards. Feature number 17 is rewards and loyalty. Many sites present rewards (e.g. scores, credit money, prizes, competitions, etc.) to their consumers to gain user loyalty and ensure that the consumer will visit the site again (customer retention). The last feature -feature number 18- is scalability. It evaluates growth potential in the site. Here, we evaluate whether the site is deigned with future expansion or shrinking in mind. Some design approaches restrict future modification in the business. 3. RESULTS ANALYSIS AND INTERPRETATION Two analysis methods are applied. These are descriptive analysis and frequency analysis. Reliability test results are very high because, as stated earlier, the authors conducted the assessment process after a clear definition is reached for each concept in the process. This was possible only after repeating the process a number of times to eliminate any variances in evaluation. Other types of analysis (e.g. Crosstabs) did not yield significant results. This section presents summarized results and interpretations.

3 3.1 Descriptive Analysis Descriptive analysis provides summary statistics on several dimensions in a single table. It computes sample size, mean, minimum, maximum, and standard deviation. The mean value has more statistical significance than average. Standard deviation is a measure of dispersion around the mean. Table 1 shows statistical measures of our four dimensions. Table 1. Dimensions statistics for Saudi web sites survey. Dimension N Min Max Mean Standard deviation Marketing Human interaction Knowledge support e-commerce Valid N 134 The mean value of the marketing dimension is 5.49 in the range of (0-15) that equals to 40 %, and 3.79 standard deviation. This implies that marketing in Saudi web sites is very weak. This is understandable, since most sites have major weaknesses with respect to marketing evaluation criteria. As for the human interaction dimension, the mean value is in the range of (0-45), which equals to 45 %, and its standard deviation is Human interaction is also very weak in Saudi web sites. Similarly, the knowledge support dimension is very weak. The mean value is 5.52 in the range of (0-15), which equals to 37 %, and its standard deviation is This will be further discussed in the next section. The e-commerce dimension has a mean value of 4.22 in the range of (0-25) that equals to 16.8 %, and standard deviation 5.3, which is a considerable value. Hence, the e-commerce dimension is also very poor in Saudi web sites. Those four results reflect the status of Saudi practices in general. It is worth noting that standard deviation is high in the four dimensions. In our opinion this is mainly due to the huge gap in level between few excellent practices and the majority of sites that are extremely poor. 3.2 Detailed Analysis Detailed analysis is presented as frequencies that provide statistics and graphical displays. These are useful for describing many types of dimensions and variables. From a quick look at results, frequency analysis gives immediate indications. The frequency report can be suppressed when a variable has many distinct values. For example, in Table 2 below, 61.2 % of the sample sites are small sites. Here, small is the mode because the other choices of the Estimated size variable, i.e. medium and large, have smaller percentages. However, in some cases, the mode percentage is close to other percentages, in which case it might be important to take this into account. We mention those cases explicitly in our discussion Sample Details (Clustering Variables) Table 2 summaries the details of surveyed Saudi web sites. The mode value is the most frequently occurring (dominant) value. If several values share the greatest frequency of occurrence, each of them can be regarded as a mode. Table 2. Summary of evaluation sample. Variable Mode value Percentage Estimated size Small 61.2 % Site pages Static 61.9 % Site purpose Just advertisement 87.3 % This table shows that most of the Saudi sites are not real commerce sites. They can be seen as only advertising sites for the organization. Consequently, the majority are small in size and static in nature Marketing Dimension Table 3 summaries the details of the marketing dimension in this survey. It shows the mode value of each element in this dimension. Table 3. Summary of marketing dimension. Targeting the right audience Weak 57 % Providing customer-centric services Very weak 59 % Customizability Not applied 81 % 57% of the sites are weak (some of which are very weak) in offering products and ads targeted for the right audience. Similar percentages (59%) of sites are very weak in identifying their customers, realizing their needs and promoting the most appropriate needs. The last figure (81%) shows that most of the sites do not collect information on customers and therefore do not provide any special service due to this lack of customer information. If we add to this figure sites that are rated as weak and very weak, we end up having 95% of the sites with no customizable services Human Interaction Dimension Table 4 summaries human interaction results in this survey. Table 4. Summary of human interaction dimension. Easy to use Weak 50 % Attractiveness Acceptable 81 % Obviousness Strong 50 % Encouragement Weak 64 % Availability Strong 63 %

4 Safety Strong 77 % Half of the sites were difficult to use (evaluated as weak or very weak). This was mainly due to the lack of visitor assistance during visit. Attractiveness and safety were acceptable in most sites. In fact, most sites scored between weak and strong, but the mean is close to sufficient. Half of the sites were strongly obvious. About 34% of them had weak obviousness. Availability was reasonable as more than 80% of the sites acquired sufficient or above. Generally speaking, some of human interaction sub-items were not bad, even if this may conflict with the initial result of human interaction dimension. There is a need to use more realworld presentations, better customer support methods and more concentration on consumer behavioral issues Knowledge Dimension Table 5 summaries knowledge support dimension results in this survey. Table 5. Summary of knowledge support dimension. Richness Acceptable 67 % Catering for different types of visitors Knowledge exchange/diffusion tools Very weak 78 % Not applied 67 % Richness was acceptable as 67% of the sites acquired between weak and strong evaluation. This is understandable since site content is mostly easy to develop and publish. None of the sites scored too bad in this regard. Only 15% of the sites had very weak contents. On the contrary, the other two features scored very bad. 78% of the sites are very weak in providing appropriate content for different types of visitors. This means that those sites have rich content but that is not carefully presented. First time visitors may require information that are not good for permanent customers. Employees expect to see news, rules and direction that are not marketing-oriented. The last feature, knowledge exchange/diffusion tools, was not supported in the majority of sites. Only 21% scored sufficient or above in this respect. Providing rich content without exchange tools means that some visitors can find information, but may not be able to share it, or discuss it with other people from within or outside the organization. It is essential that organizations have strong interaction facilities with web site visitors. In fact, this is the major advantage of WWW over traditional publishing tools, e.g. news letters, handouts/brochures, radio/tv ads, etc., and this power of IT should be exploited to achieve more business objectives. Those results are indeed consistent with our findings in the previous dimensions, specially the marketing dimension. Sites that are static and poor marketing are not expected to be good in knowledge support, because knowledge is one of the main ingredients of serving the right audience, providing customercentric services and customizability E-Commerce Dimension e-commerce dimension results are presented in Table 6. Figures shown below reflect a negative situation. As shown, most of the ingredients for a real e-commerce are missing in the majority of sites. This explains our initial result that asserts the fact that most of the sites were designed only for publicity purposes. Although the sites chosen were for large organizations, they did not have serious e-commerce practices. Table 6. Summary of e-commerce dimension. Transaction processing Not applied 76 % Buying and selling facilities Very weak 73 % Trust Not applied 64 % e-payment support Not applied 90 % Rewards and loyalty Not applied 88 % Scalability Acceptable 75 % Scalability was rated very good. This was mainly because the designs chosen for the sample sites were flexible enough to accommodate future improvements. This might seem contradicting with the findings of the descriptive analysis that indicates that 62% of the sites are static. We do not necessarily see that only dynamic sites are scalable. Missing electronic payment methods can be justified by the lack of legislations and technical support from the Saudi monetary agency. Until now, Saudi Arabia does not have a PKI and certification authority1. In addition, financial transactions have no local legal cover2. Once these pre-requisites are offered, we expect a huge improvement in this dimension. Both organizations and individuals need to be convinced about the security of electronic financial transactions. Almost 80% of the sites had weak, very weak or no trust-gaining tools. This is not acceptable in developing countries because people are more reluctant to use e-commerce solutions. It is believed that the lack of Transaction processing and Buying and selling facilities is caused by the lack of secure and legitimate e-payment tools. Therefore, e-commerce should receive more government attention if it is meant to succeed in the future [9]. There is a lot to be done in this area, and we are confident that market pressures are forcing quick actions from official authorities responsible for e-commerce infrastructure. 4. CONCLUSION AND FURTHER WORK Saudi web sites are not e-commerce-oriented and have very weak marketing facilities, human interaction methods and knowledge support tools. They are mainly small in size, static, poor in 1 Recently, King Abdulaziz City for Science and Technology was appointed as the national authority for PKI and digital certification. However, this infrastructure is not yet enforced. 2 This does not mean that courts cannot handle those cases. A written and published law does not exist yet. Foreign investors need to see those laws. Some local organizations rely on international laws to avoid this legal issue.

5 knowledge and advertisement-oriented. In the marketing dimension, they are not targeting the right audience, they are limited in focusing on customer needs, and they are also not customizable. In the human interaction dimension, Saudi web sites are to- some extent- not easy to use and not safe. Most of them are attractive and scalable and 63 % of them are highly available. Knowledge support was generally poor in Saudi web sites. Although most sites had reasonable content, this content was not designed to serve different classes of web site visitors. Further more, sites are not equipped with tools for interaction and sharing of knowledge. These are two essential components of a successful web site. In the e-commerce dimension, most of the Saudi web sites are very weak in buying and selling facilities and do not apply transaction processing, trust, e-payment, and rewards and loyalty programs. The current Saudi e-commerce practices are immature since each of the previous dimensions is either missing or very weak. Extreme care must be given to the design of Saudi web sites. They must be utilized for actual business and should be equipped with facilities for true e-commerce. Further investigation is required to give a clear evaluation of e-commerce in Saudi Arabia. This includes evaluating infrastructure impact, ISP quality of service, and organizational issues of e-commerce within organizations. Some of these are tackled in. 5. REFERENCES [1] Towards the future of e-commerce in KSA. Ministry of commerce, Saudi Arabia, (November 2001). [2] Economic research and studies department. Council of Saudi Chambers of Commerce and Industry, Riyadh, Saudi Arabia. (October 2000). [3] Chioco K, WWW Interface Design Standards. 20Standards.pdf/. (2002). [4] Mutlaq Al-Otaibi, Rasheed Al-Zahrani. Information Technology Trends in Saudi Organizations. Being submitted for publication, (2003). [5] Brown J S, Duguid P. Organizing Knowledge. California Management review, v40, no. 3, (1998). [6] Chum W C. Working with Knowledge: How Information Professionals Help Organizations Manage What They Know. Library Management, Bradford, (2000). [7] Top 100 Saudi companies Riyadh Chamber of Commerce and Industry. Information center, Riyadh, (2001). [8] Schneider G., et al. Electronic commerce Second annual edition. Course technology a division of Thomson Learning Inc., Canada, (2001). [9] Mohammed Al-Qasem, Rasheed Al-Zahrani, IT laws in KSA: reality, hope and obstacles. In proceedings of the third workshop of national IT plan on IT Laws, Riyadh, (2002). [10] Mutlaq Al-Otaibi. Assessing the Current Status of Electronic Commerce in the Kingdome of Saudi Arabia. M.Sc Thesis, King Saud University, Riyadh, Appendix A (Evaluated sites) Seq. Site URL Score % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % %

6 % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % %

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