E-commerce in Malaysia: Perceived Benefits and Barriers

Abstract

Rapid developments in information technology and telecommunications have set the pace for an electronic revolution leading to emergence of E-commerce. The advent of internet offers many business firms new opportunities and challenges. However, there are various psychological and behavioural issues such as trust, security of the internet transactions, reluctance to change, and preference for human interface which appear to impede the growth of E-commerce. This paper analyses the current situation of E- commerce in Malaysia, the merits of E-commerce, and factors affecting the adoption of E-commerce. Internet has transformed the traditional marketing model and system. Besides functioning as a communication medium, it has been used as a market space where buyers and sellers exchange information, goods, and services without the hindrance of time and geographical constraints. Marketing functions are performed under a hypermedia-computer-mediated-environment where interactivity and connectivity are replacing the traditional mode of ‘face to face’ negotiation and communication. Internet allows interactivity between buyers and sellers to create a shared real-time common marketspace. Connectivity links buyers-sellers worldwide creating a shared global marketspace. No other industry in the world history has achieved a rapid growth in as short a time as E-commerce. Though only a few years old, E-commerce has taken off at an unprecedented speed despite much skepticism and some initial hesitation. It is univer-sally accepted that the world is in the grip of an E-commerce revolution. But, the hyper growth of Internet sales is still an American phenomenon and E-commerce has not taken off in other parts of the globe although some countries like Europe, Japan, and Australia are rapidly joining the bandwagon. Although E-commerce is a relatively new method of business, it has radically altered the marketing and distribution paradigms. The scale of business generated through E- commerce is multiplying exponentially. However, Malaysian E-commerce industry has not taken off as expected. Based on primary data collected by MATRADE using a survey of 222 Malaysian manufacturers, traders, and service providers, this paper examines the perceived benefits as well as barriers to E-commerce adoption. Though the sample firms felt that E-commerce was beneficial to business in general, they were uncertain as to how it would benefit their actual business operations. The perceived benefits included: competitiveness better image efficient processes better information system. However, despite the perceived benefits, E-commerce adoption was hindered by a number of constraints. Major barriers were thought to be the problems of keeping up and understanding the technology itself lack of trained manpower uncertainties with regard to its operations and regulations high switching costs. These findings are helpful in providing the firms' perspective of E-commerce in terms of its benefits to their companies as well as barriers to its full scale adoption. Hence, any policy that aims at promoting E-commerce should take these factors into consideration. The results support the development of E-business portals to cater to their needs and rectify their problems. E-commerce portals would enable companies to share the high investment cost of constantly changing technology, reduce the manpower requirement, and keep abreast with the advances in technology.