The benefits and barriers to the adoption of e-commerce by SMEs in Uganda : A case study of online confectionery stores in Kampala City

Abstract

Electronic Commerce (E-Commerce) adoption significantly influences the growth of Small and Medium-sized Enterprises (SMEs). However, in comparison with larger companies, the adoption of e-commerce by SMEs relatively lags behind. Although research indicates that e-commerce offers feasible and practical solutions for organizations to meet the challenges of a predominantly dynamic environment, the available studies related to SMEs in developing countries reveal a delay or failure of SMEs in adopting e-commerce. Therefore, the objectives for this study were: to identify the benefits that confectionery stores in Kampala City experience after adopting e-commerce; to identify the barriers that hinder the adoption of e-commerce by confectionery stores in Kampala City; to come up with recommendations on how best the barriers affecting the adoption of e-commerce by confectionery stores can be solved, so as to improve on the level and rate of adoption by these SMEs. Data was collected from three confectionery stores, using an interviewer-administered unstructured and open-ended questionnaire, and analyzed using analytical themes. All the companies reported a number of benefits which included: geographical reach, widen customer base, convenience, increased productivity, and lower costs of transaction. Others were information sharing, imparting trust through information sharing, and collaboration. Also reported were a number of barriers that included: resource barriers, low online recognition, internet access & costs, and delivery barriers. Others reported were under-developed payment system, performance/product risk, trust, cyber-crime, and government policies and legal & regulatory issues. In conclusion, like in other developing countries, SMEs in Uganda face a number of barriers, which need solutions if the SMEs are to realize gainful e-commerce business transactions.