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AN ECOMMERCE SYSTEM FOR SMALL SCALE GROCERY SHOPS, “MAMA

MBOGA”
CHAPTER ONE
INTRODUCTION TO THE STUDY
1.0. Introduction 1.1. Background to the study
Development and evolution of the internet and world wide web(www) has led to exponential
growth and developments in a number of fields, in turn improving our way of living. One such
field is ecommerce. While still in the early days of conception, some of the ecommerce giants
today were founded, for instance Amazon. The development of this company can be partly
attributed to development of the internet. Starting off as a book selling company, based fully on
the web, it has grown to be one of the largest companies in the world. Since then, there has been a
rise of new models of doing business in ecommerce that have revolutionized the way business is
done (Hawkins, 2015). The rate of adoption virtually in every industry has been on the rise, from
beauty to banking, retail, tourism and food industries as well. In Kenya particularly, a number of
companies have come up to speed with ecommerce and despite the fair share of challenges, they
are doing well.

With the development of ecommerce, you can buy virtually anything on the internet, from. This is
attributed to the fact that there has been development of mobile money services, and data rates are
relatively affordable. Mobile money in particular, has improved the way business is done and in
turn closing the poverty gap, which for our case in Kenya is M-PESA (World Trade Organization,
2013). Also contributing to this factor is that most people right now prefer convenience in
shopping, and they shop based on the recommendation by word of mouth from a close friends,
relatives and even media (Lim et al., 2016).

In as much as online shopping has been a fad when it comes to shopping, there are still a few areas
that haven’t received much attention. One area that has not picked up steam is groceries as far as
online shopping according to the study carried out by Van Droogenbroeck and Van Hove ( 2017).
In line with this study, small scale grocery shops, popularly known as ‘mama mboga’ have not
seen the benefits of digital revolution yet. Despite these stalls being on the rise mostly in urban
areas, all the processes are done manually. This research aims to establish the factors for not
adopting e-commerce and also develop a system to improve the current situation.

1.2. Statement of the problem


Growth of the internet has led to, in business, the emergence and growth of ecommerce.
Ecommerce is the sale or purchase of goods or services conducted over the computer networks r
market, and increased profits from the business. In line with this, there has been the rise of
adoption(World Trade Organization, 2013). And with e-commerce have come unprecedented
benefits including improved customer service, saving of time that could be used to do other things,
reaching a wide of online grocery shopping in Kenya and other parts of the world.

The above benefits have however not been experienced in the small-scale grocery shops ‘mama
mboga’. While everything is done manually, from placing orders to collection of merchandise, a
lot of time is spent shopping, and this inhibits productivity of customers. On the other hand, it is
common to come across the business owners late in the evening still at it. Being parents and most
of them relying on the business as a major source of income for their families, this is detrimental
because even less time is spent with their children and loved ones.

In regard to the fact that there has been reluctance in adoption of e commerce (Mutua et al., 2013),
this research aims to out a way to introduce this new model of doing business in the small scale
grocery shops. I purpose to develop a web-based system to facilitate the day-to-day business
operations of the business. These will include placing orders, handling of purchases, for customers.
For the business owner, the system will enable them to manage orders, generate financial reports
and generate a summary of how the business is doing.

1.3.Objectives
1.3.1. Main Objective

To introduce e-commerce in small scale grocery shops, ‘mama mboga’.

1.3.2. Specific objectives


1. Establish challenges that are faced by small scale grocery shops.
2. Survey existing literature on ecommerce and online grocery shopping.
3. Gather requirements from users about what they expect an e-commerce system to help them
accomplish.
4. Conduct a case study on existing implementations to gain more insight.
5. Develop the proposed system in line with the requirements.

6. Conduct tests prior to deployment of the system to ensure it still meets the users’ requirements.

1.4.Significance of the study

This project is of importance to the following stakeholders:

1.4.1. Small Scale grocery retailers.

The outcome of the research will be a system to help them market their product, sell and manage
stock.

1.4.2. Academicians/researchers

The theoretical study will prove valuable to other people in academia as it will provide a
secondary source of data for their research. It will also identify gaps in the current research and
carry out research in those areas.

1.5.Chapter Summary

This chapter commences by outlining the impact of technological advancement to the growth of
ecommerce as well as the benefits of ecommerce. E-commerce has led to convenient, effective and
fast shopping proving advantageous to businesses that have adopted it. However, the grocery
segment has lagged behind as far as ecommerce is concerned. Therefore, to enjoy the advantages
of ecommerce on businesses and to keep up with the growing technology landscape, small scale
grocery shops need to embrace ecommerce.
CHAPTER TWO

LITERATURE REVIEW

2.0. Introduction

This chapter covers the existing research literature on the development of e-commerce, advantages
and challenges of e-commerce, adoption of ecommerce in SMEs and its influence on business
performance. It also covers ecommerce in groceries, specifically online grocery shopping. Finally,
there’s the chapter summary which outlines the findings and a critical review of the literature.

2.1. Development of e-commerce

It is believed that the first transaction over the internet occurred in August 1994. (Jebur et al.,
2012). Since then, the internet has been a major medium facilitating exchange of goods,
information and services. Being the main driver of ecommerce, we could think of ecommerce as
a constitution of the following three entities: first there are physical goods and information
trading. Secondly, there are normal trade steps, such as online marketing, payment and delivery
support. Finally, provision of electronic services such as after sales and online legal service (Jebur
et al., 2012). Most of the ecommerce companies that exist today have all these three components;
the goods or service being sold, a way for purchasing the goods/ placing the orders online and a
support system for customers.

With growth of ecommerce, new models of doing business have come up. These include the
Business to Business model (B2B), Business to Consumer model (B2C), Consumer to Consumer
(C2C) and Consumer to Business (C2B) models (Kabuba, 2014). Between the year 2011 and
2014, the share of Gross Domestic Product increased from 1.47% to 2.64% according to
Ecommerce Foundation (Report, 2015). This not only shows the growth of ecommerce but also
its contribution to the economy. Similarly, studies by (Sergi et al., 2019) show that ecommerce
has gained dominance in the recent past and is expected to continue growing globally.
2.1.1. Advantages of e-commerce

Business operations have become easier with time, owing to ecommerce gaining dominance over
time. This, in turn has been fueled by technological advancement which has made the world a
global village (Okiro & Ndungu, 2013). With the current revolution taking place in technology,
‘going shopping’ has been redefined as the line between physical and digital worlds are becoming
blurry. This is because customers are neither shopping entirely offline or online, but they are
combining the two. Tech savvy retailers on the other hand, are winning in the present
state of affairs by leveraging technology to meet the evolving customers’ desires; shopping
however, whenever and wherever they want (Nielsen, 2015).

In a study conducted in Egypt, it was found that SMEs could gain competitive advantage by
adopting ecommerce as it could improve their market performance by providing access to a wider
market (Zaied, 2012). Contrary to this, other studies have shown that not everyone will be
interested in a product as far as marketing is concerned. Mellahi and Johnson (2000) argue that
although a company website has the capacity to serve an unlimited number of customers, not
everyone will be attracted. Therefore, it is essential to identify a specific target group of people
(market) that the website will attract and then be directed to that audience. This in turn creates
competition in the same space thus forcing companies to continuously adapt to new market
situations. Similar studies conducted in Kenya argue that ecommerce could contribute to
competitiveness of the commercial sector, by enabling businesses to trade globally thus accessing
larger markets using the internet.

Amongst all the developments, of most importance is the fact that business operations have been
made faster and convenient. This is highly attributed to the fact that people can communicate with
a click of a button to whoever, wherever in the world (Zaied, 2012).

2.1.2. E-commerce opportunities.

James and David, (2014) argue that with the development of the internet, business has been
revolutionized in the following ways:

i. It transcends the boundaries of time and space allowing business to be conducted all
the time in any and all locations across the world,
ii. Allows penetration of global market without incurring logistical costs of access, iii.
Allows organizations to offer their products and services in different locations
without having to set up separate sales infrastructure in those locations,
iv. It allows businesses to compete more effectively with large businesses,

v. It allows buyers and sellers to communicate and connect thus reducing transaction and
communication costs.

In addition to that, ecommerce has led to increased profit, better relationships with customers and
it has also promoted customer loyalty. In addition to that, ecommerce businesses enjoy much lower
overheads compared to the traditional businesses (Liu & Arnett, 2000). Also, customers enjoy self-
service and delivery offered by businesses. Therefore, the businesses are able to increase
productivity, lower costs and practice niche marketing (Maina, 2016).

Results from a similar study on the opportunities in ecommerce show that large brands enjoy higher
loyalty online than they theoretically should, while the effect is reversed for small brands.
Also, online customers are less price sensitive and preferred buying larger pack sizes (Bu & Go,
2016).

2.1.3. Challenges of e-commerce.

According to Jebur et al., (2012), there are many challenges businesses face when setting up their
e-commerce face. Specifically, the challenges are classified into the following groups;

i. Technological challenges (security, web site issues, technology issues including


costs, software and infrastructure)
ii. Managerial issues (people and organizational issues, management support) iii.
Business challenges (customer service, legal issues)

Similarly, most of the businesses find it a challenge when moving from a traditional setting to an
e-business. The question that mostly arises is ‘how?’, since most people have no idea how to go
about it. This way, a virtual form of business arises, mixing the traditional ways of doing business
with new, electronic communications (Jackson & Harris, 2003). It is further explained that one of
the key problems is moving from ‘legacy infrastructure’ to an e-business infrastructure. Start-ups
can leapfrog these problems whereas established companies usually have a hard time to adjust.
Thus, a business has to adjust its organizational structure and methods to meet radical ways of
working that new technology makes possible (Maina, 2016).

Also, having e-commerce in place means that businesses need integrated front and back-end
systems. This means that customers can order and purchase goods while transaction processing,
stock and inventory control need to be carried out by financial systems. One major problem is that
these back-end systems are unlikely to be based on open internet protocols and need to be custom-
built (Maina, 2016).

Trust remains to be the one determinant of e-commerce success. Before customers proceed to
undertake a transaction, they must first have confidence about product information and reliability
of the trading partner (Kabuba, 2014). Since the internet is open, there is a high security risk posed
to the customers especially since modern day cyber criminals have increased technical knowledge
(Jebur et al., 2012). Thus, the parties taking part in a transaction must have the assurance that their
data is safe (Kabuba, 2014).

2.2. Adoption of e-commerce in SMEs and its extent.

From the above observations, it is evident that ecommerce has been developing over time and
contributing to the world economy. The only question now is how has ecommerce been received
in the business landscape?

It is anticipated that growth and adoption of ecommerce will come from developing countries
(Sergi et al., 2019). But what is it really like in the business world for these developing countries
as far as ecommerce is concerned? The internet, being the primary driver of e-commerce, implies
that the ecommerce is heavily dependent on usage of the internet and how many people use the
internet at any given point in time (Jebur et al., 2012). In developing countries, internet usage has
been on a steady rise because more people have access to smartphones now compared to earlier
years (Pew Research Center, 2016). It is therefore undeniable that because of the increase in the
number of people, the rate of ecommerce adoption should increase as well.

In China, the number of registered SMEs exceed 40 million accounting for more than 99 percent
of enterprises. They are considered an important source of employment and contributors to the
economy (Mwangi-Nyaga, 2015). In a similar study carried out by the World Trade
Organization(2013), SMEs make the majority of businesses and employ majority of workers. They
mostly cater to the domestic market and are very small.

A case study carried out in Indonesia points out that increase in ecommerce usage is majorly
driven by large companies. Small and Medium size Enterprises (SMEs) on the other hand, have
been left behind when compared to the large firms (Rahayu & Day, 2017). Also, transition from
traditional commerce to e-commerce depends on digitization of the products/services sold, the
process and delivery methods.

A similar study conducted in Nairobi, Kenya by Mutua et al (2013) indicated that small and
medium sized firms were relatively slow to adopt ecommerce. However, they stand to gain the
most in terms of increased productivity should they adopt e-commerce. Contrarywise, they also
lose out of opportunities brought about by e-commerce in terms of profitability and productivity
if they fail to incorporate e-business in the daily operations (World Trade Organization, 2013).

Some of the inhibiting factors to ecommerce adoption in SMEs as pointed out by researchers
include lack of human resources, internal resistance, lack of support and lack of IT resources
(Rahayu & Day, 2017). Other challenges include lack of information and understanding of
ecommerce as well as security and privacy issues are some of the major inhibiting factors for
ecommerce adoption.

2.3. Online grocery shopping

With the adoption of ecommerce, it is undeniable that other kinds of business as well have joined
the wave of ecommerce. In the recent past, multiple companies have set up shop in Kenya to
conduct business. For instance, Jumia which has been around for a while, retails food from ready-
made food to groceries. Globally, online grocery shopping has been on the rise in the past few
years and it is anticipated to continue growing exponentially (Bu & Go, 2016). However, grocery
shopping is different from other forms of online shopping in that the products involved are
perishable. Therefore, customers are more vigilant when choosing where to shop and from whom
to buy (Mortimer et al., 2016). Even so, the number of online grocery shoppers has been on the
rise according to a study carried out by Nielsen (2015). In addition to that, even more people are
picking it up and are more likely to use it in future. One of the factors contributing to growth of
online grocery shopping is maturity of the people who grew up with the digital technology, mostly
millennials. Amongst this population, online shopping is more preferred and thus it is a deeply
ingrained behavior (Nielsen, 2015).

2.3.1. Motivations for online grocery shopping.

A study conducted by (Pitts et al., 2018) examined factors as to why consumers opt for online
grocery shopping and the types of foods purchased. The motivations for shopping online were
gathered from various studies and they include majorly convenience and saving time. Also, other
factors include: caring for a sick family member, transitioning to a new place of residence, avoiding
crowds in long lines in supermarkets and the ability to multitask while shopping. Households with
higher education levels and those with young children where both parents are working were cited
as reasons why people adopt online grocery shopping in similar literature by Van Droogenbroeck
and Van Hove (2017).

This study however, did not conduct a literature review related to home delivery services thus
leaving out disadvantaged and low-income consumers. Delivery services are vital part of online
grocery shopping and should be put into consideration especially when deciding which business
model to use for online grocery retailing.

2.3.2. Inhibiting factors for online grocery shopping

Despite the studies citing the growth of online grocery shopping and ecommerce, there are several
inhibiting factors to its growth. First, the urgency of the product. Most people would like to buy
and consume products immediately, without waiting for deliveries to arrive. In addition to that,
spoilage is also a major concern. This is because most customers want to touch and smell products
before purchasing (Nielsen, 2015). These findings are particularly relevant to this study because
as far as groceries are concerned, what the customers buy is of more importance.

In a similar study carried out by Van Droogenbroeck & Van Hove (2017), the factors that affect
ecommerce adoption are the age, population and income of the customers. For instance, shopping
online would be of more importance to a young couple fully employed and with young children.
Also, a young highly educated couple will most likely be tech savvy and thus would prefer using
online shopping as a means of getting groceries.

Pitts et al (2018) summarized these factors as “inconvenience of waiting for deliveries, delivery
fees, orders not being fulfilled appropriately and inappropriate or inadequate substitutions”.
2.3.3. Disruptions for retailers in online grocery shopping.

Buying of goods and services in future, will be about providing unique experiences to the
customers regardless of the channel being used (Ali et al., 2016). Ali goes on to explain that
retailers are currently facing disruptions owing to the evolution of online grocery shopping. The
disruptions are classified as follows:

i. The changing role of the store: In a store, customers can touch, feel and physically see
the products. In the case of online shopping however, one can shop at any time of the
day, get better deals, compare deals and they do not have to travel. Customers however,
experience challenges, for instance elderly shoppers are not technologically advanced
and thus they have a hard time shopping online.
ii. Mobile and related technologies: There has been an increase in the number of people
using mobile phones in the recent past. This makes phones the primary shopping agent
in the online shopping world.
iii. The proliferation of social networks: Social media has linked people to their favorite
brands. Thus, a brand can interact with customers in real time and gather feedback to
help improve. To optimize their reach therefore, online businesses need to use different
social media networks.
iv. Demographics: People in the 18 – 24 age brackets are more inclined to use the internet
to do their routine tasks and they shop more after they are connected to their favorite
brand online.

This research however, did not focus on the customer aspect of retail and it didn’t put much
emphasis on the empirical evidence based on interviews and discussions with customers and
business owners.

2.3.4. Models of online grocery shopping

Just like there were traditional business models before e-commerce came into being, there are
business models in ecommerce and more specifically online grocery shopping models.

According to Ali et al. (2016), there are two types of business models that can be used for grocery
retailers. These two models are:
i. Brick and Mortar and store-pick model: this model is used for companies which have
existing stores, or those which have paired with supermarkets.

ii. Pure play and warehouse-pick model: in this model, companies buy directly from
producers, and operate their own warehouses where they stock their products. This
model is however, relatively expensive.

In the same line, it is established that while choosing a model to use for online grocery business, it
is important to consider the following factors: order picking methods, delivery and pricing,
customer retention and management and expansion.

These models are relevant to small scale grocery retailers in that they have to decide on how to
store their merchandise in the course of running their business. After getting the products from
their supplier, they decide on how to store, sell the groceries and how to deal with the remnants.

2.4. Chapter Summary

The subject of e-commerce in small scale grocery shops comes up because e-commerce is a crucial
element as far as technology and business are concerned. Studies have shown that e-commerce has
had an upward trajectory since its introduction into the business world, mainly because of
developments in technology and the internet over time. In developing countries specifically, its
adoption is driven by large companies whereas SMEs have been relatively slower to pick it up.
The upside of ecommerce is majorly convenience and that business transactions are faster
compared to traditional business models.

However, the groceries segment of ecommerce has lagged behind mainly because of the nature
goods involved in that they are perishable. Also, demographic factors such as age and the level of
education are some of the factors online grocery shopping has been slow in adoption. Generally,
compared to traditional business models, online grocery shopping has got more opportunities for
retailers such as reaching a wider market of buyers, increased customer loyalty, lower overhead as
well as higher turn overs for the business. Therefore, it is a field worth pursuing.

The next chapter discusses the methodology to be used in the research.


CHAPTER THREE

RESEARCH METHODOLOGY

3.0. Introduction

This chapter is going to provide a detailed attempt of describing the research methodology that the
research is going to adopt, highlighting how the researcher gathers, organize, compile and analyze
data in relation to the research problem in question.

3.1. Research design

i. To achieve the first objective, I will conduct a literature review to gain more
understanding of the research problem. I will also examine already existing
implementations of similar systems to evaluate features and gain more insight on the
system I need to implement.
ii. To meet the second objective, I will conduct a survey to collect quantitative data. More
specifically, questionnaires will be administered to the target population. A survey is
chosen for this research project because of its versatility of questioning other than being
more efficient and economical as compared to observation.
iii. To meet the third objective. I will use Adobe XD for design of the user interface. In
addition to that, I will use Visual Studio Code for writing code, GitHub for version
control, and a DBMS for the database. All the work will be done using a laptop. iv. For
the last objective, I will use testing frameworks and libraries; more specifically Jest to
conduct unit tests. This is because the system will be developed using JavaScipt as the
main language.
3.2. Target Population

According to Kothari (2004), a target population is a universal set of the study of all members of
real or hypothetical set of people, events or objects to which an investigator wishes to generalize
the result. For this research, the target population is the ‘mama mboga’ retailers who do business
in Webuye town. The population size is 120.

Most businesses have temporary structures that house them and do not have many employees.
Most of the retailers’ products are likely to be similar and more women than men are likely to do
the business.

3.3. Sampling technique and sample size

The sample size of this study is drawn from 120 ‘mama mboga’ retailers. The Yamane’s formula
is used to calculate the sample size.

The formula is: n

= N / (1 + Ne^2)

where:

n = sample size N =

population size e =

error term (0.05)

Hence, n = 120/ (1 + 120(0.05)2) = 92.3 ~ 92

The study sample size is 92 retailers.

Convenience random sampling will be used to select the respondents. This technique was chosen
because it is spread more evenly over the entire population. Also, it is easier, less costly and can
be used conveniently even in large populations (Kothari, 2004).
3.4. Data Collection methods

To collect primary data, questionnaires are used. A questionnaire is a research instrument


consisting of a series of questions and other prompts for the purpose of gathering information from
respondents. This reason for using the questionnaire as data collection instrument is because it
assists in the collection of information from the respondents without affecting their schedules in
their jobs and answers the questions at their own free time.

Questionnaires will be physically availed to the respondents. During data collection, the researcher
will be present to clarify any issues to the respondents. To ensure willingness to respond and
cooperate, each potential respondent was promised confidentiality and anonymity.

3.5. Data analysis methods


According to Kothari (2004), data analysis procedure includes the process of packaging the
collected information putting in order and structuring its main components in a way that findings
can be easily and effectively communicated. After the fieldwork, before analysis, all questionnaires
will be adequately checked for reliability and verification. Editing, coding and tabulation will be
carried out. The data collected was analyzed using simple qualitative and quantitative methods and
presented using tables, figures and charts.

3.6. Chapter summary

This chapter discussed the methodology used in research. Descriptive research design is used in
the study and a survey was done to collect information from respondents. The target population is
120. The sample size is 92. The data collection tool is questionnaires.
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APPENDIX

APPENDIX I: PROJECT SCHEDULE

APPENDIX II: PROJECT BUDGET


Item Notes Unit Rate Total
Printing and This includes Page 5.00 per page 2000.00
binding subsequent
meetings to the
supervisor,
printing of
questionnaires,
the proposal and
final project
documentation

Fare Moving around 2000 2000.00


gathering data

Purchasing of Storage of data, Disk 1000 1000.00


Disks and disks for
project
submission
Internet costs Internet is Data budles 2000 2000.00
required to carry
out research on
the topic

Total Ksh. 7,000

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