E-Marketing, 3rd edition Judy Strauss, Adel I. El-Ansary, and Raymond Frost

E-Marketing, 3rd editionJudy Strauss, Adel I. El-Ansary,and Raymond Frost Chapter 16: Country Profiles from the Six Continents © Prentice Hall 2003

Overview of E-Marketing Around the World Australia Computer Ownership Internet Usage Uses of the Internet E-Commerce Chile E-Commerce Government Role People’s Republic of China E-Commerce Obstacles Future Egypt Communications Infrastructure Public Awareness Regulations And Legislations E-Commerce Success Stories Challenges For E-Commerce In Egypt Germany Guatemala India Barriers To Growth E-commerce Profile of an Indian Internet User Northern Ireland Basic Adoption Rate and Trends Net Adoption Shopping and Buying Behavior Online B2B Market Future Predictions Conclusion Peru Poland Amazing Thailand Thailand and E-Commerce About the Future Turkey Overview

Overview of E-Marketing Around the World • 530 million consumers worldwide (B2C market) = 8.5% of world’s population, • BUT some countries have very high Internet usage: • Top 10 countries in 2002 = 382 million Internet users = 72.1% of all users, • Iceland and Sweden = 50% to 60% Internet penetration in their populations, • In countries with small Internet penetration, users = upper class or university.

Top Ten Countries in Number or Percentage of Internet Usage Source: Data compiled from www.cyberatlas.internet.com

Estimated Internet Penetration in 2002 Source: Population from CIA World Factbook; Internet usage data from www.cyberatlas.internet.com

Australia • Highest levels of Internet use in the world (behind Sweden & USA): • Internet use in households grow strongly, • Online shopping = stronger growth doubling each year since 1998, • Household computer ownership = increasing, • Shrinking gap between proportion of households owning a computer and those also accessing the Internet. • Untimed local calls = factor spurring the growth of Internet usage, • A low, fixed fee irrespective of connection time, • May change = uncertainty about the 51% public ownership of Australia’s telephone company. • Issue for Internet use = lack of widespread broadband access. • At the end of 2001, 96% of Internet users were using dial-up access.

Computer Ownership • 1999: 48% of home computer ownership, • 2001: 64% of home computer ownership. • 2000: 66% of adults reported using a computer: • 47% at home, • 42% at work, • 40% at library, educational facility, friend/neighbor/relative, • In households without a computer: • 36% of respondents = no need for a computer, • 25% said they did not have one because of the expense. • 61% of households had at least one mobile phone.

Internet Usage • Household usage of the Internet (37%) < computer ownership: • End of 2001, Household Internet usage: 50 %, • During 2000 1/2 of all adults reported using the Internet, • End of 2000, 0.4% of all households using non-computer devices for Internet access, • Strong growth in household Internet access: • Growth of households with game machines = 23% to 33% between 1998 and 2000, • Growth of households with pay TV (11% to 17%). • Households without Internet access: • 25% = lack of interest, • 25% = no use for it, • 19% = too expensive.

Uses of the Internet • Activities conducted online at home included: • E-mail or chat (68%), • General browsing (57%), • Searching for information on goods or services (26%), • Finding information for work related purposes (36%). • On average: • Households downloaded about 58 Mbs per month, • 337 Mbs per month by businesses and the government.

E-Commerce • 2000, 10% of adults had purchased or ordered goods or services via the Internet = continuing strong growth. • Approximately 20% of household Internet users utilized it for purchases = for nearly all age groups (including 55+). • Age group that fell below this level = 18-24 year olds = 15% purchased or ordered via the Internet. • 82%of Internet shoppers used a credit card online to pay for all or part of the purchase. • Reasons given for not shopping on the Internet: • No need (43%), • Security concerns (29%), • Preference to shop in person (17%). • About 30% of shoppers spent more than $500 during 2000, and 74% made at least two purchases.

E-Commerce • Most commonly purchased items: • Books or magazines (36%), • Music (20%), • Computer software (18%), • Computer hardware accounting for another 10%. • Australian use of the Internet to pay bills or transfer money was relatively low: • 13% of adults in 2000 reported using the Internet for this function, • 49% who used the telephone, • 67% who used EFTPOS, • 74% who used an ATM. • 12% of adults accessed government services using the Internet.

Chile • Chile is the South American country with the highest overall Internet penetration rate. • Between 1999 and 2001, from 700,000 to 2,837,000 Internet users. • In 2000, Internet penetration = 16.6% of population —the highest in South America. • Argentina = 6.8% of population, Brazil 2.9%. • 17% of Chilean households own a computer, and 50% of households with computers also have an Internet connection. • The most frequent users are 19-to-29 year-olds. • 2 key factors help explain the Internet’s explosive growth in Chile: • The highly deregulated domestic telecommunication market, • The low cost of fixed-line telephone charges.

Chile • Chilean telecommunication industry is being affected by several factors: • A large number of competitors, • Substitution, • Lower prices and margins, • A constraint on demand, • The cost of a fixed-line phone call for Internet access is US$0.01 per minute, • The insatiable demand for Internet access & faster connections have developed a growing industry in Chile: the broadband market: • In 2001, the broadband market = 61,000 users; by the end of 2003, total broadband user is expected to reach 195,700, • The broadband market = ADSL, Cable Modem, Dedicated and WLL.

E-Commerce • Strong growth of e-commerce in many Chilean companies: • Products offered online grew from 10,000 (1999) to 120,000 units (2000). • Online retailers sold US$2.6 million (1999) and the market is expected to rise to US$25 million (2002). • Foreign sources sales the revenue to US$12.6 and US$45 million. • In 1999, online B2B sales reached US$75 million; in 2001 B2B sales are expected to grow to US$262 million. • The number of Internet domains grew 150% over the last year. • 1/3 of the companies think that within five years e-commerce would represent more than 20% of their sales.

Government Role Communications and Information Technology Unit (UTIC): • Established in 1998 by the Chilean Government, • Goal: coordinating, promoting, and advising the Chilean Government on the development of IT in the areas of employment, information and communications. • Successful reform = pushing forward comprehensive reforms of its procurement system, • Consequences: business opportunities with the Chilean Government = more transparent, reduced firms' transaction costs, increased opportunities for feedback and cooperation between firms and public agencies, and reduced opportunities for corruption. • Results: substantial savings, creation of a more perfect information market, and increased transparency and accountability.

Government Role • Chile is making progress in its use of the Internet in B2B, B2C and B2G markets. • Chile is not totally free of the natural fears and doubts generated by electronic commerce: • Chilean users do not yet have complete confidence in current electronic methods of payment. • This may soon change: A draft law regulating digital signatures is close to being passed by Congress.

People’s Republic of China • Internet access and use has been growing rapidly + projected to continue: • Internet users: 10 million (2000), 33 million (2001), 56 million (April 2002). • China has the biggest Internet population in Asia. • A few years ago, Internet users = younger (18-35), better-educated males. • Now: • The Internet becomes mainstream, especially among urban residents, • Female Internet users = 40% of the overall Internet population, • Internet users with college degrees = only 30% of total users.

People’s Republic of China • Internet access from: • Home (61%), • Net café (15%), • Work-related access (25%). • Dial-up is most frequently for home access. • The top 2 objectives for using the Internet: • “Information” (46%), • “Entertainment” (31%).

E-Commerce • Online shopping is still relatively uncommon: • 36% of the users have purchased anything online during the past year, • Total number of online shoppers was only 3.5 million in 2001. • Major obstacles to online purchasing: • Security, vendor reputation, delivery, and payment. • Products bought: • Books (58%), computer-related products and travel services.

E-Commerce • Chinese B2C e-commerce = about $47 million in 2000. • B2B e-commerce = about $9.3 billion in 2000. • The biggest activities of B2B e-commerce = manufacturing and IT companies with industrial powerhouses. • China’s entry into WTO + its rising status as “Manufacturing Center for the World” = China’s B2B e-commerce is expected to play an important role.

Obstacles • The actual percentage of households using the Internet in China = quite low (5%) compared to developed countries. • Barriers to the continuing growth of Internet usage and e-commerce in China: • Low telephone penetration rate, • High Internet access charges, • Few good Web sites in the Chinese language, • Government regulation of Web contents, • Lack of convenient online payment systems.

Future • The future of the Chinese Internet market = promising because of its huge potential market size. • Trends in the Internet market in the next few years will likely include: • E-government initiatives, • Broadband Internet access, • Entry of multinational e-business companies.

Egypt • More than 1 million Internet users (April 2002), = a 256% increase in the number of users since October 1999. • Forecasts = 2.6 million users by 2006. • This steady growth attributed to: • The improvements made to the communications infrastructure, • The increase in public awareness, • The introduction of new regulation and legislation.

Communications Infrastructure • Telecom Egypt monopolizes the country’s fixed phone operations and services. • In 2000, new digital network with a fiber optic backbone and ATM switches to provide more capacity for the constantly growing number of phone lines and services. • Number of fixed phone lines: from 6.4 million (1999) to 9.1 million (2002). • Fixed phone subscribers are charged per minute for their phone calls. • Pay phone services: 2 private sector companies, Menatel and NilePhone: 13,000 phones (October 1999) to 40,000 (April 2002). • GSM-based mobile phone services: MobiNil and Misrfone are the 2 only companies, a third license is currently under consideration: • 7,000 (1995), 650,000 (October 1999), 3.8 million (April 2002). • Penetration of fixed phone: from 10% in 2002 to more than 14% by 2006, • GSM penetration will reach 17% by 2006.

Communications Infrastructure • The Internet bandwidth increased from 20 to 400 Megabit/sec between October 1999 and April 2002. • IP traffic: • 30% is handled by Telecom Egypt, • 70% by Information and Decision Support Center of the Egyptian cabinet. • This bandwidth is being sold through more than 60 ISPs offering: • Dial-up connections and DSL for home users, • DSL, ISDN, and leased lines for enterprises and governmental institutions. • Internet account sharing = very common among Egyptian Internet users: • Internet users = 8 times higher than the number of actual service subscribers, • Free dial-up Internet access (January 2002), but users still have to pay for phone line time usage = Account sharing is expected to drop, • Telecom Egypt sponsors the free Internet access by sharing the money collected from Internet users for their phone time with ISPs.

Public Awareness • High illiteracy rate (more than 50% among adults), • But Egypt ranks 17th in the world in the number of high school graduates. • Internet penetration = 1%. • Limited home-based Internet users: • High subscription fee: approximately 60 Egyptian Pounds ($18 USD) for unlimited Internet access + per-minute local phone charges, • Computer availability: 1 million PCs in Egypt in 2001.

Public Awareness • MCIT and Telecom Egypt have orchestrated efforts to elevate public awareness of the Internet and online services through: • Improving the local market for IT companies and creating new IT jobs, • Enriching the local content of the Internet and creating more online services, • Providing affordable IT training to students and fresh graduates, • Reducing internet access fees, and • Increasing PC affordability for individuals. • Ambitious project = E-Government, automate many government-provided services and provide them online for convenience use.

Public Awareness • MCIT has forged training alliances with major IT players, such as Microsoft and IBM, to train college graduates on the cutting-edge IT technologies at reasonable fees. • Results: • 7,000 certified professionals into the local market by April 2002. • 44,400 individuals received basic CIT training. • Origins of success: • Free dial-up Internet access, • Affordability projects to help households & university students finance the purchase of PCs at zero interest rate, • 325 IT clubs (government subsidized Internet Cafes) were established in youth centers, public libraries, schools, and NGOs to offer members free Internet access, • Ministry of education plays a notable role in connecting the nation’s schools to the Internet.

Regulations And Legislations • The CIT sector is participating in the country-wide economic reform towards progressive market liberalization. • New laws are facilitating this shift in the governing policies of CIT operations. • A new bill addresses the legality of e-signatures is being prepared for the parliament approval. • If passed, the law will allow the government to provide true online services through the E-Government project. • More efforts are needed to overcome challenges related to taxation and customs issues.

E-Commerce Success Stories • www.otlob.com (“otlob” is an Arabic verb that means “request”): • Product: cooked meals for home delivery, • Dozens of restaurants participate in this service, • Users pay cash for the food on delivery, • Users can also buy flowers, medications, and rent videotapes in addition to the original food delivery service. • www.e-kotob.com (kotob is the Arabic translation of the word “books”): • An online Arabic bookstore launched in 2000, • Users can search and buy from the site’s catalog of 50,000 Arabic titles and even download Arabic books to read on their computers, • The site accepts credit card and money order payments for deliveries to other countries, and credit card and cash-upon-delivery payments for domestic deliveries, • The cash-upon-delivery option is expected to cover all deliveries to Arab countries soon.

Challenges For E-Commerce In Egypt • Modern financial system: The Egyptian cash-based culture limits the volume of online transactions. The establishment of payment centers and collection agencies are expected to lessen the severity of the problem but will also add to overhead expenses incurred by online services. • Language barrier: Most online service providers opt to provide bilingual interface for their sites to accommodate local and foreign customers. = increases costs + adds some technical challenges. • Lack of flat-rate phone plans: Dial-up Internet users are charged per minute for phone use. The introduction of free Internet access should relieve the burden for users looking for inexpensive Internet access. Reasonably priced DSL plans should accommodate users who want faster Internet access. • High illiteracy rate: This limits usage of high-tech services of all kinds. Progressive governmental strategies are certainly needed to reduce the relatively high illiteracy rate. • Legislation and regulation: New rules and laws are needed to address issues related to taxation, customs, privacy, security of electronic transactions, software piracy, credit card fraud, and online money laundering.

E-Marketing, 3rd edition Judy Strauss, Adel I. El-Ansary, and Raymond Frost