Project – Impact of online trading (e-commerce) on commercial properties

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

The importance of Online trading (E-commerce) in real estate brokerage cannot be overemphasized. It enables the use of the internet for marketing, identification, payment and delivery of goods and services. Through the e-commerce technology, the internet has revolutionized the mode of business transactions by providing customers with the ability to bank, invest, purchase, distribute, communicate, explore and research from virtually anywhere, anytime where there is internet access (Anup, 2017; Ayo, Adewoye & Oni, 2021). However, with the paradigm shift in the mode of operation occasioned by the advent of the internet, global corporations now operate with much consistency and at reduced cost of transactions as if the entire world were a single entity. In Nigeria, the internet business (e-commerce) is taking on a serious dimension in the country especially within the more commercial states of the nation.

Since the early 1990s when the term ‘electronic commerce’ was first coined, the U.S. has significantly developed its e-commerce market and is undoubtedly a pioneer and a leading country in the e-commerce industry.

Retail Real Estate Supply Conditions in 2014 reported that, retailers and restaurateurs announced over 2,400 establishments would be closed and an estimated 27.1 million square feet. Consequently, facing the worrying condition, many leading developers and owners of commercial property to close their retail establishments, malls and shopping centers.

Recently, the remarkable IPO of Alibaba, within Nigeria- and by some measures, the world’s largest e-commerce company- has attracted worldwide attention to the Chinese e-commerce industry. At present, e-commerce development in Nigeria still lags behind the United States, but it has experienced a soaring growth in recent years.

As Internet shopping, or e-shopping, becomes an alternative to in-store shopping, it could lead to dire consequences for physical shops (Weltevreden and Rietbergen, 2017). The increasing number of online shops and the dramatic growth of online sales undoubtedly threaten the performance and development of the physical stores. E-shopping is gradually becoming a substitute for in-store shopping (Weltevreden and Rietbergen, 2017).

Developers worry that the rapid development of e-commerce in Nigeria is affecting the commercial real estate market, just like it has in the United States and other countries. News reporting indicated that the traditional retail industry and the commercial real estate market suffer a lot from the rise of e-commerce–frequently noted in media outlets, such as the Wall Street Journal, NetEase, etc. Some analysts believe that since the retail market in Nigeria is still developing and immature, and lacks high-profile retail brands, e-commerce will pose more obvious threats to Chinese physical stores than in other developed countries (Xu, 2013).

This paper focuses on the impact of online trading (e-commerce) on retail commercial properties. Firstly, the relationship between e-commerce and aggregate demand for commercial properties will be explored based on national statistical data. Then, three different forms of commercial properties-supermarkets, department stores and shopping centers-will be analyzed based on surveys and statistical data to have a more in-depth understanding of the effects of e-commerce.

1.2    Statement of Problem

The overheated real estate industry in the past few years has driven a lot of developers and investors to flock together in the commercial real estate market, resulting in an oversupply of shopping centers in many cities. One of the biggest ecommerce challenges to estate is to convert visitors into paying customers. An e-commerce website might have a lot of traffic, a lot of clicks and impressions but they aren’t making the sales they anticipated.

Lack of touch or feel of products during online shopping is a drawback. E-commerce applications are still evolving and changing rapidly. Internet access is still not cheaper and is inconvenient to use for many potential customers, for example, those living in remote villages. After doing many literature reviews, the challenges of e-commerce are inefficient and incompetent internet services, logistic services, linguistic barrier, affordability and accessibility, trust issues, security, legal issue. The question that beg for an answer now is; of what impact is online trading (e-commerce) on commercial property?

1.3    Aim and Objectives of the Study

The aim of this research is to examine the impact of online trading (e-commerce) on retail commercial properties in Lokoja, Kogi State with the view.

Objectives of the Study

To achieve the study aim, the following are the objevtives;

1. To ascertain the impact of online trading (e-commerce) on commercial properties in lokoja, Kogi State.
2. To identify the importance of e-commerce on commercial properties.
3. To examine the factors affecting trading (e-commerce) on commercial properties.
4. To established the relationship between online trading and demand for commercial properties.

1.4    Research Hypothesis

H₀: Online trading (e-commerce) has no significant effect on retail commercial properties in Lokoja.

H₁ Online trading (e-commerce) has significant effect on retail commercial properties in Lokoja

1.5    Significance of the Study

The findings from this study will improve online trading (e-commerce) on retail commercial properties, in Lokoja, Kogi State.

This research will also serve as a resource base to other scholars and researchers interested in

Also, Estate management and valuation firms will find the outcome of this research useful as the will gain insight into the pros and cons of the techniques they employ in viability appraisal of e-commerce and the changed consumer behavior is met by the flexibility that online shopping infer which accelerates the trend. Although, the report says that the consumers are demanding expertise which implies that the physical store with salesmen who possess the right competence are still important – but perhaps not in all segments.

The report will be of good value to add to the existing literature on real estate management and valuation. Thus academia and research will find this research report useful while conducting research on the impact of e-commerce on retail commercial properties.

1.6    Scope of the Study

The area of study covers impact of online trading (e-commerce) on commercial properties in Lokoja, Kogi State, the study is carried out in Lokoja town, situated within the confluence state, as the study area. This research intends to limit it’s the study to Lokoja metropolis and its environs. This research will enhance online trading (e-commerce) on commercial properties in Lokoja Kogi State. The community is a tin mining area, hence majority of the estate and plaza are within the metropolis.

1.7    Limitation of the Study

Adequate effort will be made to bring this project work to reality; it will not be without certain constraints. Among the constraints is the short time frame for the preparation of this project bringing to bear the difficulty of combining normal class activities with the task of project. Other limitation include: financial constraints, the distance between the location of the researcher and the study area, difficulty in obtaining the much needed primary data for the research work which hindered the punctual completion of the research work.

1.8    Brief Description of the Study Area

         Lokoja is a city in Nigeria. It lies at the confluence of the Niger and Benue rivers and is the capital city of Kogi State. While the Yoruba (Oworo), Bassa Nge and Nupe are indigenous to the area, other ethnic groups of Nigeria, including the Kupa-Nupe, Hausa, Ebira, Igala, Igbo, Bini/Edo, and Tiv have recently established themselves. Projected to be the third fastest growing African continent city between 2020 and 2025, with a 5.93% growth It was listed a second class township by the 1917 township ordinance of the colonial administration.

Project – Impact of online trading (e-commerce) on commercial properties