E-COMMERCE

REPORTERS:

SALBORO, JULLIENE

SARNO, VNZICHRO

SILORIO, WENCY KELTZCRIZZ

SUMINGUIT, AILEEN

ACCY 45-A

LOREN ANN C. LACHICA

ADVISER
MAS Written Report E-Commerce August 9, 2018

E-COMMERCE

Simply put, ecommerce or electronic commerce refers to commercial transactions conducted online. This
means that whenever you buy and sell something using the Internet, you’re involved in ecommerce.

Brief History of E-commerce

There are many versions of the history of Ecommerce but the foundation for ecommerce was created in
1979 by an English inventor, Michael Aldrich. He connected his television to a computer using his
telephone line. While it was unlike ecommerce as we know it today, his idea sparked the idea for
shopping without having to go to a physical store. At the time, most people didn’t own computers. Bill
Gates and Steve Jobs popularized computers for the average person. Bill Gates even said that his goal was
to put “a computer on every desk and in every home.” Without computers, ecommerce would be
remarkably different.

In 1994, Jeff Bezos founded Amazon as an online store selling over one million different books at launch.
Amazon would eventually go on to become the most popular online store for consumers to buy any type
of products.

By the mid-1990s and early 2000’s, people were adding computers to their home and paving the way for
the growth of ecommerce. Companies were accepting checks in the early to mid-1990s as there wasn’t an
online payment gateway to transfer funds from customers to businesses. When PayPal was founded in
December 1998, it simplified the shopping experience for customers as credit cards were easily accepted.

By 2008, ecommerce sales made up 3.4% of all sales which shows industry growth. In 2014, it was
estimated that there was around 12-24 million online stores worldwide.

While in the Philippines, e-commerce was made known to the Philippine landscape through the entry of a
company named Lazada in 2012.

Needless to say, ecommerce has grown by leaps and bounds since then. BigCommerce cites that
ecommerce is growing 23% year-over-year, and according to eMarkerter, global ecommerce sales are
expected to top $27 trillion in 2020 — and that’s just statistics for the retail sector.

Aspects of Electronic Commerce

When you purchase a good or service online, you are participating in e-commerce.
Some advantages of e-commerce for consumers include:

 Convenience. E-commerce can take place 24 hours a day, seven days a week.

 Selection. Many stores offer a wider array of products online than they do in their brick-and-
mortar counterparts. And stores that exist only online may offer consumers a selection of goods
that they otherwise could not access.
MAS Written Report E-Commerce August 9, 2018

But e-commerce also has its disadvantages for consumers:

 Limited customer service. If you want to buy a computer and you’re shopping online, there may
or may not be an employee you can talk to about which computer would best meet your needs.
Some websites do include chat features to connect with their staff, but this is not a uniform
practice across the industry.
 No instant gratification. When you buy something online, you have to wait for it to be shipped to
your home or office; however, services such as Amazon increasingly offer same-day delivery as a
premium option for select products.
 No ability to touch and see a product. Online images don’t always tell the whole story about an
item. E-commerce transactions can be dissatisfying when the product the consumer receives is
different than expected.

Types of ecommerce merchants

There are many ways to classify ecommerce websites. You can categorize them according to the products
or services that they sell, the parties that they transact with, or even the platforms on which they operate.

Classifying ecommerce merchants according to what they’re selling

1. Stores that sell physical goods

These are your typical online retailers. They can include apparel stores, homeware businesses, and gift
shops, just to name a few. Stores that sell physical goods showcase the items online and enable shoppers
to add the things they like in their virtual shopping carts. Once the transaction is complete, the store
typically ships the orders to the shopper, though a growing number of retailers are implementing
initiatives such as in-store pickup.
2. Service-based e-tailers
Services can also be bought and sold online. Online consultants, educators, and freelancers are usually the
ones engaging in ecommerce. The buying process for services depends on the merchant. Some may allow
you to purchase their services straightaway from their website or platform.
3. Digital products
Ecommerce is, by nature, highly digital, so it’s no surprise that many merchants sell “e-goods” online.
Common types of digital products include ebooks, online courses, software, graphics, and virtual goods.

Ecommerce platforms: A look at where and how ecommerce takes place

1. Online storefronts  
Having an online storefront is one of the most straightforward ways to conduct ecommerce. The merchant
creates a website and uses it to sell products and services using shopping carts and ecommerce solutions.
The “right” solution will depend on the merchant and their products. Below is a list of some of the top
ecommerce platforms.
MAS Written Report E-Commerce August 9, 2018

BigCommerce – Used by big and small brands alike, BigCommerce offers features such as a site builder,
shipping options, reporting, and more. It also enables merchants to sell on other sites and platforms,
including eBay, Amazon, Facebook, Google Shopping, and Square. Plus it has a Buy Button for enabling
sales on blogs, emails, and more.

2. Online marketplaces
Ecommerce transactions can also take place on online marketplaces — sites that facilitate transactions
between merchants and customers. Many online marketplaces don’t own inventory; rather, they just
connect buyers and sellers and give them a platform on which to do business.
Some of the top online marketplaces on the web are:

Amazon – A company that needs no introduction, Amazon is one of the world’s largest online
marketplaces, offering extensive selections of books, electronics, apparel, accessories, baby products, and
more.

As of 2015, there were more than 2 million third-party sellers on the site, and according to Amazon, these
sellers sold 2 billion items in 2014.

eBay – eBay is another popular online marketplace that connects merchants and buyers, facilitating B2B,
B2C, and C2C ecommerce. eBay offers products in several categories, including electronics, cars,
fashion, collectibles, and more.

eBay merchants can also hold auctions that let buyers bid on products. This allows the possibility of
selling items above market value.

3. Social media

Social media can pave the way for ecommerce in two ways: social sites can facilitate a sale by directing
shoppers to a merchant’s ecommerce site, or they can allow users to buy something directly on the
platform. Social networks are also exploring ways to let consumers complete purchases without having to
leave the site.

Pinterest, for instance, has Buyable Pins that enable merchants to sell products featured on their Pinterest
page. According to the site, “Buyable Pins have a blue price tag, which tells people your product is in
stock and available for purchase. People can easily spot these Pins all over Pinterest—in search results, in
related Pins and on your business profile.”

Speaking of Shopify, the ecommerce platform also offers a fully integrated Facebook store that allows
shoppers to purchase products without having to leave the site. Shopify also has Messenger support, so
customers can buy items and track their orders through chat.
MAS Written Report E-Commerce August 9, 2018

LAWS APPLIED IN E-COMMERCE

RA.8792-The Electronic Commerce Act

It is an act providing for the recognition and use of electronic commercial and non-commercial
transactions and documents, penalties for unlawful use thereof and for other purposes. In 1999, the
Philippines Y2K Law was the first law crafted and deliberated online by the private sector. The law took
effect last June 19, 2000.

OBJECTIVES:

 Provide a secure legal framework and environment for electronic commerce.

 Protect the integrity of electronic signatures as well as its transmission and communication so
as to build and ensure the trust and reliance of the public on electronic transactions.
 Provides for penalties on computer hacking, introduction of viruses and piracy of copyrighted
works of at least P100,000 and maximum commensurate to the damage incurred, and
imprisonment of six (6) months to three (3) years, among others. Promotes e-commerce in the
country, particularly in business-to-business and business-to-consumer transactions whereby
business relations are enhanced and facilitated and consumers are able to find and purchase
products online. 
DTI Department Administrative Order No. 8 – “Prescribing Guidelines for the Protection of
Personal Data in Information and Communications System in the Private Sector”
This governs data protection certifiers and processing of all types of personal data. The intention of
the guidelines is to encourage and provide support to private entities to adopt privacy policies for the
protection of the personal data in an information and communications system in the private sector. 
DTI-DOH-DA Joint Department Administrative Order (JDAO) No. 1, entitled Rules and
Regulations for Consumer Protection in a Transaction Covered by the Consumer Act of the
Philippines 
The JDAO aims to protect consumers doing online transactions, specifically on the purchase of
products and services pursuant to the Consumer Act of the Philippines. It applies to all retailers or
sellers, whether located here or abroad, engaged in electronic commerce with consumers. Moreover,
it adopts the provisions of the Consumer Act on fair business practices and the prohibition from
engaging in false, deceptive and misleading advertisements.
 

To enable consumers to make an informed choice/decision, the guidelines require the online disclosure of
accurate, clear and easily accessible information about the retailers or sellers, the products or services
being offered, and the terms, conditions and costs of the consumer transaction. Also under the guidelines,
retailers/sellers are mandated to set up and make operational internal complaint-handling mechanism for
consumer complaints, without prejudice to the rights of the consumers to seek legal redress.

TRADITIONAL COMMERCE VS E-COMMERCE

What is Traditional Commerce?

Traditional commerce involves the exchange of goods and services between two people face to face. It is
one of the oldest modes of buying products and services. It is done by almost everyone all over the globe.
Just walking into a store or a marketplace, selecting an item and paying for the product.
MAS Written Report E-Commerce August 9, 2018

Traditional Commerce is a part of business, which encompasses all those activities that facilitate
exchange. Two kinds of activities are included in commerce, i.e. trade and auxiliaries to trade. The term
trade refers to the buying and selling of goods and services for cash or kind and auxiliaries to trade,
implies all those activities like banking, insurance, transportation, advertisement, packaging, and so on,
that helps in the successful completion of exchange between parties.

The following are the scope of e-Commerce:

 B2B commerce: When the business transaction takes place between two business houses,
through the electronic channel, it is called B2B commerce.
 B2C commerce: When the exchange of goods and service takes place between the business
entity and the customer, over the internet, then it is known as B2C commerce.
 C2C commerce: When the buying and selling of goods and services take place between
customers using electronic medium, then it is called C2C commerce
 Government to business (G2B): G2C transactions take place when a company pays for
government goods, services, or fees online. Examples could be a business paying for taxes using
the Internet.
 Business to government (B2G) – When a government entity uses the Internet to purchases
goods or services from a business, the transaction may fall under B2G ecommerce. Let’s say a
city or town hires a web design firm to update its website. This type of deal may be considered a
form of B2G.
 Consumer to government (C2G) – Consumers can also engage in B2C ecommerce. People
paying for traffic tickets or paying for their car registration renewals online may fall under this
category.

Traditional Commerce vs E-Commerce

The following points are noteworthy so far as the difference between traditional commerce and e-
commerce is concerned:

1. A part of business, that focuses on the exchange of products and services, and includes all those
activities which encourage exchange, in some way or the other, is called traditional commerce. e-
Commerce means carrying out commercial transactions or exchange of information,
electronically on the internet.
2. In traditional commerce, the transactions are processed manually whereas, in the case of e-
commerce, there is automatic processing of transactions.

3. Business is open only for a limited time in traditional commerce. Round the clock (24 x 7)
service is available in e-commerce.

4. E-commerce does not allow physical inspection of goods. In purchasing goods in e-commerce,
customers have to rely on electronic images whereas in traditional commerce, it is possible to
physically inspect the goods before the purchase.
MAS Written Report E-Commerce August 9, 2018

5. In traditional commerce, the interaction between the business and the consumer is a “face-to-
face”. In electronic commerce, the interaction between the business and the consumer is “screen-
to-face”. Since there is no personal touch in e-business, companies need to have intimate
relationship with customers to win over their loyalty.

6. The scope of business in traditional commerce is limited to a particular area, i.e. the reach of
business is limited to the nearby places where it operates. On the contrary, the business has
worldwide reach in case of e-commerce, due to its ease of access.

7. As there is no fixed platform for information exchange in traditional commerce, the business has
to rely on the intermediaries for information fully. Unlike e-Commerce, wherein there is a
universal platform for information exchange, i.e. electronic communication channel, which lessen
the dependency on persons for information.

8. Traditional commerce is concerned with the supply side. In contrast, the resource focus of e-
commerce is the demand side.

9. The business relationship in traditional commerce is vertical or linear, whereas in electronic

commerce the business relationship is characterized by end-to-end.

10. In traditional commerce, due to standardization, there is mass/one way marketing. However,
customization exists in e-commerce leading to one to one marketing.

11. Payment for transactions can be done by paying cash, cheque or via credit card. On the other
hand, payment in e-commerce transactions can be done through online payment modes like credit
card, fund transfer, etc.

12. The delivery of goods is immediate in traditional commerce but in the case of e-commerce, the
goods are delivered at the customer’s place, after some time, usually within a week.

13. It takes a lot of time to complete a transaction in traditional commerce. E-commerce saves a lot
of valuable time for both the consumers and business. A product can be ordered, and the
transaction can be completed in few minutes through internet.
14. Lot of cyber frauds take place in electronic commerce transactions. People generally fear to give
credit card information. Lack of physical presence in markets and unclear legal issues give
loopholes for frauds to take place in e-business transactions. Fraud in traditional commerce is
comparatively less as there is personal interaction between the buyer and the seller.

CONTEMPORARY COMMERCE ACTIVITIES

The current trend in e-commerce marketplace has stretched its wings in various directions today, in
comparison to how it started. Today’s e-commerce marketplace is no more just an online platform where
people can buy or sell things but much more, from being hyperlocal to infusing artificial intelligence to
offering even intangible goods and services like short-term loans, e-commerce marketplace has evolved
rapidly.
MAS Written Report E-Commerce August 9, 2018

A modern and customer-centric approach to digital commerce includes the following: customizable
storefronts, delivery to every device, personalization, and worry-free payments. For digital commerce
organizations to achieve higher profits, they must deliver personalized shopping by delivering content the
customer prefers in their channel of choice and develop seamless digital-to-physical experiences.

The future perception of the marketplace is on the edge of a complete change with the advent of
technology progressing at light’s speed. However, it is certain that the next generation of e-commerce
trends rests on customer experience, which are being enhanced via Internet of Things (IoT), artificial
intelligence, data analytics, logistics, personalization and the hyperlocal space, to say the least.

Hyperlocal e-commerce market: It is a form of e-commerce which merges offline and online and allow
deliveries to be done in hours instead of days. Hyperlocal platforms solve the problem of matching
immediate demand with the nearest available supply in the most optimised manner. In a layman’s terms, a
startup in the hyperlocal space is a platform to enable local offline services from anywhere, anytime.

A good use case is cataloguing all local grocery and mom-and-pop stores products in a mobile app and
choosing channelised workforce to deliver products in the shortest possible time.

Intangible marketplace: E-commerce is no more a marketplace to buy only consumer products. Many
companies today are providing solutions and services such as loans, warehousing and other solutions and
means to run businesses in a more efficient and smoother way. Chinese giants Evergrande Real Estate
Group together with Tencent Holdings announced a collaboration in 2016 to create an ‘internet +
community service’ ecosphere to build an online platform for internet community services such as
ordering and handling of logistics.

Online to Offline marketing:  Combining both online and offline marketing techniques, increases the
chance of attracting potential customers and improving the overall customer experience. The merger of
physical and digital experience has proliferated especially into sizable markets such as that of China and
India. The term “phygital” has also surfaced – a blending of physical and digital spaces in marketing
ecosystems that redefines the relationship between consumer and brand. Alibaba has a vision for the
future of retail where there is no distinction between online and offline shopping, and the customer
experience is enhanced by augmented reality, artificial intelligence (AI) and facial recognition.

Artificial Intelligence: It is the fastest growing technology in the 21st century. From chatbots to
humanoids, AI is successfully implementing a change in the economies around the globe. Artificial
intelligence and machine learning unlock shopper patterns and user behavior insights gleaned from first-,
second-, and third-party sources.

The conclusions that just a few years ago took data scientists weeks of regression analysis are now
achieved in minutes.

In July of this year, Alibaba launched the Fashion AI, a platform that provides AI-powered fashion mix-
and-match suggestions for consumers based on over 500,000 sources data of fashion and dressing tips
from stylists on the Taobao and Tmall, as well as the store product images and mix-and-match
recommendations by merchants.
MAS Written Report E-Commerce August 9, 2018

Also, Alibaba Cloud partnered with Australia’s online retailer, The Iconic, to launch visual search tool,
Snap to Shop. Developed with Alibaba Cloud’s machine learning capabilities, the tool allows users to
search for clothing, sportswear and accessories by uploading a photo to the app. The app reviews an
assortment of 50,000 products from 800 brands.

Data and Analytics leading to a more personalised experience: Today, the online marketspaces bet big
on data. Companies are garnering more and more information on users to offer them a more personalised
experience using artificial intelligence that will enable them to offer customised recommendations to
customers. Digital commerce professionals must meet newfound customer expectations in real time
through contextual shopping experiences and targeted behavioral marketing.

The e-commerce game is no longer about being the fastest in the space but about being able to deliver in a
price range that matches with the customer needs. 

Gamification: It is one of the most powerful tools in the world of modern marketing. It's the application
of game-like features to a nongame platform to allow people to engage utilizing a video game industry
concept. For marketing, that means getting potential consumers to pay attention to a company, buy its
products and services, and even provide that company with valuable information. Some of the benefits of
this approach come from the shopping experience. People using Gamify games enjoy their experience and
are more likely to return. And when customers win a discount, they may buy more products to make the
most of the opportunity.

Logistics: It is one of the key growth indicators in e-commerce space. It is fast coming up as a key
differentiator with regards to customer relationship services. Logistics are improving by the day via
integrating technology wherein shopping carts connect through web xml, API or other connection to a
shipping management system to enable customers to receive the exact price quote for delivery of large
items. This results in improved communication, improved customer satisfaction, transparency into the
supply chain and on time deliveries along with cost reductions.

JD.com, who is in competition with Amazon, Alphabet, Tencent, and Alibaba is not only investing in the
technology of tomorrow, but they are also applying today's technology into its operations in many ways
from smart warehouses to drone delivery. Here are just a few ways JD.com uses AI, big data, and robotics
in operations today:

Automated warehouses: While JD.com’s warehouses aren’t entirely autonomous, they are taking action
currently to automate everything they possibly can.

Robots:  Some of the company’s most advanced robots work in its 500 warehouses. They stack products
on shelves and pack and ship merchandise to send out to consumers.

Drones: JD.com has used drones to deliver products across China since March 2016. They use drones of
various shapes and sizes, and they are currently working to build a drone that can carry up to five tons.
MAS Written Report E-Commerce August 9, 2018

Facial recognition: The company is testing out facial recognition software at its headquarters that would
allow shoppers to take their merchandise out of a store without stopping to pay; payment is controlled
through facial recognition.

Alternative Payment Methods: In many countries, APMs, which include bank transfers, eWallets, and
cash-in solutions. They have become the online payment method of choice compared to mainstream
credit cards. According to Bruce Dragt, EVP of YapStone, there are a variety reasons for the prevalence
of APMs, but the three main reasons revolve around creating trust, reducing payment fraud, and minimize
shopping card abandonment.”
MAS Written Report E-Commerce August 9, 2018

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