ONLINE SELLING: BOOM OR BANE?

SOCIO 116 PHILIPPINE SOCIAL SYSTEM

Rex Makinano

Araneta, Hazel Haneka

Dejolde, Chona Mae
Lumactod, Jenelyn
Musico, JM
Introduction

The rise of online shopping has made international shipping the conveyor belt of
the world (Price, 2019). Today, everybody has access to it. Guidelines for its usage and
operations are produced by several organizations like Internet Society (Gem, 2014).
Online selling is a process whereby consumers directly buy goods, services etc. from a
seller without an intermediary service over the internet (Gnanadhas, 2014). As Frisby
(2018) stated that Since the advent of internet, the cyber sphere has morphed form simply
an information hub into a digital shopping mall. While the internet still functions as
resource, its use has hugely diversified over the years. Now the world is inextricably
interconnected by social networks and billions of dollars are digitally transferred daily.
Actual shopping tasks by 299 respondents from 12 countries indicate that site quality,
trust, and positive affect toward it is critical in explaining both the purchase intensions and
loyalty of visitors to the site (Lynch, Kent and Srinivasan, 2001). Gan, Lee, Lingtay and
Wai (2007) indicated a survey that carried out to examine the difference between online
and traditional marketing strategies, to explore the possibility of online marketing
replacing the traditional marketing, and consequently, the future of online marketing in
Singapore. The findings reveal that Multi-National Corporations (MNCs) do adopt different
marketing strategies, both online and offline, in aspects of products, price, place,
promotion, people and physical evidence. Result indicate that online marketing is still in
its infancy in Singapore. Export.gov (2018) in the Philippines a majority of Filipinos access
the internet through their mobile phones, providing cost effective and consistent access.
Philippine and international business sell products and services through mobile that has
a direct access to online consumers. The Philippines is the fastest growing app market in
southeast Asia. Nowadays millennials have heavily influenced social medias evolution
into an important source of product information. They are increasingly basing their product
evaluations on information gathered from online reviews (Mangold and Smith, 2011).
However better targeting opportunities and the increasing role-intensive environments
have created new challenges for firms in obtaining customer information. Such
information can help firms increases their profits through cross-selling opportunities
(Ackura and Srinivasan, 2005).

II. Statement of the Problem

2.1 ADVANTAGES AND DISADVANTAGES OF ONLINE SELLING

Advantages of Online Selling

Due to rapid growth of technology, business organizations have switched over from the
traditional method of selling goods to electronic method of selling goods. Business
organizations use internet as a main vehicle to conduct commercial transactions.

Online stores do not have space constraints and a wide variety of products can be
displayed on websites. It helps the analytical buyers to purchase a product after a good
search.

1. Convenience of Online Shopping

Customers can purchase items from the comfort of their own homes or work place.
Shopping is made easier and convenient for the customer through internet. It is also easy
to cancel the transactions.

The following table depicts the factors which motivate the online shoppers to buy products
online.

Top 6 reasons given by shoppers in buying through internet

1. Saves time and efforts.

2. Convenience of shopping at home.
3. Wide variety / range of products are available.
4. Good discounts / lower prices.
5. Get detailed information of the product.
6. We can compare various models / brands.
Source: I-Cube 2006, a syndicated product of IMRB International

2. No pressure shopping
Generally, in physical stores, the sales representatives try to influence the buyers to buy
the product. There can be some kind of pressure, whereas the customers are not
pressurized in any way in online stores.

3. Online shopping saves time

Customers do not have to stand in queues in cash counters to pay for the products that
have been purchased by them. They can shop from their home or work place and do not
have to spend time traveling. The customers can also look for the products that are
required by them by entering the key words or using search engines.

4. Comparisons

Companies display the whole range of products offered by them to attract

customers with different tastes and needs. This enables the buyers to choose from
a variety of models after comparing the finish, features and price of the products
on display, Sometimes, price comparisons are also available online.

5. Availability of online shop

The mall is open on 365 x 24 x 7. So, time does not act as a barrier, wherever the vendor
and buyers are.

6. Online tracking

Online consumers can track the order status and delivery status tracking of shipping is
also available.

7. Online shopping saves money

To attract customers to shop online, e-trailers and marketers offer discounts to the
customers. Due to elimination of maintenance, real-estate cost, the retailers are able to
sell the products with attractive discounts through online. Sometimes, large online
shopping sites offer store comparison.

Disadvantages of online selling

Ease of use is the prime reason that drives the success of e-commerce. Though internet
provides a quick and easy way to purchase a product, some people prefer to use this
technology only in a limited way. They regard internet as a means for gathering more
information about a product before buying it in a shop. Some people also fear that they
might get addicted to online shopping.
The major disadvantages of online shopping are as follows.

1. Delay in delivery

Long duration and lack of proper inventory management result in delays in shipment.
Though the duration of selecting, buying and paying for an online product may not take
more than 15 minutes; the delivery of the product to customer’ s doorstep takes about 1-
3 weeks. This frustrates the customer and prevents them from shopping online.

2. Lack of significant discounts in online shops

Physical stores offer discounts to customers and attract them so this makes it difficult for
e-trailers to compete with the offline platforms.

3. Lack of touch and feel of merchandise in online shopping

Lack of touch-feel-try creates concerns over the quality of the product on offer. Online
shopping is not quite suitable for clothes as the customers cannot try them on.

4. Lack of interactivity in online shopping

Physical stores allow price negotiations between buyers and the seller. The show room
sales attendant representatives provide personal attention to customers and help them in
purchasing goods. Certain online shopping mart offers service to talk to a sales
representative.

5. Lack of shopping experience

The traditional shopping exercise provides lot of fun in the form of show-room
atmosphere, smart sales attendants, scent and sounds that cannot be experienced
through a website. Indians generally enjoy shopping. Consumers look forward to it as an
opportunity to go out and shop.

6. Lack of close examination in online shopping

A customer has to buy a product without seeing actually how it looks like. Customers may
click and buy some product that is not really required by them. The electronic images of
a product are sometimes misleading. The color, appearance in real may not match with
the electronic images.

People like to visit physical stores and prefer to have close examination of good, though
it consumes time. The electronic images vary from physical appearance when people buy
goods based on electronic images.

7. Frauds in online shopping

Sometimes, there is disappearance of shopping site itself. In addition to above, the online
payments are not much secured. So, it is essential for e-marketers and retailers to pay
attention to this issue to boost the growth of e-commerce. The rate of cyber-crimes has
been increasing and customers’ credit card details and bank details have been misused
which raise privacy issues.

Customers have to be careful in revealing their personal information. Some of the e-

trailers are unreliable.

The disadvantages of online shopping will not hinder its growth, Online shopping helped
businesses to recover from the recession.

Merchants should pay attention to the stumbling blocks and ensure secure payment
system to make online shopping effective, the following advice may be followed by the E-
merchants and by the online shoppers.

2.2 THE ONLINE SELLING PROCESS

The process of online shopping may be defined as when consumers decide to use the
internet to shop. Hollensen (2004) alleges that the internet has developed into the “new”
distribution channel. Using the internet to shop online has become one of the primary
reasons to use the Internet, combined with searching for products and finding information
about them (Joines et al., 2003).

The figure below shows a ten-step model to describe a consumer online shopping
behavior and process:

Motivation

Searching for web sites

Browsing web sites

Searching for products

Examining products

Evaluating and comparing

Temporary purchase

Payment
Receiving and checking

Products accepted or returned

2.3 How do they handle Online Customers

If an online seller isn’t offering excellent customer service to their online shoppers,
they we’re behind by other online sellers. Online sellers must work harder and smarter to
compete with in-store customer services, one of the main reasons consumers still go to
bricks and mortar.

There is a high-value placed on great customer service – it makes them want to

buy more and feel confident in their purchase. One of the main challenges of online
shopping for retailers is that shoppers now have a lot more choice at their fingertips, and
can go elsewhere very quickly. This is how offering more to their customer will make sure
they choose you over the competition.

Online retailing is now becoming less about selling products and more about selling
an experience. But what exactly do shoppers want when they come to an online shopping
site is that they will looked for a good and affordable items to buy as well as great
customer’s services offered. So, here are the seven (7) common simple ways usually
used by an online seller to have a good online customer service:

1. Make it personal

One way to show that they care about their customers is by personalizing the e-
retail experience such as using cookies to remember their login details, offering a wish
list option, showing recently viewed items, and sending emails on their birthday. 59% of
marketer’s experience good ROI after personalizing their online stores, meaning
personalization is essential to convert them into lifetime shoppers.
2. Offer more contact options

Online shoppers are getting more and more savvy, and expect 100% support
whenever they enter a shopping website. According to Desk.com:

 9 in 10 customers expect multiple contact channels

 46% expect brands to provide support on Facebook

 88% of shoppers are less likely to buy if their questions are unanswered

 77% of consumers agree that online chat positively influenced their attitude about
retailer

As stated above, customers have set the bar high for online retailers and want a
quick, personal response. By doing this in a number of ways:

 Must could put a Chatbot on site that pops up automatically

 Highly-responsive email inbox – under 24 hours for a response

 Social media – Facebook and Twitter with inbox messaging enabled and/or wall
posts/tweets

 Phone line

An e-commerce website actually, is one of the fastest ways for customers to

contact online seller and speak to a real human, and nowadays customer service
platforms offer voice products. This means customers can leave voicemails when online
seller isn’t online, and can expect a response as soon as possible when they open again.

3. Include as much product information as possible plus better photos

An online seller might know what weather a Tog 24 jacket is suitable for, but their
customer might not. Codes like these can confuse customer, so it’s better to be safe than
sorry –they tell the customer exactly what they’re buying and give as much useful
information as they can. This includes measurements and fit, what size the model wears,
a description of the item, and washing instructions. The more the better!

Also, they don’t underestimate the power of high quality photographs to display their
items. Multiple angles, colors and even models wearing the product will increase the
likelihood of purchase. Some websites also do 360-degree views (with the ability to zoom
in) or videos of items.

4. Give them what they want (Product reviews)

Online shoppers have looked at a review of a product before they bought it. 88%
of online shoppers that factor reviews in to their purchase decision.

Research from Vendasta found:

 A whopping 92% of consumers now read online reviews

 40% of customers form an opinion by reading just one to three reviews

 63% of shoppers are more likely to make a purchase from a site which has user
reviews

 80% trust reviews as much as personal recommendations

 48% will visit a website after reading positive reviews

That is why online seller need reviews on their site and quick. Customer reviews
help inform potential customers about what to expect and the quality of an item. But just
having product reviews is no good if the shoppers can’t see them, so they make sure that
these reviews are obvious on the product page that they are viewing.

5. Follow-up immediately

After a shopper has successfully completed their purchase and received an item,
online seller sends a follow-up email to see how they’re liking the item. This is where
they can give them a discount for next time, or offer incentives for referrals. With that
said, they try and steer away from a very ‘salesy’ type of email and instead try a more
personal message, even with a staff member’s name and contact details at the bottom

6. Make your checkout awesome

Customer service doesn’t always mean that online seller should be there the whole
time – it can be an overall feeling of support. When it comes to a seller checkout, it should
be optimized and intuitive to their customer so they don’t get frustrated or complain.

This is how online seller simplify the checkout process and improve their eCommerce
customer’s experience:

 They’ve Make the shopping cart viewable and buyable on every page

 Include localized payment options – i.e. Cash on Delivery or Mode of Payment

 Avoid shocking shoppers with duties and taxes – include them in the final price

 Offer different types of shipping – and clearly state cost and estimated arrival

 Display discount codes and allow them to be entered easily

 Give inventory and/or store stock on an item, and allow updates for out-of-stock
items

 Offer account sign-up plus guest checkout

Basically, the less clicks of online shopper has to make, the better.

7. Making their search more intuitive

According to a SUMO Heavy survey, 63% of online shoppers saying they

frequently use eCommerce search functionalities. Of these online shoppers, most fall
into 3 categories:

 they know what they’re looking for

 they sort of know what they’re looking for
  or they don’t know what they want.

Online sellers need to have options for all of these customers and enable them to
sort by size, color, type (i.e. heels, boots, sandals), occasion, gender, category (and sub
category), price (low-to-high, high-to-low, range), sale items, brand and length.

The shopper journey is so important to an online seller success. They must think
like a customer also in order to know the customers need and to improve their services
through online shopping.

2.4 How does Online Selling helps the economy of the Philippines

E-commerce has profoundly transformed the way consumers shop and businesses
reach their markets. While the brick-and-mortar shop is still the primary venue for retail
transactions, an increasing number of consumers are making purchases online, a huge
opportunity for businesses of all sizes and across all industries. According to the Visa
eCommerce Consumer Monitor 2014, as much as nine out of 10 Filipino consumers go
online to shop at least once a month. Benefits such as convenience (58%), price (47%),
and deals (46%) are being cited as top reasons for online shopping.

While it is clear the e-commerce industry in the Philippines has grown over the
years, it is still in its early days. However, the accelerating use of Internet and mobile
devices have led to the expansion of the online consumer base which is very conducive
to the further growth of the industry. “It is early days of e-commerce in the Philippines. It
has been growing quite fast in the last four years. There is a huge market to be penetrated
while the entry of new e-commerce firms, as a result of the industry’s progress, helps
further boost the growth of the market,” said Inanc Balci, CEO at Lazada Philippines, a
leading e-commerce marketplace. In an interview with UpgradeMag.com at the AWS
re:Invent 2015 held in Las Vegas last year, Chaiwat Ratanaprateepporn, chief technology
officer of Thailand-based Ascend Group announced the scheduled opening of its online
shopping site – itruemart.com – in the Philippines in November 2015. When operations
started, the Philippines became the first country to have the e-commerce site outside of
Thailand.

According to Nelson Liao, CEO of YiLinker Philippines, the growth of online

transactions from 2013 to 2015 has grown almost 100% every year. “Based on this, the
Philippines could become a better market for e-commerce like China and other developed
countries.” With YiLinker’s entry into the Philippines, “we aim to revolutionize the local e-
commerce industry with the YiLinker model where online is better than offline. We have
an affiliate program where stakeholders can set up online stores and offer merchandise
without spending a single centavo, no need to hire people, but have the chance to earn,”
said Liao.

The swift increase in the country’s Internet penetration rates which currently
reached over 44%, driven by the increasing adoption of smartphones particularly by the
younger population as more of these have become affordable, strongly contributes to the
growth of the industry. As mobile Internet penetration rises, Internet usage is expected to
increase, helping e-commerce gain increased popularity. With the rising number of
Internet users, Barbie Dapul, Head at Globe myBusiness, expressed the need to have a
broader Internet access for the growing online market as a result of the growth in
smartphone and Internet penetration in the country. Internet access, she said, has also
expanded to devices such as laptops and tablets for an accessible and easier
connectivity. The emergence of new payment methods is also a prime factor which
boosted e-commerce. Lawrence Ferrer, Vice President at PayaMaya Philippines notes
that without a means to pay online, people will not be able to participate in the digital
economy. “While some e-commerce stores in the Philippines will accept cash on delivery
(COD), the imperative really is to create more inclusive and more extensive financial
technology.”

Logistics is also very important in e-commerce. Mitch Padua, Vice President for
Digital Commerce at Voyager Innovations, stressed the need for an affordable delivery to
the far corners of the Philippines, innovation on speed of delivery, and granularity in
tracking and ability to deliver different types of items that will bring brands and products
from the online store to the consumer’s door. Dapul cited that the rise of big online players’
web sites and apps such as Lazada and Zalora provides the industry more opportunities
for growth as these create a new online buying behavior due to their wide array of product
lines and affordable value proposition. They also promote better value due to price
markdowns and special offers and discounts, she said.

The country’s growing economy, which is reflected in the increased income, also
helps fuel the demand for online transactions. “People continue spanning their disposable
income but at the same time, people are getting used to the idea of shopping online,” said
Balci. “More people try and keep buying online so the growth of e-commerce will
continue.” Although the e-commerce industry is fast accelerating in the Philippines, it is,
however, not spared from challenges such as logistics, payments the cash mentality of
Filipinos, and even market conditions that hinder the attainment of its growth. Dapul said
that the major stumbling block to the growth of the industry is the Filipino cash mentality
which slows the adoption of mobile payment as alternative to cash. “Majority of Filipinos
still wants to hold on their money and this is why they are still transacting in cash. The
Filipino concept of “Kaliwaan Transaction” is prevalent as the rule of thumb of Philippine
trade practice. This is evident in the low penetration rate of credit cards and the increasing
number of physical banks in every city nationwide,” said Dapul.

Balci also noted that the Philippine economy is still mainly cash-based with low
credit card penetration. “Alternative payment methods are steadily growing from a small
base, but the payment landscape is primarily based on COD transactions which is difficult
for small-sized e-commerce companies to manage.” With regards to payment, Padua said
COD is both a boon and a bane to e-commerce and needs to be disrupted in order to
reduce friction in the ecosystem. Being complex and fragmented, the Philippine
geography is also considered as a challenge to the e-commerce industry. There are low-
density areas with low retail pressure that are hard to reach as these require expensive
delivery infrastructure. Logistics and warehousing capabilities must be upgraded to have
a reliable and affordable delivery.
 “Logistical coverage, reliability and related costs are challenging even for largest
players, making it difficult for new players to increase their market share,” said Balci. He
also mentioned customer awareness, lack of trust and market size as other bucket of
main challenges. The industry should expand its coverage to include places outside Metro
Manila or the under-penetrated market. He claimed that in the local e-commerce industry,
the market is underpenetrated so there is always a demand to buy stuff at a cheaper
price. Besides, e-commerce firms have a lower cost pay which they can reflect to their
customers to provide them goods at lower cost.

Aside from transforming shopping practices, online retailing has also paved the
way for the emergence of alternative payment methods or technologies which is very
necessary to propel the growth of the industry. Although COD is still the most popular
mode of payment in the country, the payment landscape has evolved considerably. In
addition to credit and debit cards, new payment technologies such as e-wallet and mobile-
based payment methods have also emerged. Padua remarked that solutions for the
unbanked, uncarded and unconnected like PayMaya will continue to evolve and a
cashless economy will emerge. He also said that wallet digitization will continue as well
as alternative payment methods with changes in form factor and usage habits from
tapping a phone or a plastic card, to using mobile number, email address or bio
identification to trigger a payment. Even if COD or over-the-counter payments are still
popular payment modes in the country and credit cards are still in use, payment options
using mobile devices emerge and available to pay purchases transacted online.

“As mobile penetration in the country hits over 100%, customers will continue to
use their mobile devices to pay for their purchases and this is where mobile money will
be most useful,” said Dapul. “Globe has its flagship mobile money service GCash which
is now accepted by a growing number of online merchants and sellers, offering users
access to a convenient, secure, and hassle-free way of purchasing items from online
stores and e-commerce sites using their mobile phones.” Balci also insists that cash
payment (via COD) will still capture a bigger share of the market in the country. However,
he said that just as the mobile landscape is growing, so will alternative payment solutions
like e-wallet that enable customers to pay directly from their phones. Balci said Lazada
accepts Hellopay, an e-wallet and online payment gateway which converts post-payment
methods into pre-payment and serves as a best value proposition for merchants.

For e-commerce companies which transact business to a lot of customers,

security and privacy are important issues that matter for them. Security needs to be
addressed that’s why e-commerce firms put a lot of efforts to make sure the sites and
information they have are secured. To help the e-commerce industry hurdle challenges
that are hampering its performance, there is a need for collaboration between the private
stakeholders and the government to improve and promote the growth of the industry. “The
government can support e-commerce growth in the Philippines by taking the lead in
promoting e-commerce awareness through industry-wide educational forums and
empowering SMEs to venture into e-commerce,” said Balci.

As Internet speed and wider access to the public is critical to change market
behavior, Balci said the government can invest in the country’s digital infrastructure. He
also asked the government to create venues for e-commerce players and related side
industries to collaborate and improve e-commerce services as these are sustainable
steps in growing e-commerce in the country. Being a key element of the e-commerce
industry to protect customers from online fraud, theft, phishing, among others, Dapul said
the government should provide online security regulations, as well as ensure access to
consumer rights to guarantee that the online marketplace is secure and conducive to
conducting business.

Dapul also said the government can act as liaison between public and private
stakeholders to ensure that the application process for those who want to run their own
online business is easy and hassle-free to ensure that more players will venture into e-
commerce. Padua relayed that the government must invest in long-term programs that
will help MSMEs realize new digital opportunities, compete globally, and ride the wave
happening in e-commerce. Government agencies that directly impact the e-commerce
ecosystem should provide incentives with the goal of mass adoption of e-commerce
among local enterprises. Another aspect that can help, Padua said, is if the public sector
can look into setting up funding, subsidies, grants and assistance that will create a
Launchpad for enterprises making the digital shift. Foreign investors and venture
capitalists must be encouraged to invest in the country and fuel the startup ecosystem.

With e-commerce playing an important role in enhancing economic growth, the

Department of Trade and Industry (DTI), together with major e-commerce players and
digital industry leaders came together in a forum entitled “Gearing Up for Pinoy E-
Commerce” in November last year to promote online shopping in the country. “We need
all hands together to increase the e-commerce penetration in the Philippines and this
includes the government, private sectors and consumers,” said Balci. In her presentation,
Maria Lourdes Yaptinchay, Director of Sector Planning Bureau at DTI, announced that
the government is preparing a five-year (2015-2020) roadmap for the local e-commerce
industry with a vision of making the industry an economic growth contributor and
Philippines’ competitive advantage. The roadmap has the following business objectives
and success criteria: (a) 100,000 MSMEs do e-commerce; (b) 30% of Filipinos do e-
commerce; (c) implementation of e-payment by the government; (d) effective merchant
and consumer protection; (e) to have a fast and cost-competitive Internet access; (f)
cybercrime enforcement and prosecution; and (g) e-commerce to be 25% of the country’s
Gross Domestic Product (GDP).

Online shopping is set to see greater heights in the future, aided by increasing
online customer base as a result of declining smartphone prices and encouraging growth
of mobile Internet penetration and usage, the emergence of new payment methods as
well as support from the government. The growing economy also contributed to the
growth of e-commerce. These components complement each other to support the growth
of e-commerce in the country. “The local e-commerce industry is growing very fast,”
claimed Balci. “In three years, we expect e-commerce penetration to increase to three
percent to four percent of non-food, non-travel retail market which is $100-billion.” As e-
commerce became very successful last year, Balci expects the same direction to happen
this year. “2015 has been very successful for e-commerce. The market has grown several
times and for this year, we are waiting for same thing to happen – to have a record market
growth.”
 III. Analysis

Parsons' theory is a part of the paradigm of action theory. AGIL represents the
functional scheme for the whole general action system. We attempt to correlate parson’s
theory with the system of online shopping. In Adaptation, the system must adopt physical
environment around it to exist successfully. The online seller must have knowledge of the
demands, trends, likes, dislikes of the consumers from time to time to catch the
customer’s “taste” for their market strategy. Goal attainment is the means and goal should
be clear for individuals/institutions to run the system successfully. In the online shopping
market, the objective must to prioritize and reliably handle customers at the same time it
will help the sellers grow. In Integration, all the institutions should be integrated to run the
system smoothly. The seller must make sure that they reach the customer’s expectation
and customers should send reviews to help the seller. Both of them should coordinate
together. Latency is to run all mentioned above smoothly, latency is necessary. The
elements mentioned should be maintained for a sustainable system of online shopping.
online shopping has drastically conquered the market business with the help of
technology. the e-industry can help the growth of our economy because nowadays
millennials are heavily influenced by social media. one can shop with just a tip of his finger
and it makes it easy for both the shopper and seller to have an easier transaction.
however, there are many downsides especially in the shopper's side such as the inability
to physically inspect the desired item. both parties are to be aware of the possible
complications and make each other contented in shopping online.