CHAPTER 2

Review of Related Literature

E-COMMERCE

The rapid development of advancement in information communication

technology (ICT) along with the popularity and ubiquity of the Internet, E-Commerce is
getting stronger in the world with speedy economic trends (Castro, Meneses, & Moreira,
2013; Zhang, Deng, Wei, & bDeng, 2012). (Armesh, Salarzehi, Yaghoobi, heydari, &
Nikbin, 2010), they stated that E-Commerce or Electronic Commerce is defined when
individuals as well as organizations utilize Internet as a means of intermediary for
trading products and services. As an approach, E-commerce is being promoted and
being explained in order to reduce the monetary, energy, time and psychological
transaction costs for customers while they are carrying out their shopping activities.

With the help of internet and rising of e-Commerce system, every people in the
world can easily buy things they wanted and can also easily to start up a business with
the use of online shopping applications. By just sitting, tapping their phones, consumers
can get what they desire and sellers take this as an advantage for it is easily to earn
money in selling online.

In the Philippines, according to Internet World Stats, over 67 million of Filipinos

were active online in January 2018. Businesses believe that Philippines is an ideal
place for e-commerce to thrive for the reason that this country ranked first in the world in
terms of social media use and amount of time online. A report by Statista said that the
Philippine e-commerce market revenue grew to $840 million or about P44 trillion in
2018 from $688 million or about P36 trillion in 2017. Revenue is expected to grow about
10.5% annually leading to a market volume of $996 million dollars or about P53 trillion
pesos by 2019. In additional, CNN Philippines stated that the e-commerce industry is
gaining ground as digital marketplaces end 2018 with record highs to reflect the growing
number of Filipinos doing their shopping online.

This mean that since our world is now highly developed to technological
innovations, it may also lead for the people to be part of it. Where here in the
Philippines, people are giving their lot of attentions over the internet during at their free
time.

In the 21st Century according to Mitra Abhijit (2013), E-commerce plays a very
important role along with the rapid expansion of internet. She stated that the rise of
electronic commerce is another revolution in which it changes the way of people when it
comes to buying and selling price

What Abhijit means is that, since 21 st century is the generation wherein a lot of
people or rather the entire world are using technologies. Everywhere you look hold
either focuses on their screens. As the generation is growing and growing, the rise of
technology were also increasing.

Benefits of Online Shopping

People tend to purchase product online rather than doing in a traditional way is
that because according to (Mohammad, et al., 2012), online shopping are convenient
and time saving and no more traveling and waiting in lines is needed. It also opens in all
time and they are accessible anytime and anywhere and it provide consumers with free
and rich information about products and services.

Why is it convenient and time saving? Is that because, you as a consumer don’t
need to commute or travel to a particular place to buy the things that you desire but
instead, you only need your phone and have an online shopping app and search for
your thing. Also, online shop is open for 24 hours unlike to local stores that closes early
before 10 or at 10 pm. Moreover, online stores provide us information and reviews in
order to check if it is good and not fake and also with that, reviews and information can
make your customer gain trust to your particular online store.

Jush and Ling, (2012) defined online shopping as the process of consumer who
made an order of product through online. They also stated that a consumer can do this
without doing anything but to just tap their phone and pick their desired order.
 In connection, Jush&Ling studied that, having an online shopping thing doesn’t
make people to be lazy but rather they don’t want to waste some time on travelling or
going out to far places just find what they wanted to buy.

Online shopping has been known around the world. But this one has a great
impact mostly to women. According to Khanna & Sampat (2015), the reason of the fast
growing of online shopping is that women are very curious wherein everything that is
new is they were intrigue to try it.

And with this, trying out something that is new to them may help them to enjoy
themselves and might also result them into thinking a new idea from what they have
experienced in trying it out. And that idea is that they come up to the thinking that an
online shopping is not only for them to purchase products, but also for them to use it as
a tool for starting up a small business through the help on internet.

Through online, business in the Philippines is the best option to have experience
in managing an enterprise. Where it does not require much capital, and running these of
business are manageable. Just like with the other businesses, it can be a source of
income in everyday life (Manarang, 2019).

This is why Philippines called as “Social Media Capital of the World” for the
reason that a lot of Filipinos are using internet to be socialize with others and of course,
taking it as an advantage for the source of their income. Since it is not that hard to sell
online, Filipinos gained interest on trying out the online business.

Online Scams and Fraudulence

However, according to (Jewkes and Yar, Levi, 2008; 2010; Sandywell, 2010;
Buchanan and Whitty, 2013; McGuire and Dowling, 2013), even though this things
(internet, online shopping) has a lot of advantage in the society, he stated that frauds
and other crimes has given the opportunity to be perpetrated on an industrial scale.

By that, the more that online activities were increasing, the higher the possibility
of encountering crimes online specially for online shopping activities where consumer
either seller is involved in this kind of situation. Moreover, for the seller’s perspective,
once they were a victim of fake customers, it might be a big negative result for his/her
business.

The growing threat of online theft nowadays is a real concern in terms for online
merchants and their customers. Though the retailers take to a tighten security and in
preventing malicious activity, scammer still find a way on how they going to victim the
other people. (J. Rampton, 2015).

Knowing that people are getting even more brighter and being more intelligent
when it comes to hacking and faking with the use of technology and when it really
comes to gaining money, they are really in to it. So, it is indeed a threat for online sellers
that those criminals were actually finding ways to earn money specially nowadays, with
just an internet and technologies, everything gets done easier.

Online fraud and scams disguises in many ways and go by different names, like
consumer cybercrime, e-crime internet fraud, and online crime. But no matter what it's
called, it still causes a considerable distress to everyone who have been experiencing it,
and where it also can even culminate in a serious financial problem. (Moraes, 2019)

Fraud and scams existing in different aspects over the internet as it continues
happens in our society right now, may lead to financial loss of the business. Moreover,
online businesses aren’t the only thing to be affected by this case, but instead children
who are already utilizing technology might be involved in this for the reason that they
don’t know what they were doing in these technologies.

According to (Albert, 2002), there are some common disguises, forms or shades
of online fraudulent solicitation and transactions:

1. Online identity theft fraud. Deliberate use of someone else's identity, usually
as a method to gain a financial advantage or obtain credit and other benefits
in the other person's name, and perhaps to the other person's disadvantage
or loss.
2. Online retail schemes. Scammer will create an online site which seems
professional, using expert web design and include a variety of products in
which they stole the information and images from other sites.
 3. Online Auction. Involves schemes attributable to the misrepresentation of a
product advertised for sale through an Internet auction site or the non-delivery
of products purchased through an Internet auction site.

By those forms of fraud, businesses aren’t the only one who will be affect by this
but these frauds can also bring negative effect for the global commerce and also for our
government and society.

Media contain full of stories about fraud against individual, and business as well
are just likely to be the victims of fraud. Fraud has a different form and one of these is
the nonpayment fraud. Where there's an individual who going to take his/her order but
when the time's goes by, they refuse to pay for those items (J. Murray, 2019).

This is why if you’re owning an online business, you must have the knowledge on
identifying your online customers. You must have to ask for the full and complete
information about your customer before agreeing on what he/she will order to you.
Learn not to trust immediately but to know every single detail first.

Advices to online frauds

For the connection to it, if those frauds have many ways to deceive online
entrepreneurs, there is also a way to avoid this kind of circumstances and to avoid
some loss that might encounter to your business if this happened. According to (K.
Matthews, 2019), there are 6 ways to protect online businesses from online frauds:

1. Perform a security audit. This enables the cybersecurity experts at a business

to determine where the weak points exist. Patching those vulnerable points can
make it less likely for cybercriminals to carry out online fraud, such as malware
that demands a ransom paid to restore file access.
2. Implement a company- wide password policy .  Setting strong passwords that
are long enough and do not use words found in the dictionary can also go a
long way in protecting businesses from online fraud. Furthermore, it is also
advisable that they can also use a two factor- authentication wherein it requires
password users to have knowledge of the correct string of characters and
possess something like a temporary access code before they can gain access.
 3. Analyze customer information and purchase behavior . Your goal here is to be
able to assess a customer’s profile, order, and delivery details before accepting
a transaction. Similarly, orders placed early in the morning, of high quantity or
high value are also red flags, particularly if the product can be easily resold.
4.  Incorporate Online Fraud into Employee Education Topics. Fighting online
fraud is a team effort, which means it should ideally take a top-down approach
where the company leaders prioritize it, then encourage the employees to
follow suit. Making that happen starts with training all employees to know what
might constitute online fraud.

5. Realize That External Parties May Play a Role. Becoming more knowledgeable
about how to protect a business from online fraud means being aware of types
of fraud carried out by external parties related to a company, such as its
customers and contractors.

6. Scrutinize All Online Requests; Especially Urgent Ones. Some companies are
so eager to please stakeholders, they rush to meet any need possible without
checking for the possibility it's fraudulent. It's crucial for businesses to carefully
evaluate any online requests that seem legitimate, especially if the sender
conveys exceptional urgency.

This ways of protecting online business from online fraud can be an additional
knowledge or an additional information and tips for online entrepreneurs who is just a
beginner in starting online business. With these, online sellers may now be confident
enough to render service for online consumer without any worries for the reason that
they were secure and has an enough knowledge for preparing themselves if ever they
were encounter some fake or bogus customers in their own businesses.
Credibility of Consumer
(Wirtz, Schilke, & Ullrich, 2010), since web 2.0 had been developed in many
ways, a lot of business models and other business ways has been risen and give
opportunity to those entrepreneurs who is willing to start up a business in a simple
manner. Web 2.0 is an improvised model that contains the improvement of social
networking, interaction, communication with the use of internet.

With the help of web 2.0, everything makes so easy to do when it comes to
business. Entrepreneurs can now sell through modern way and consumer are now able
to purchase product through online applications and so on.

As for that, since with the use of internet is the modern way of selling now, as a
seller or an entrepreneur, it is very important to know to yourselves that you must trust
your customer or know the credibility of them. According to (Paghdal, 2016), credibility
is important in building a successful online business. Whether it is a spinoff of an
already-existing enterprise or a new solely online venture. Having enough trust by the
customers to their seller and same as well with the business owner in trusting their
buyers.

By these, having the credibility of customer toward the seller may help the
business more successful and That’s because customer retention is much more cost-
effective than constant acquisition. In fact, it costs five times more to earn a new
customer than it does to keep an existing one.

According to Al Hawari (2011), he suggested that having a customer’s trust is

such a very important variable for an entrepreneur. In additional, he also stated that to
earn a customer’s trust, a good product quality and services that is rendered to them will
do.

It is indeed that customer’s trust is very important variable for they are the ones
who made the business grow and be known by many people. Without those customers,
a business will lead into failure and at the same time would not even flourish.
Bogus and Joy Reserver scam in the Philippines

In the Philippines, common scam that is experiencing by entrepreneurs is what they

called “Joy Reserver” (P. Buncab, 2018). He stated that a “Joy Reserver” is an online
selling jargon that means a buyer who enthusiastically shows interest on an item, but
will not actually buy it. So, in this kind of situation, he provided some tips on

 Set a reservation period. Setting a one-week reservation, for example, not only
prevents Joy Reservers to delay their orders, but also allows legitimate buyers to
reserve items that earlier transactors have nullified.

 Check the buyer’s profile If you’re selling on Facebook, a lot of times, people’s
accounts are public. So, you can at least have decent judgement if you’re dealing
with a legitimate customer who has interest on the kind of item you’re selling.
Otherwise, you can also a quick online search to gauge the background of the
person you’re dealing with.
 Never name and shame. We Filipinos when we are having a bad day, we
immediately post our experienced in social media. Now what Percival Buncab
mean here is that, online entrepreneurs must NOT post some JOY SERVER
ALERT threads once they encounter bogus customer for this is such an
unprofessional doing for an entrepreneur. Why? Because these fake customers
may feel good on flagging them especially when you already counted a reserved
item as de facto sold, only to find out it’s not. 

Percival Buncab only wants Filipino online entrepreneurs to act professionally

even though they were encountering this kind of circumstances. No matter what
negative experience they were encountering, still stand on your ground and be a
professional entrepreneur.

Also in the Philippines, Bogus Buyer is the other form of scam that is
commonly experienced by a lot of Filipino entrepreneur wherein it is the term used
 by the sellers online for those scammers who will reserve their item over the internet,
through text messages and chat. Where there's a schedule for the meet-up in a
place you have agreed. But after giving time and effort, that customer will not show
up and cut off the connection between the seller. (Antonio, 2010).

Since our world is now engaging to a social media, lot of people put up into a
business so that through online they could also earn money. But suddenly, there still
a lot of beings who just tripping around that affects the online business of the owner.

As stated by (Guillermo, 2013), "Selling products or items online, where

business owner may have encountered a lot of bogus buyers, fake bidders, joy
inquirers and joy reserves' in with online selling business. Where this can be irritating
or frustrating because it's just a waste of time, effort and money. They got enjoy and
pride in fooling and annoying other people. That we shouldn't be just tolerating,
because it has a huge effect on our own small business.”

But why do this bogus customer or this fake people commonly targeting small
businesses? Is that because, entrepreneurs who are still starting up or just a
beginner on managing business online doesn’t have enough knowledge on how they
will secure their businesses when it comes to this kind of cases online.

Experiences of Filipinos regarding bogus customers

Online seller having a hard time when it comes to encountering this kind of
situation with their online businesses. According to (ABS-CBN news, 2018), it
stated here some of the experiences of online Filipino business owner in
encountering bogus customers:

1. “Pinaasa”. The online selling business relies heavily on trust between the
buyer and the seller. There are times, when a buyer reserves a certain item,
and backs out at the last minute. In the worst cases, buyers might pull out of
the sale when just when the seller is already on their way to the agreed
meeting place. It can be equally frustrating when the tables are turned, and
the seller fails to meet the buyer.
 2. “Iniwan sa ere”. Another scenario is when a buyer fails to show up, with no
warning that they are pulling out of a sale. And where the buyer has blocked
the seller on social media or closed all lines of connection between the two of
them. The seller might then find that the buyer has blocked them on social
media and close all lines communication between the two of them.
3. “Na-haggard sa traffic”. Here in the Philippines, traffic is a daily reality. Taking
lot of hours to get from one place to another, when it would have only taken a
few minutes some years ago. Some online sellers and buyers willingly take
long drives or commutes to arrive at the agreed-upon meeting place. Thus,
they end up spending more on gas or fare than the actual profit from that
sale--not to mention the time lost during travel.

SYNTHESIS

Chapter 2 was all about elaborating the world of continuously developing of

technologies. And as it continues in developing, many opportunities for people specially
entrepreneurs had risen and that is the E-commerce or the Electronic Commerce. This
system had opened a lot of opportunity for entrepreneurs to sell using technology and of
course with also the help of internet connection. It explains that it made the work of
entrepreneurs easily, for the reason that by just simply using your phone and some
online shopping application, you can buy things you wanted and also can make this as
an advantage for online seller to start up a business and can easily earned money.

However, this chapter also stated that though online shopping user has a lot of
advantages in online selling and online buying there is such a disadvantage waiting for
them specially for the online seller of an online business. Frauds, scams are given the
opportunity to deceived these entrepreneurs for them to gain money. This chapter also
stated what are the kinds of online scammer that is commonly experienced by the
online entrepreneurs. And stated some information for the credibility of customer that
could be trusted by the sellers. Also of course, chapter 2 also provided some tips and
guidelines on how online sellers avoid that kind of circumstances for the sake of
goodness of their online businesses.
 CONCEPTUAL FRAMEWORK

INPUT PROCESS OUTPUT

 The
 Awareness Experiences of
 Environmental the Online
 Evaluation
Behavior Clothing
 Data Analysis
(consumer Business
(Experiences)
behavior) Owner
(Surveys)
 Emerging regarding the
Problems Bogus
Customers

Figure 1. Conceptual Framework: Experiences of the Online Clothing Business Owner

regarding the Bogus Customers