E-commerce has to be more effective and accountable

Published : 02 Nov 2021 08:46 PM | Updated : 03 Nov 2021 04:49 PM

E-commerce is electronic activity associated with the buying or selling of products on online services or through the use of the Internet. This process is facilitated through diverse technologies, including- electronic funds transfer, coordinated supply chain management, internet marketing, electronic inventory management systems, and online transaction processing and automated data collection systems. To take this varied dimensions forward, E- commerce creates web portals and also uses common technologies like the e-mail. This assists in online shopping from online marketplaces.

The prospect of different opportunities pertaining to such commercial activity has led to the creation of different formats- (a) B2C- third-party business- to-consumer; (b) C2C- consumer-to-consumer sales and (c) B2B-electronic data interchange. These processes are facilitated through the gathering and using of demographic data through web contacts and social media. This in turn is mostly required at the time of launching new products and services.

In May 1989, Sequoia Data Corp. introduced Compumarket, the first internet based system for e-commerce. Sellers and buyers could post items for sale and buyers could search the database and make purchases with a credit card. was launched by Jeff Bezos in 1995 and the Alibaba Group was established in China in 1999. This rapid transformation helped global e-commerce to reach the significant global figure of US Dollar 150 billion by 1999.

In fact, it was subsequently reported that US e-commerce and online retail sales reached nearly US Dollar 294 billion, an increase of 12 percent over 2013 and 9% of all retail sales. It was also revealed that accounted for more than half of all e-commerce growth by 2015. This steady and diversified growth helped to push retail e-commerce sales across the world to reach US Dollar 2.304 trillion by 2017, which was a 24.8 percent increase from the previous year.  

Such a pro-active trend drew the attention of the US State legislatures and persuaded them to activate Government Regulations. This resulted in the California Privacy Act. 2020, enacted through a popular election proposition on how specifically electronic commerce may be conducted in California.

In the US in its entirety, electronic commerce activities were also regulated more broadly by the Federal Trade Commission (FTC).  In addition to e-commerce activities associated with the use of commercial e-mails and online advertising, attention was also given regarding consumer privacy. It may be mentioned here that using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has since then, brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers' personal information. 

Conflict of laws in cyberspace has been a major hurdle for harmonization of legal framework for e-commerce around the world. Consequently, in order to give uniformity to e-commerce law around the world, many countries have adopted the UNCITRAL Model Law on Electronic Commerce (1996). Internationally there is also the International Consumer Protection and Enforcement Network (ICPEN), which was formed in 1991 by an informal network of government customer fair trade organisations. This measure was apparently undertaken to find ways of co-operating on tackling consumer problems connected with cross-border transactions in both goods and services, and to help ensure exchanges of information among the participants for mutual benefit and understanding. From this has evolved - an ICPEN initiative since April 2001. It is a portal to report complaints about online and related transactions with foreign companies.

There is also the Asia Pacific Economic Cooperation (APEC) which was established in 1989 with the vision of achieving stability, security and prosperity for the region through free and open trade and investment. APEC, consistent with what has been happening elsewhere, has an Electronic Commerce Steering Group as well as another section with the responsibility of working on common privacy regulations throughout the APEC region. This is commendable.

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In Australia, different formats of Trade are covered under Australian Treasury Guidelines for electronic commerce and the parameters of the Australian Competition and Consumer Commission. It regulates and offers advice on how to deal with businesses online, and offers specific advice on what happens if things go wrong.

Consistent with this process, the United Kingdom, before enforcing Brexit, created in 2013 the Prudential Regulation Authority and the Financial Conduct Authority to implement the varied aspects, importantly underlined by EU’s Payment Services Directive as to how firms and financial institutions will provide payment services to their customers. These firms include banks, non-bank credit card issuers and non-bank merchant acquirers, e-money issuers, etc. The PSRs created a new class of regulated firms known as payment institutions (PIs), who are subject to prudential requirements. This was done because the United Kingdom had the highest per capita spending in e-commerce in Europe.

In India, the applicability of the e-commerce matrix is governed by the Information Technology Act, 2000. There is also the Indian Right to Information Act that supports this initiative. In India, cash on delivery is still the most preferred payment method with regard to more than 75% of their e-retail activities. This process has gained higher ground also due to the effect of the Covid pandemic.

In China, the Telecommunications Regulations of the People's Republic of China (promulgated on 25 September 2000), has stipulated their Ministry of Industry and Information Technology (MIIT) as the government department to regulate all telecommunications related activities, including electronic commerce. This has helped China to keep pace with further legislation that may be required for improving China's electronic commerce legislation.China's e-commerce presence has continued to expand every year because it has nearly 700 million Internet users, China's online shopping sales reached $253 billion in the first half of 2015 and accounted for 10% of total Chinese consumer retail sales in that period. This dynamic has continued to grow since then because Chinese retailers have been able to help consumers feel more comfortable shopping online. 

E-commerce allows customers to overcome geographical barriers and enables them to purchase products anytime and from anywhere. This is partially because online and traditional markets have different strategies for conducting business. Traditional retailers offer fewer assortments of products because of large shelf space. However, online retailers, based on digital considerations, sometimes create wider space by sending customer orders directly to the manufacturers. The pricing strategies are also different for traditional and online retailers. Traditional retailers base their prices on store traffic and the cost to keep inventory. Online retailers however base prices on their speed of delivery.

It needs to be acknowledged that e-commerce has helped create new job opportunities due to information related services, software apps and digital products. On the other hand it has also caused job losses- in areas like- retail, postal, and travel agencies.

Analysts have taken both of these factors into account and have pointed out that both of these factors have their own connotations. It is generally believed that the development of e-commerce will create jobs that will require highly skilled workers to manage large amounts of information, customer demands, and production processes. 

There is a hint that this will persuade the youth population to become more digitized and proactive. It has also been noted that because e-commerce requires sufficient stocks that could be delivered to customers in time, the warehouse has become an important element and this conversely will need more employees and staff to manage, supervise and organize. As such, there are two sides of the same coin.

E-commerce brings some benefits for customers as they do not have to leave home and only need to browse websites online, especially for buying the products which are not sold in nearby shops. It also helps customers to buy a wider range of products and save customers’ time. Consumers also are able to research products and compare prices among retailers. In addition, online shopping often provides sales promotion or discounts. So, it has the potential of becoming more price effective for customers. Moreover, e-commerce can provide products’ detailed information which the in-store staff might not be able to provide. E-commerce technologies can potentially also cut transaction costs by allowing both manufactures and consumers to skip through the intermediaries.

All of the above are good. However, as we have observed in the recent past, in Bangladesh, many e-commerce consumers have been badly affected through malicious steps undertaken by e-commerce retailers. The e-commerce Association of Bangladesh is the trade body for e-commerce in Bangladesh. According to the association, there are 8,000 eCommerce pages on Facebook alone.  Currently, the following four types of eCommerce are popular in Bangladesh: Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Consumer (C2C) and Business-to-Employees (B2E). B2B companies normally offer office supplies, stationery, computers and cleaning chemicals for other companies. The Business to consumers- The B2C segment has grown through the growth of home-delivery of food. There are a number of websites under B2E that host information about jobs in Bangladesh.

In Bangladesh, as in many other parts of the world, accountability is slowly being introduced within the e-commerce paradigm. After several recent cases of scam through digital manipulation within this sector it has now been revealed that the consumer rights watchdog of Bangladesh- the Directorate of National Consumer Rights Protection (DNCRP) has fined 17 e-commerce firms for their failure to deliver products as promised and for deceiving customers through false advertisements. This is a good beginning.

Necessary legislation and statutes are also needed for creating effective accountability among e-commerce retailers. Regulations with required penalties need to be in place with effective monitoring by the Ministry of Commerce. Our E-Commerce Policy, 2020, the Digital Commerce Operation Guideline, 2021 and Consumer Rights Protection Act will then add more culpability for imparting punishment to wrongdoers.

Muhammad Zamir, a former Ambassador, is an analyst specialized in foreign affairs, right to information and good governance.

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