E-commerce faces many obstacles

Legal and policy issues are keeping electronic commerce from taking off, even though the technology is already in place.

This is the common view of e-commerce proponents, who say basic issues, such as the legality of online payments, need to be resolved. While some companies have already started a form of e-commerce in their Web sites, they are not getting the full benefits of online commerce because they cannot accept payments through the Internet.

The problem stems from a legal safety net that requires the owner of a credit card to affix his or her signature in a billing slip when using a credit card. Since e-commerce transactions are done electronically, signing a payment slip is indeed a problem.

"There is a problem with payments," says Janette Toral, founding president of the Philippine Internet Commerce Society (PICS), a group of IT professionals promoting e-commerce. "If we pay through our credit cards, the law says we have to sign our names on the payment slip. In the US, all you need to do is give your credit card number to do business online. That's legal there; here it's not."

Without the capability to do online payments, sites that try to do e-commerce actually fall short of what is really e-commerce, said Jim Ayson, marketing manager of Worldport Internet, a US-based Internet solutions provider that has a Web development facility in Clark's CyberCity.

Ayson pointed to one local e-commerce site, Pizza Hut's local Web site, as an example. "There's a menu all right and it allows you to fill in an order form online. But there is no facility for online payment - no e-commerce transaction," he noted.

Food stores seem to be the first ones experimenting with e-commerce. Aside from Pizza Hut, Magoo's Pizza also maintains a Web site that offers online ordering. There's also Eric Tomacruz's Chow.net, which offers delivery of Chinese takeout and other food.

Because online payments are not possible, these sites are using a workaround: payment on delivery. "That's a workaround, but it's very tedious," Toral says.

But the issue of payments is just the first of many stumbling blocks. For one, local Internet service providers don't seem to be ready to offer e-commerce just yet, Toral says, noting that local ISPs are not as fast as their US counterparts in building a Web store front.

"In the US (where e-commerce is already starting to boom), ISPs already offer templates that make it easy to build a Web site. In the US, you can have a storefront and storefront software easily, and you don't have to start from scratch like we do here," Toral explained.

Ayson agrees, saying that the reason Worldport Internet started offering its services locally was because of the "vacuum of advanced Web applications" in the country. He notes that although there has been some Web e-commerce activity here, it isn't mature enough.

Worldport's facility in CyberCity houses the company's Web development team composed of graphics artists, application developers, and database programmers. Before, the company only used to work on projects intended for the international market, but since last month, they have been eyeing the local market as well.

The lack of bandwidth is also an obstacle.

Today, it is more practical to host a Web site in the US because the access time is faster than if it were hosted locally, Toral says. Destination: Philippines and Philmusic.com, the first two local e-commerce Web sites Worldport is working on will be hosted at the company's Silicon Valley headquarters, Ayson says.

Hosting a site abroad also allows them to accept payments online, Ayson says. By using a US merchant account, Worldport enables local Internet users who have credit cards that are honored internationally to order and pay for their purchases online.

Another stumbling block for e-commerce is the impending telephone metering scheme, which some critics say will discourage the growth of e-commerce in the Philippines.

"People will be spending less time on the Internet with phone metering in place," Toral says. "When we go shopping, we don't necessarily know what we're going to buy. We like to browse first and look around. Metering will prevent users from spending a lot of time on the 'Net, so there will be fewer chances for companies to get business going."

The lack of e-commerce professionals is another problem. Toral says that e-commerce professionals know how to run an e- commerce site. They know how to translate business processes into e-commerce applications.

"Knowing how to create a Web site is not enough to become an e-commerce professional," she says.

Horacio Cadiz, general manager of PHNet, concurs. He says that because most people are unfamiliar with e-commerce, they take their time before venturing into it.

Toral, however, is confident that this need can soon be filled. She says that more people are now focusing on e-commerce. IT professionals who are doing electronic data interchange (EDI) have also begun taking notice of e-commerce.

Another solution might come from schools, Toral says. She notes that in the US, computer schools have already started offering masters courses in e-commerce or have integrated it in their curricula. Locally, she believes that some of the bigger computer schools might do the same as well.

Keith Laidlaw, Oracle Consulting Services' technical manager for e-commerce, says that he is disappointed that only a few companies in the ASEAN region have been doing e-commerce.

He notes that all the technology for secure, reliable e-commerce is already available, but companies are just not doing anything yet.

But most people don't seem to know that the technology is available, Ayson says. The level of misconceptions about e-commerce is still very high, he adds.

"The perception that e-commerce is insecure must be corrected. It can be compared to the ATM (automated teller machine), which people were uncomfortable using during its earlier years," Ayson says. Toral adds that one of PICS' goals is to promote awareness of e-commerce because right now, it's "terrible".

"Everybody seems to know that e-commerce is here, but there are still a lot of wrong perceptions about it. We want to educate them on issues concerning e-commerce," she said.

According to a 1997 Electronic Advertising & Marketplace report in the US, 52 leading electronic marketers generated $US7.03 billion. Those who gained the most included Cisco and Dell, which earned $US4.2 billion.

According to an International Data Corporation (IDC) report, the worldwide Internet commerce market will exceed $US46 billion in consumer transactions and $US176 billion in business transactions by the year 2001.

Ayson notes that the bigger market for local e-commerce sites is definitely the international market. He says that if the country gets even 1 per cent of the total worldwide market, that would be a great accomplishment. Locally, business-to-business e-commerce would probably boom more than business to consumer e-commerce, he adds.

Until the issue of online payments is resolved, e-commerce will be stuck. But a number of initiatives that will kick off this year, might get e-commerce moving.

Toral says, for instance, that an owner of a large chain of malls is developing two or three virtual malls that will be launched some time this year.

But the better news is that the Philippines government is getting into the act as well.

Ayson says that the Department of Trade and Industry is creating an e-commerce council to oversee the development of e-commerce in the country. The council will be composed of representatives from both government and private sectors.

Ayson, whose Worldport will be one of the council consultants, is confident, e-commerce scene will pick up. "This is not something that will remain stagnant," he says. "We will definitely act on it."

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