CHAPTER 1

Abstract

Internet shopping has become more and more popular nowadays, however, some consumers are

still reluctant to purchase online due to some perceived risks. The purpose of this paper is to

introduce internet shopping, trying to analyze problems facing it and find corresponding solutions

to ensure e-commerce growth. In order to give a concrete picture, the paper will also illustrate

measures which have been undertaken by eBay to operate effectively.

Introduction

Due to the popularization of internet usage, people begin to get familiar with this multifunctional

tool, which lead to the boom of internet shopping. According to Hsiao (2008), people's daily lives

have dramatically changed in the past ten years, which stems from the application of online

shopping, saving the visit to physical shops compared to offline shopping. Such a new kind of

shopping style can be called in various ways as e-shopping, network shopping, web-based

shopping, online shopping or Internet shopping (Hsiao, 2008).

Identified by Hsiao, internet shopping has lowered transaction and search costs (both in terms of

time and money) Compared to other forms of shopping, from which consumers usually can shop

faster, choose from a wider selection, and order from the merchant with the lowest price. First of

all, with the aspect of shop speed, there is no need to travel to stocks and malls by using online

shopping, which obviously saves cost and time that defined as two common consumer resources,

leading to the accumulation of buyers' utility. Nevertheless, it's the opposite case to the offline

shopping. Second, as for the variety of selection, because consumers can access to various

information through the Internet by easily clicking the hyperlinks, most of which interlink to
other information around the world and some even send out virtual signals. Thus, the information

quantity of internet shopping is considered superior to store shopping. Lee et al. (2003) suggested

that affected by the increase of internet usage, the economic value on the information will

appreciate gradually. Third, in general, consumers can save money by purchasing online, even

though they have to afford the shipping fee sometimes. By saving of overhead and maintenance

of store fronts, online stores are able to sell products at lower prices than physical stores (Hsiao,

2008).

However, despite internet shopping is helpful, some consumers are still reluctant to purchase

online due to apparent barriers, such as financial risk, psychological risk, product performance

risk and time/convenience risk identified by Jacoby and Kaplan. The goal of this study is to

analyze the risks, suggest corresponding solutions by using the case of eBay, which finally

improve the development of e-commerce. The next section will describe the four risks mentioned

above, including definitions and solutions. The third section will go through the case of eBay,

discussing the measures undertaken by it, comparing them to get the most vital one. The last

section will draw conclusions about the problem.

Risks Facing Internet Shoppers and Corresponding Solutions

As mentioned above, internet shopping is growing rapidly because of its strength in faster

shopping, wider selection and lower price. Nonetheless, some risks which represent a fear of loss

in a particular transaction are still perceived by consumers, which cools down people's desire to

purchase online so as to impede the development of e-commerce. Brooker et al. have identified

six types of perceived risk: financial, psychological, product performance, social, physical and

time/convenience loss (Brooker, 1984; Jacoby and Kaplan, 1972; Peter and Tarpey, 1975; Garner,
1986; Mitchell, 1992; Schiffman and Kanuk, 1994). This paper will investigate four out of these

six types of risk-financial, psychological, product performance and time/convenience loss that

were ranked as most prevalent among Internet shoppers (GVU's 10th WWW User Surveys,

1998).

In general, trust is the key to solve the influence of perceived risks. Mayer et al. (1995: 726)

stated that, “If the level of trust surpasses the threshold of perceived risk, then the trustor will

engage in the risk-taking in relationship.” If trust is not in place, risk will expand, thus

transactions will fail (Jarvenpaa&Tractinsky, 1999; Luhmann, 1988). Josh Boyd (2002) declared

that trust is weakest at the very beginning, it accumulates with repeated interactions. The more

successful interactions happen, the higher trust will exist (Josh Boyd, 2002). Then the focus turns

out to be what actions can be taken corresponding to different risks in order to strengthen trust,

which will be illustrated below.

Financial Risk

Financial risk refers to the net loss of money to customers, for instance, the risk of misapplication

of credit card, which is a typical one. People feel anxious when they shop online, because they

believe credit card information is subject to be divulged via internet. The reluctance of providing

credit card information becomes one obstacle of internet shopping (Sandra M. Forsythe, Bo Shi,

2003). Moreover, during online transactions, people are always required to pay in advance before

receiving the goods. Thus, there rises a worry about no receipt of goods at the expense of money.

Recommended by Karim Jamal, Shyam Sunder and Rong-Ruey Duh, to protect shoppers' interest,

online trading platforms can make use of escrow program and insurance. The former makes

payments through a third party that keeps money until getting buyers' Authorization after they

receive goods and are satisfied with the quality. Otherwise, the party will return the money to
shoppers. The latter refers to a programme designed to compensate buyers with good reputation

for the loss of not receiving merchandise or service (Karim Jamal, Shyam Sunder and Rong-Ruey

Duh, 2002).

Product Performance Risk

Product performance risk indicates the loss of poor quality of products, resulting from

misjudgment as consumers are unable to collect sensuous information online (Sandra M.

Forsythe, Bo Shi, 2003).

According to Dr. Wolf (2007), the online trading platforms can firstly allocate sufficient

resources into the inspection of product quality, including human resources and system

investments, fight bad listings and sellers. Then it can educate users and create awareness on fake

and poor quality products. Finally, keep a close cooperation with law enforcement.

Solutions to Financial Risk

Considering consumers' worry of misuse of credit card information, eBay Inc. acquired Paypal, a

global leader in online payment solutions, in October 2002, which uses the most exceptional

exclusive fraud prevention systems, enabling any individual or business with an email address to

securely, easily and quickly send and receive payments online. When using Paypal, the credit

card information is kept in its server, thus preventing sellers from knowing that information. On

the other hand, the payment process completes immediately as the money transfers directly to the

seller's account. Then, customer can track the progress of the payment by My eBay or Paypal

account. Additionally, Paypal also provide Buyer Protection in case of non-receipt of item or

dramatical difference from seller's description. This programme covers eligible transactions for
up to the full purchase price plus original shipping charges. In order to use Paypal, consumers are

required to bind the eBay and Paypal account together and confirm the address with it.

Solutions to Psychological Risk

As the bad emotion of this risk arises from the disclosure of personal information, keeping this

information private plays an essential role in the process to solve the problem. Stated by eBay,

they treasure the data as valuable assets, so store them on their servers located in America by

using variety of methods (password, encryption, physical security, etc.) to prevent unlawful

entrance and exposure, unauthorized disclosure to third party for marketing purpose as well. They

also make use of Cookies, most of which are session cookies that can disappear by itself

immediately after logging out from eBay or exiting from the web pages, to lessen the times of

inputting passwords, thus enforcing trust and safety. Another guarantee of eBay is that they

forbid spreading spam or spyware through their communication tools by automatic scan and

manual filter.
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Project Objectives

General Objectives
The Objectives of the project is to provide a fully functional and a friendly user interface website

to be used by the company and by the customers in an online transaction and to pace with the

technology today.

Specific Objectives

 To design Online Ordering System.

 To design and develop a system that will surely satisfied the customer service.

 To improve the communication between the client and the server and minimizing the

time of ordering.

 To have a secured database file of the order

 To have online website for customer knowledge

 To develop a database for the order

Scope of the Study

The Scope of this project is to develop and design a system which can improve their business in

performing their daily tasks, improving efficiency, and helping them to be more productive. This

project will provide a solution through which they can easily manage, handle and generate all

required information in their respective format when needed. It will help them to manage order

details, financial data, and historical data and also in producing documents of different formats

for different customers. This solution will help their business in reducing effort spend on

managing orders. It will also provide them opportunity to explore possibility of generating

documents, managing financial details and analyzing historical data with use of digitalized

solution.

Limitation

This system can generate graphical view of the summary sales. It can generate sales transaction

report. The system has a database that will file all the total orders in every transaction. It is

accessible in any web browser. It displays record every order is purchased. This website is an

Online Shop only for Zion’s Olshoppee only. If you register to this website, it will grant you the

access to search for the items you’re looking for, but you cannot post in it. You can rate the

items individually. This Online shop don’t accept payment through credit cards.
Project Significance

Our proposed system is designed to provide an easy access of customers in getting their orders.

This study is important aim in improving the use of computer system in the society and a

motivation to its employees. This study will also be valuable to the owner and employees in

strategic management when they employ effective management to their business. This research

is also a step forward in aggressive business and can considered as an advantage since less

business uses a computer based system. )

For the Management of Zion’s OlShoppee

This system will inform the owner about the current performance of their business. The

system can help the owner in updating the sales in every daily transaction and stocks of every

item
Cost and Benefits Analysis

Benefits Cost

Computer Set P17,000.00

Internet connection P2,600.00/Monthly

Electric bill P2,800.00/Monthly

Transportation P40.00
Benefits

The amount of time that can be saved by a business is, perhaps, the biggest benefit of using a

computerized inventory system. A great example of this benefit is the retail industry. Depending

on the size of the establishment and how many different products sold, this can be a daunting

and time consuming task. If that same store, however, used of computerized sales and inventory,

the master inventory list would be updated electronically each time a sale is made.

Technical Feasibility

To minimize the time the system will need to do the assigned work load by track well the source

documents and reports required for management control.

Operational Feasibility

To determine which machine’s characteristics best fit the over-all needs of the client, and how

the proposed system’s operational capabilities compare with the present system.

Economic Feasibility

To determine what the cost elements will be, before the company assumes the financial burden

of a computer.
Project Benefits

Tangible Benefits

• Increased Revenue

• Resource Cost Savings

• Hardware Cost savings

• Software Costs savings

• Productivity Gain

• Process Improvements

Intangible Benefits

• Enhanced User Experienced

• Increased Customer Satisfaction

• Increased Compliance

• Brand Equity
 Figure 1.0 Fishbone Diagram

System analyst recommendation

Developers examine their current system and resolved that the “Sales and Ordering System” can

lessen the time that they consume in writing the order of the customer. In our proposed system,

the cashier can select from the displayed menu automatically add the item in the total amount.

The system can record all the transaction in one day and can view it by weekly and monthly.

The proposed system can compute the data more accurate than the manual system. So we

suggest developing a system that is needed to your business. The proposed system has the

feature that can assist you to the better improvement of your business and accomplish a goal of

providing good service to its customer

A. Human Error

i. Data Inconsistency occurs between files when similar data is kept in different formats in

two different files, or when matching of data must be done between files. As a result of the data

inconsistency, these files duplicate some datacompromising data integrity

Solution: by using keys to identify objects that are versions of each other. Key here means an

attribute or a set of attributes to decide objects referring to the same object in the real world

ii. Data Redundancy is a condition created within a database or data storage technology in

which the same piece of data is held in two separate places. This can mean two different fields

within a single database, or two different spots in multiple software environments or platforms.

Solution:

1st Normal Form: Avoid Storing Similar Data in Multiple Table Fields.

 Eliminate repeating groups in individual tables.

 Create a separate table for each set of related data.

 Identify each set of related data with a primary key.

2nd Normal Form: Records should be Dependent, Only, upon a table’s Primary

key(s)

 Create separate tables for sets of values that apply to multiple records.

 Relate these tables with a foreign key.

3rd Normal Form: Record Fields should be Part of the Record’s key

 Eliminate fields that do not depend on the key.

B. Cost

i. Computerized system nowadays will cost high as of now. Online shops are so in, so the seller

needs Computer device and a system to organize his/her products. The costing is listed above.

Solution: We are the one who will give the system to the owner free. It’ll help a lot.

C. Order

i. The problem in listing the orders correctly is right, even by alphabetical or time purchased.

The main problem here is the way every customer is order their items.

Solution: This system can generate online stock and the system will organize the orders by the

time it is placed online.

D. Time

i. Inventory counting systems can be periodic or perpetual. Under a Periodic Inventory system,

a physical count of items in inventory is made at periodic intervals (e.g., weekly, monthly) in

order to decide how much to order for each item. This system allows placing orders for many

items at the same time. However, there is a lack of control between reviews and there is a need

to protect against shortage between review periods by carrying extra stock.

 CHAPTER 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the materials used such as books, magazines, journals, internet and

other thesis writing to support the relevance of the presented study.

Related Literature

Foreign Literature

The extension of technology that integrates the electronic media in the buying and the

selling process is known as the Ecommerce. Elton (2014) mentioned that the ecommerce website

has deflated the dissimilarity of the world.

Marketing is an important organizational function in today's age. It is the one path that a

firm follows to create and deliver value to its customer and itself. The internet has created a vast

array of opportunities to deliver this value.

According to Brigita Go (2014), running an online business is much better than opening a

store. Selling online is indeed one of the great ways to make profits online. In fact, it is also a

great way to widen your target market and grow your business fast as well. Carolyn Anderson

(2014) stated that "by putting your business online, you are also widening your reach worldwide".

It is important to check out some online selling tips that may help make selling successful.

As more and more business take the ecommerce journey to charm customers, it is

enhancing more and more necessary to build effective ecommerce marketing ideas. According to

Sunny (2014) the primary reasons for marketing your ecommerce business online is to remain

fasten.
 Ian Ross Hollander (2014) stated that there are three online marketing trends every

successful entrepreneur must adopt: communities are critical, dynamic browsing environments

and control what you create.

According to Harris (2014) the online medium offers a big platform to promote your

business as compared to other medium available. Your products and services will reach to a large

number of potential buyers only if you choose the right marketing medium for your business.

Today online reservation system is even accessible to consumers through Internet

Gateways and it allows the users to book hotel rooms, rent cars as well as book online airline

tickets, which is definitely a more convenient way of making your travel plans. Andrew

mentioned that, online reservation systems are the future of the self-catering holiday provider as

more and more people request online or as a minimum live availability.

Related Studies

Foreign Studies

That is according to the 2015 Pitney Bowes Online Shopping study. High shipping costs (64%)

were ranked as the biggest barrier in the survey, followed by additional fees owed at time of

delivery (48%) and product delivery taking too long (39%).

Product returns are also a major concern, as 33% of global shoppers cited online return policies

and processes as deterrents.

Another barrier is localization, with 30% of global online shoppers saying they would be

discouraged from completing a purchase with merchants who do not offer their preferred form of
payment. Additional barriers include not being able to read a product description because it is in a

foreign language (29%), merchants not accepting credit cards (27%) and when pricing is not in a

country’s local currency (25%).

The study also found that search engines still lead in finding products, and that online

marketplaces and retailers’ sites are the top choices for buying online. Sixty-two percent of online

shoppers are using search engines as the preferred method to find products. When international

consumers were asked what types of online sites they would consider purchasing from, 66%

chose online marketplaces, while 62% selected retailers’ websites.

In other findings:

• Nearly a quarter of consumers said they make the most online purchases on mobile devices –

including mobile/smart phones, tablets or other devices – or a mix of devices.

• Online shoppers in the U.K. (37%), India (36%) and China (34%), and the U.S. (29%) had the

highest rates for using a mobile device, or mix of devices. Thirty-three percent of millennials

(ages 18 to 34) are using mobile devices, or a mix of devices, compared to 24% of overall

consumers in the study.

• The U.S. (71%), U.K. (44%) and Germany (39%) continue to be the most desirable e-

destinations for consumers to purchase goods online outside their own country.

• A third of global online shoppers have purchased products online from retailers in other

countries. Australians continue to be the most likely to buy products online from retailers outside

their own country (63% in 2015 and 2014 studies) followed by Canada (48% in 2015 versus 54%

in 2014) and Russia (49% in 2015 versus 54%).

• Price is the top reason (61%) shoppers have purchased or would consider purchasing a product

from an online retailer outside of their own country, followed by availability (40%), quality and

better selection (both 30%). Product authenticity was highest in India, (36%), China and South

Korea (both 30%) and Russia (22%).

2015 Pitney Bowes Global Online Shopping Study set out to provide meaningful data to

merchants’ most pressing questions about their customers. Our second annual study surveyed

around 12,000 consumers in 12 countries – Australia, Brazil, Canada, China, France, Germany,

India, Japan, South Korea, Russia, the United Kingdom and the United States – to provide

retailers validated information on the buying habits and preferences of online shoppers around the

world.

Local Studies

The “Visa Consumer Payments Attitude Study 2015” identified trends in payments behavior

among consumers in six Southeast Asian markets, including the Philippines.

The study showed that there are more active online shoppers nowadays compared to a year ago.

The increasing engagement in online shopping, coupled with payment technologies available in

the market, ensure robust growth and steady development of local e-commerce businesses.

The Philippines has an Internet penetration rate of 39 percent; and e-commerce engagement is on

the rise compared to countries with similar Internet penetration. And despite the low proportion

of active cardholders who shop online, a surge in transactions made through smartphones

indicates consumers are going mobile first.

“E-commerce is becoming the ‘new normal’ in Southeast Asia, as consumers in the region take to

online shopping because of the variety of goods and services available, competitive pricing and

improved delivery options make the whole process much easier. Mobile devices such as

smartphones have also brought online shopping to the palm of our hands,” said Stuart Tomlinson,

Visa country manager for the Philippines and Guam.

Filipinos’ top reasons for doing their shopping online are convenience (52 percent), door-to-door

delivery (30 percent), affordability (10 percent), and accessibility (8 percent).

Products and services that were predominantly bought online include software, apps and app-

related content (68 percent), travel services (67 percent), events and concerts (55 percent), and

digital content like games, music, and videos (53 percent).

Other products and services that are increasingly being bought online are financial services (41

percent), food delivery (28 percent), and movie tickets (27 percent).

The percentage of respondents who use desktop computers and laptops (65 percent) as their

primary means for online shopping is seen to plateau in 2016.

Mobile devices such as tablets and particularly smartphones have seen usage increase (35

percent). Six out of ten Generation Y, those between 18 to 35 years of age, use mobile devices to

shop the most (59 percent).

Strong intention to shop online using smartphones is also set to rise. More Filipinos expressed

interest in m-commerce (mobile commerce), using of smartphones in online shopping, from 19

percent in 2015 to 22 percent in 2016.

The top five categories for mobile purchases are ground transportation (73 percent), software,

apps and app-related services (44 percent), digital content (44 percent), groceries (38 percent),

and event and concerts (33 percent).

Strong user experience remains vital, according to the report. Two in five online (43 percent)

shoppers clicked “buy” on computer or mobile devices because filling in information, such as

billing and shipping details, during check out was a breeze.

The outlook is optimistic for retailers: Respondents said they are more likely to shop if the

retailer has a mobile optimized site (68 percent), and eight out of ten (84 percent) said they would

download and use their favorite physical store’s mobile app if there is one.

The growing preference for mobile devices in online shopping is not only prevalent in the

Philippines. A separate Visa study in 2015 revealed that consumers in 13 Asia Pacific markets

reported an average 22 percent increase from 2014 in shopping using mobile devices (mobile

phones and tablets) over desktop computers.

“Though e-commerce in the Philippines is still in its nascent stage, it is growing rapidly.

Categories such as groceries, food delivery and movie and concert tickets will become key

growth drivers as they have low online share but high frequency of purchase. The high proportion

of transactions made via smartphones also presents a strong opportunity for growth,” said

Tomlinson.
 CHAPTER 3

3.0 Research Design & Methodology

3.1 Conceptual Framework

Input Process Output

1. Images of items to be sold.
2. Database of items.
3. Log in and Log out
database
1. The user will choose from Show the list of orders the
8 different categories of user/buyer put in his/her
items on sale. shopping cart
2. Log in or Register to the
website for the Seller has Show the user’s bill
the information of the user. depending on the payment
method they choose.
3. Choose items the user
wants to buy.

4. Place orders on the cart.

5. Choose the payment

method the user refer (Meet
up or Online Shipping)

Evaluate

Figure 1: Conceptual framework of Zion’s Olshoppee

Figure 1 input consisted of data’s to be put in the homepage. The procedure how to order
properly online through the Zion’s Olshoppee homepage. The output will show the user/buyer’s
list of orders and bill of his/her items.
3.2 Project Management

Determine
Needs

Build Prototype

Evaluate
Prototype

[Finished] [Continue]

Figure 2: Agile Prototyping model

Figure 2 indicates User Interface (UI) prototyping is an iterative analysis strategy in which users
actively involved in the mocking-up of the UI for a system. UI prototypes have few purposes:

A. Determine Needs- In the phase, the proponents listed the needed items and data which the
homepage is going to fulfill.
B. Build Prototype - The Build Prototype happened in this stage. This part the proponents
designs the webpage including the backgrounds, layouts and images of the items. The
coding process begins. In this stage the idea of the Homepage is physically designed
C. Evaluate Prototype – this is part the proponents check if there are any imperfections or
bug in the designed software and if the software created according to the plan.

3.3 Project Design

3.3.1 Use Case Diagram

Open Homepage

Choose Category

Log in/ Register

Server

User

Payment Method

Figure 3: Use Case Diagram of Zion’s Olshoppee

Figure3. The Use-Case Diagram shows how the user interacts with the Homepage. The
outline demonstrates the realistic delineation of the interactions among the components of
the Homepage. The Use-Case Diagram beneath likewise contains all framework activities
that have implication to the users. First the user choose a category, then the user
register/Log in to the Homepage, and then place the order he/she wants to buy. Next the
server receives the data of the items the user placed on the cart, then the user choose from
the payment method he refer.

USER APPLICATION
 Start
Choosing
Server
items

Open Home Log

page in/Register Men’s Apparel Women’s Apparel

Gadgets Health and Beauty

Home and Living Kids

Choose
Category Hobbies and Sports Accessories

Buy Order
yes
Payment Display Output
no

End

3.3.2 Activity Diagram

Figure 4: Activity Diagram of Zion’s Olshoppee

Figure 4 show the Activity Diagram of how to order properly. In the user interface the user will
Open the Home page then choose categories of items he/she wants to buy, then he can log in or
register to make an order to the website. Then the application will receive the database and
displays the items he/she chose. If the user wants to buy it he will straight up to the payment page
or he/she can cancels everything by closing the website .

3.3.3 Context Diagram

 Zion’s Olshoppe

Opens
Home page Send Data
User Server
View output Receive
Data

Figure 5: Context Diagram of Zion’s Olshoppee

Figure 5 shows the system as a whole viewed as one process of the homepage of Zion’s
Olshoppee using web browser.

3.3.5 Data Flow Diagram: Child Diagram

1

Choose Category
User
Payment

Choose item

Log-in/Register

3.1
Sending Data Men’s 3Apparel

3
3
Server 3.2

Women’s
Apparel
Categories

View Order 3.3

3.6
Gadgets
Home and Living

3.4
3.7 Health and
Kids Beauty

3.5
3
3.8 Accessories
Hobbies and
Sports

Figure 7: Child Diagram of Zion’s Olshoppee

 Figure 7 above shows the child diagram of Zion’s Olshoppe’s homepage. The user will
choose from the categories and he will choose what payment method he wants. Is a form of
electronic commerce which allows consumers to directly buy goods or seevices from a seller over
the internet using web browser. Online Shopping, the act of purchasing product or services over
internet.Online shopping has grown popularity over the years,mainly because people find it
convenient and easy to bargain shop from the comfort of their home or office. But it has
advantage and dis-advantage. Dis-advantage is Fraud and some online shopping are lack of close
examination product online shopping, Lack of touch and significant discount delaye divery.
Advantage is you can buy anytime,anywhre in the world. you can purchase or buying items such
as clothes,gadgets,furniture and shoes/accessories and more.