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CHAPTER 1

The Problem and Its Background

Introduction

Electronic commerce, commonly known as E-commerce or

simply e-commerce, is a means of commercial trading of

products and/or services thru the use of Internet and

Internet community. E-commerce draws on technologies such

as in mobile applications, electronic funds transfer, and

internet marketing, online transaction processing,

electronic data interchange (EDI), inventory management

systems, and automated data collection systems. E-commerce

uses the World Wide Web in most of the transaction's life-

cycle, although it may encompass a wider range of

technologies such as e-mail, mobile devices, social media

networks, and telephones as well.

E-commerce Website allows businesses to sell their

products or services to the online customers technically

all over the world. These websites smash the barrier of

geographical location of business which also gives enormous

spectrum of viewers and therefore possibility of better

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overall sales. E-commerce is conducted using a variety of

applications, such as e-mail, online catalogs and shopping

carts, EDI, the File Transfer Protocol, web services, and

mobile devices. This also includes business-to-business

activities and outreach, such as using email for solicited

advertisements, to consumers and other business prospects

as well as sending out e-newsletters to subscribers and SMS

texts to mobile devices. More companies now try to entice

consumers directly online, using tools such as digital

coupons, social media marketing and targeted

advertisements. The benefits of e-commerce include its

around-the-clock availability, the speed of access, the

wide availability of goods and services for the consumers,

accessibility and international reach. Its perceived

downsides include sometimes limited customer service,

consumers not being able to see or touch a product prior to

purchase and the wait time for product shipping.

In conclusion, Technology has been always one of the

biggest factors on the success of e-commerce as it is the

primary component of e-business especially now in this

modern world. The proponents seen this opportunity for the

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Gawad-Kalinga community to maximize and widen their market

range. This are also the reasons why the proponents want to

introduce e-commerce to Gawad-Kalinga, to help its

community prosper for a better life.

Background of the Study

Reliability has a lot of definition and you can’t just

sum it in one specific category. It has so many faces. The

top online retailer Lazada-PH defines what it is to be a

reliable website to its consumers. It offers a very easy

and convenient online shopping experience with a lot of

product options that a lot of consumers can choose from

ranging from books, movies, music, men’s clothing, women’s

clothing, accessories, toys and babies, gadgets like smart

phones and tablets, consumer electronics like MP3 players,

gaming consoles and headsets, home appliances both big and

small, computers, laptops, skin care products, health

supplements, home improvement items grooming accessories,

men’s shoes, women’s shoes, designer perfumes and a lot of

other things that one will normally find in a traditional

shopping mall of course with the convenience of not leaving

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your home to shop. The company also offers a couple of

payment options that are simplified to make the Lazada

online shopping experience as easy and as convenient and

fun as possible. The two payment options are the cash on

delivery payment method and of course the other one is the

staple and default payment method for online purchases; the

credit card. The main thing about the cash on delivery

payment method is the simplicity of doing business. The

online shopper makes the order, have it sent to the address

where he prefers it to be delivered, wait for it to arrive

and pay for it once it is there. It’s easy as one two

three. This payment method is perfect for those people who

does not have a credit card as well as for those people who

has one but is not amenable to putting their credit card

information online. This payment method has a very huge

impact to the way a lot of people does their shopping in

such a way that they became more open to the idea of online

shopping unlike before when online shopping is very

limiting because of the limited payment method that they

offer. Lazada captured a much broader audience when they

came up with this payment method. As with the credit card

payment method, I would say that they have the most secured
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online payment method there is which addresses the concerns

of people about online security. The website is certified

and checked by PCI-DSS annually to make sure that all

transactions are safe along with the credit card

information of the consumers. PCI-DSS is Payment Card

Industry Data Security Standard, an online security council

that established security standards for online shopping

companies and e-commerce businesses to follow. IT was put

together by the top 5 financial institutions in the world

namely Visa, MasterCard, American Express, JCB and

Discover. That shows how safe and secured Lazada-Ph is.

When it comes to the other factors that affects reliability

such as delivery timeframes, availability of products and

reliability of customer support, it is very accurate to say

that the company easily dominates those criteria. They

define reliability down to the core. Lazada is indeed

synonymous and is the definition of reliability.

Theoretical Framework

System Theory, first proposed by Ludwig von

Bertalanffy in 1945 has been used for decades as an

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analytical approach to understand how complex physical,

biological, economic and social systems operate. A system

may be, typically defined as a set of several independent

and regularly interacting or interrelating units or

subsystems that work together to accomplish a set of pre-

determined objectives. Thus, system theory provides a

framework for identifying the subject entity, creating a

formalized model of the entity and thereby enabling the

ability to study the entity by which groups of elements and

their properties may be studied jointly in order to

understand results. Business organizations and their

behavior have often been investigated using what is termed

as ‘system’s approach’. The basic advantage of the system

approach is that it encompasses many concepts of system

theory such as inputs, outputs, boundaries, feedback and

control, etc. that are useful in understanding business

situations. An Information System (IS) is a typical example

of a system that conforms to the system theory. The IS as a

sub system that works with other sub systems of the

business system that acquires the resources, supports

business processes and produces the outcomes that represent

business performance (Lomerson et al., 2007). An e-

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commerce, being a sub system of IS, uses appropriate

information practices in order to achieve customer

acquisition, customer loyalty, cost savings channel

optimization and value capture (Epstein, 2004). Since, the

transactions in e-commerce are computer mediated, they are

subject to risks arising out of system-dependent

uncertainty. The system dependent uncertainty may arise

either from the open technological infrastructures or from

the transaction-specific characteristics of the trading

parties (Grabner-Krauter S., 2003). Thus, system theory may

be applied to understand the issue of trust in e-commerce.

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Conceptual Framework

The research paradigm showed the scope and direction

of the study.

INPUT PROCESS OUTPUT

This study
aims to develop a
proposed system
“E-Commerce for
Gawad Kalinga”  Gathering
It sought Data
answers to the  Unstructured
following Interview
questions:  Analyzing
1. What are and “E-COMMERCE
the features to Interpreting FOR GAWAD
be considered in of Gathered KALINGA”
the proposed Data
study entitled  Developing
“E-Commerce for of the
Gawad Kalinga” in System
terms of:
a. Screen
Layout; and
b. System
Capability?

FEEDBACK
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Figure 1. Input, Process, Output for “E-COMMERCE FOR GAWAD

KALINGA”

The Input shows the features to be considered in the

development of the “E-Commerce for Gawad Kalinga” in terms

of Screen Layout and System Capability.

The Process shows the need of gathering the data,

unstructured interview, analyzing and interpreting of

gathered data and developing of the system.

The Output shows the result of the “E-Commerce for

Gawad Kalinga”.

Statement of the Problem

This Study aims to develop a proposed system “E-

Commerce for Gawad Kalinga”

It sought answers to the following questions:

1. What are the features to be considered in the proposed

study entitled “E-Commerce for Gawad Kalinga” in terms of:

a. Screen Layout; and

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b. System Capability?

2. How does the respondents assess the proposed system

entitled “E-Commerce for Gawad Kalinga” in terms of

a. Screen Design of the software;

b. Effectiveness of the system; and

c. Functionality of the system?

Assumptions

This study envisioned to design and develops a system

that will help Gawad Kalinga community to electronically

market their products via online and via mobile

application. The study seeks to lighten-up the traditional

way of marketing products (Farm-to-Market) thru the use of

a user-friendly online system.

Scope and Limitations

E-Commerce for Gawad Kalinga is a software application

that will act as a buy & sell platform over the internet.

The system inclusions are online, accessible and good

structure with a mobile application.

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This study limits only for Gawad Kalinga as the direct

seller and the product supplier in which is administrated

by a certain person. Costumers will be the online community

nearest to the area.

Significance of the Study

This study was beneficial to the following:

To the Users: This study will help Gawad Kalinga to

introduce their products more easily and conveniently.

To the Future Researchers: This study will help to

gain knowledge for them to familiarize themselves in making

such system or program.

Definition of Terms

Cash-on-Delivery The system of paying of goods when they

are delivered.

Gawad Kalinga Is a Philippine poverty alleviation and

nation building movement known officially as “The Gawad

Kalinga Community Development Foundation.”

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Splash Screen Is a graphical control element consisting of

a window containing an image, a logo, and a current version

of the software.

E-Commerce Commercial transactions conducted electronically

via Internet.