THE IMPACT OF E-COMMERCE IN COLOMBIA

THE IMPACT OF E-COMMERCE IN COLOMBIA

Leidy Tatiana Ayala Garcés1

Abstract
The main objective is to present the impact that e-commerce has had in Colombia where a
quantitative methodology based on secondary sources such as databases and journalistic
documents was implemented, where we can highlight how e-commerce has had a great
growth in recent years, just as this has influenced the development of new business
opportunities with this type of commerce, however there is a culture in which they are not
accustomed and factors with the lack of security in means of payment or logistics systems do
not allow the development to be greater compared to other countries in Latin America.

1
Leidy Tatiana Ayala Garcés. Student of inernational Business Management, VIII semester, Pontifical
Bolivarian University, 2019
 THE IMPACT OF E-COMMERCE IN COLOMBIA

Introduction

This article seeks to publicize how the emergence of e-commerce has been a major influence
on Colombian trade in recent years. We will initially talk about e-commerce in comparison
with the traditional channel, in addition to which are the socio-cultural aspects that have
influenced this trade, as well as the importance of this new type of trade and what are the
advantages it brings with it for the development of new opportunities in Colombian
companies. Finally, we will describe the legal rules that control and regulate this type of trade
and the laws that and the importance of these changes for Colombia.

1. Research Problem

What is the impact of e-commerce at the Colombian level?

2. Objectives
3. General Objective

Analyze the real impact of e-commerce within the Colombian market.

2. Specific Objectives

1. Determine the importance of electronic commerce in Colombian society.

2. Analyze what has been the impact of e-commerce at the economic, commercial,
and consumer levels.
3. Describe the implementing e-commerce in Colombian companies.
 THE IMPACT OF E-COMMERCE IN COLOMBIA

1. THE IMPORTANCE OF ELECTRONIC COMMERCE IN COLOMBIAN

SOCIETY.

1.1 Traditional commerce vs. e-commerce

Technological advances and the existence of new scenarios regarding the

needs and consumption habits of society have led to the reinvestment of today's trade
models. The mentality of consumers has changed, and with it they have become more
demanding, so they are always looking for much more personalized products. This is
why models such as the traditional have been changing to more global opportunities
and more in line with the new digital
era.

That is why if we compare these

two models we can recognize that in
traditional trade is characterized by the
participation of a large number of
intermediaries that make it possible for
goods and services to reach from the
producer to the final consumer, so that
before the good reaches its final
destination, it goes through various
stages where often ends up being
fractioned and losing quality.
(Garibaldi 2001)

Source: Comercio electrónico: concretos y reflexiones básicas.

 THE IMPACT OF E-COMMERCE IN COLOMBIA

On the other hand, digitizable goods constitute the extreme of electronic

commerce since the producer can deliver his product directly to the consumer
without any intermediation. Likewise, the producer and consumer can establish
open communication channels flowing information in both directions. (Garibaldi
2001)

Source: Comercio electrónico: concretos y reflexiones básicas.

Even so, electronic commerce is becoming increasingly important for the

growth of the country's economy, which is why according to the report of the E-
Commerce Industry of BlackSip (2017), "digital channels are gaining strength as a
complement to traditional channels, so the concept of omnicanal strategies begins to
be more and more common, involving traditional channels and digital channels in
order to enhance growth in sales of brands and customer experience".

1.2 Growth of e-commerce in Colombian.

Although e-commerce in Colombia is not something old, if we compare it with

other countries, it is necessary to know its history and see the growth that e-commerce
has had over the years, so it will be described in 3 phases:

 1995-2000: innovation
 THE IMPACT OF E-COMMERCE IN COLOMBIA

The early years of E-Commerce were a period of explosive growth and

extraordinary innovation that began in 1995 with the use of the Web to
promote products and services.
 2001-2006: consolidation
The period of explosive growth ends in March 2000, when market
assessments for ".com" companies peaked and began to collapse.
 2006-present: re-invention
In 2006 e-Commerce enters a period of redefinition with the emergence of
social networks and user-generated content sites which have attracted huge
audiences.

At present, the internet is part of the daily life of Colombians, eight out of ten
people in the country claim to surf the web constantly. So the growth of e-commerce
is in very good position, according to the report of BlackSip (2017) this industry grew
64% in the last three years, but even with the high demand for Internet use has not yet
created a culture in online shopping help the development of e-commerce in the
country.

1.2.1 Socio-cultural aspects of e-commerce

Understanding the profile and social characteristics of the digital consumer is

essential for many brands and companies, as the growth of online shopping makes
companies want to expand their digital presence and achieve greater results.

Today, the increase in purchasing power and the ease with which people can
access technology in Latin America is taking regional commerce to another level.
Colombia is no exception, giving way to the growth and development of e-commerce
in national and international markets.

The digital consumer in Colombia contains clear features that characterize it

and meet the minimum requirements for technological access, which stand out when
 THE IMPACT OF E-COMMERCE IN COLOMBIA

acquiring goods and services online, with levels of confidence and appropriation of
the e-commerce of the Colombian market.

According to BlackSip (2017), users' motives for buying through digital

channels derive from the exclusive characteristics of the online shopping experience.
Among the main motivations are the convenience and ease of acquiring products,
avoiding travel and waiting, fascination with the authenticity of the product and
privacy and security in their purchase. This is why it is imperative to deliver a good
quality of service to consumers throughout their entire shopping experience, from
start to finish. However, promotions remain among the aspects valued by consumers
when shopping on websites, along with receiving a very good customer service.

Similarly, attorney Victor Gomez (2004) states that "The consumer of the
network is an individual who is widely familiar with technological developments and
the use of electronic means of payment, the most frequent the credit card that is a very
practical means when making electronic purchases, that is why he feels so
comfortable and safe using electronic commerce through the network to satisfy their
desires and needs.

2. THE IMPACT OF E-COMMERCE AT THE ECONOMIC, COMMERCIAL,

AND CONSUMER LEVELS.

2.1 E-commerce in the Colombian economy

Technology has opened a variety of doors for all sectors of the Colombian
economy and trade has been one of the main beneficiaries. Due to the great offer,
businesses increasingly enter the digital world to improve their sales regardless of the
fact that Colombians are lagging behind the digital culture, even so, are increasingly
willing to make their purchases of products and services on the web.
 THE IMPACT OF E-COMMERCE IN COLOMBIA

Today in Colombian society more and more companies are migrating more
and more towards the digital, being such an important segment for the economy, their
contribution to digital commerce is increasingly relevant. According to an article in
the newspaper El Colombiano (2019) in the country Internet purchases have grown
more than three times since 2013, when they reached 5,390 million dollars, or an
average of 15.4 billion pesos. In 2017 (the most recent data on record) increased to
reach $17,850 billion dollars (51.1 billion pesos), according to figures from the
Chamber of Electronic Commerce. Similarly, the newspaper states that in Colombia
there are more than 70 million annual visits in online sales pages, of which 50% is
focused on the Colombian capital, with more commercialized products such as
multimedia items, fun and home furniture, followed by fashion garments, footwear,
accessories and beauty.

In addition, according to the Republica newspaper, digital transactions and

their share in GDP, represented almost 8.5% in 2018 of the total according to
projections by Euromonitor International. So it is a great opportunity to explore and
develop this type of trade in Colombia.

Thanks to the new digital era has changed the way of doing business,
communicating with the customer, as well as eliminating the barrier of multi-
intermediaries. That is why electronic commerce has become a great opportunity for
the economy and many companies in the market to reduce costs, especially small
companies that want to enter and compete in a market in which more and more
participants fit.

2.2 Use of e-commerce in Colombia

According to the study of e-commerce consumption in Colombia carried out

by the e-commerce observatory (2019), an average of 98% of the population over 15
 THE IMPACT OF E-COMMERCE IN COLOMBIA

years of age uses the Internet, and almost 91% carry out e-commerce activities, so
that every 9 out of 10 people carry out these activities, however, only 19% have
carried out e-commerce actions, i.e. buying and selling online.

For consumers, convenience, ease and the possibility of buying without

moving is one of the important points that has made companies move to digital
platforms, as the use of this type of consumer has gained relevance as motivators of
purchase with respect to this type of channel.

According to the BlackSip report, young people between the age range of 15
to 35 years are the largest consumers and who give more use to digital platforms, the
report also states that this segmentation is the most important, since in a few years
will enter into active participation in this market, with a radically different way of
consuming.

The strategies to reach new audience segments must include the development
of web stores that are usable and accessible, that is to say, that are easy to use for any
person and that visualize well in any device. (BlackSip 2017)

2.3 Advantages of e-commerce

Colombia has many advantages in e-commerce over traditional commerce.

This offers many opportunities for retailers to have an additional sales channel, as
well as the possibility of opening new markets, promoting their goods or services,
expanding the possibilities of Colombian companies. In short, electronic commerce
is deduced from a competitive advantage and an opportunity for the country's
economy.

According to Marcos Pueyrredon in an interview for the newspaper Dinero,

Colombia today is the focus of e-commerce in Latin America and predicts the same
 THE IMPACT OF E-COMMERCE IN COLOMBIA

for the coming years. The benefits of e-commerce have generated an impact in certain
categories and which will be enhanced. Today the country is within the podium of
what is maturity in categories such as food, fashion, tourism, and this can be seen
reflected in success stories such as Jumbo that what is being done in Colombia is an
example, not only for the region, but for the world of how to solve the complex that
is the purchase of food and not food in a single experience.

The implementation of e-commerce in Colombia generates a great opportunity

as long as it remains at the forefront, constantly innovating so that the processes in
Colombia do not stop its development. (Puerto, 2019)

3. THE IMPLEMENTING E-COMMERCE IN COLOMBIAN COMPANIES.

3.1 Business models in e-commerce

Currently there are about 5 to 6 types of e-commerce models, but according to

the e-commerce observatory, there are 4 types of e-commerce business models in
Colombia which are described below:

 B2C (Business-to-Consumer): Companies dedicated exclusively to

electronic commerce or retail companies that have a physical presence that
sell their products or services to final consumers.
 B2B (Business-to-Business): Companies doing business among themselves,
in order to reach new customers, effectively serving new and existing
customers, achieving efficiencies in buying and better prices. This type of
business represents the major part of e-commerce. "From the perspective of
a small business, participation in B2B e-commerce may be a requirement for
participating in national or global value chains. (United Nations, 2015)
 THE IMPACT OF E-COMMERCE IN COLOMBIA

 B2G (Business-to-Government): Companies that sell to government

institutions. Example: Public procurement (jobs, tenders, etc.).
 C2C (Consumer-to-Consumer): Platform from which consumers buy and sell
to each other. This is the most modern version of e-commerce, where it offers
informal companies the possibility of entering this type of business.

In addition, the observatory describes that the e-commerce value chain is

composed of five (5) interrelated phases and one (1) cross-sectional phase
corresponding to the use of ICT, which support all activities in the value chain:
(Observatorio e-commerce, 2019)

o Online shopping
o Access to the shopping portal
o Payment management
o Delivery logistics
o After-sales

3.2 Success factors of e-commerce in Colombian companies.

According to the study 'Online Purchase Observatory, Colombia 2019',

conducted by the Colombian Chamber of Electronic Commerce (CCCE), one of the
main factors that determine the conduct of any transaction online is the convenience
provided by this channel and the ease of purchase for users. In addition to generating
confidence in the Colombian consumer when making purchases on online portals are:
the feeling of security in transactions and the variety in payment systems offered by
online merchants.

Other factors that help boost the growth of e-commerce in Colombian

companies are digital events such as Cyber Monday, HotSale, Cyber Week and Black
 THE IMPACT OF E-COMMERCE IN COLOMBIA

Friday, in addition to logistics and delivery services provided by these companies are
other factors that also drive e-commerce in Colombia (Blacksip, 2017).

Marcos Pueyrredon, president of the Latin American Institute of Electronic

Commerce, in his interview with the newspaper "El Portafolio" (2017), states that
"Macroeconomic factors today do not directly influence the growth of the e-
commerce business, but rather the access to new means of payment and the increase
in connectivity in Colombia, driven by government projects, are factors that have led
to the exponential growth of Internet businesses in the country. That is why Colombia
bets on the realization of events such as eCommerce Day in a continuous and
sustained manner over time, in pursuit of the incentive and development of e-
commerce as a driver of the local and regional economy.

3.3 Legal framework of e-commerce in Colombia

Due to the great development of e-commerce in Colombia, it currently has a

regulatory framework that allows the protection of the fundamental right to private
initiative and its free development in that trade.

According to the e-commerce observatory in Colombia, the constitutional framework

has a series of guarantees and limits to this type of commerce, which are shown
below:

 Article 15 of the Political Constitution: through which the fundamental

category is given to the right to personal and family privacy and to its good
name, also known as Habeas Data. (E-commerce Observatory, 2018)

 Article 20 of the Constitution: protects freedom of expression, which is one

of the main guarantees for eCommerce. (E-commerce Observatory, 2018)
 THE IMPACT OF E-COMMERCE IN COLOMBIA

 Article 333 of the Political Constitution: "Economic activity and private

initiative are free, within the limits of the common good. In order to exercise
them, no one may demand prior permits or requirements without the
authorization of the law. (E-commerce Observatory, 2018)

 The legal framework created Law 527 of 1999, known as the law of electronic
commerce, establishes the "principle of functional equivalence" between:
electronic signature and autograph, and between data messages and written
documents. Additional constitutes a series of rules for certification of digital
signatures and creates the Certification Entities. (E-commerce Observatory,
2018)

In addition to the laws governing electronic commerce in Colombia, there is

another law that provides consumer protection, where Law 1480 of 2011 provides
obligations to suppliers and retailers, located in Colombian territory, to offer their
goods and services through electronic means such as information (identification of
the supplier, characteristics of the good, means of payment available), duty to retain
information, security mechanisms, electronic mechanism for receiving requests,
suggestions and complaints, information on delivery of goods. (E-commerce
Observatory, 2018)

Conclusions

 The traditional commerce will be facing a great challenge when

competing with the wide online offer in the coming years, so it is necessary that
traditional companies, large and small businesses, focus on an integration with more
online and offline strategies, and manage to adapt and manage their logistics systems,
integrating a multichannel system, thus providing a better development to Colombian
commerce.
 THE IMPACT OF E-COMMERCE IN COLOMBIA

 An analysis of e-commerce in Colombia showed an impact on its

growth, which has been surprising contributing more and more to GDP reaching up
to 8.5% in 2018 being the highest in recent years within the country's domestic
product, with this encourages trade to join a new business opportunity or the
strengthening of organizations seeking more profitability and positioning in front of
the competition.

 Even with the growth that has had the electronic commerce in
Colombia, there are factors in which it does not allow a greater development of this,
if we compare it with other countries one is the lack of custom of the citizens with
respect to this medium, another is the culture that has the Colombians of "prefer to
see and touch before buying", and one of the most generates delay is the confidence
in the forms of payment (security), these three factors, is due to the tradition of the
Colombian population, which has to work so that it adapts to this new type of
commerce in growth in Colombia.

 Finally, regarding the rules that currently exist are sufficient to

guarantee rights and establish duties within the ecosystem of electronic commerce in
Colombia. However, it is important to consider that while e-commerce continues to
advance in the way it does today, it is important that this advance of equal measure
and does not maintain a static regulation.

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