Consumer Protection in E-Retailing in ASEAN

Huong Ha

• Editorial: Business Expert Press
• Año: 2021
• ISBN:
  9781953349613
• Categoría: Commerce
• Categoría: Marketing numérique

This book examines how consumers are protected on the online marketplace in the context of ASEAN countries.

While many sectors have been badly affected by the COVID-19 pandemic, e-retailing is one of the booming sectors during this period. Actually, the e-retailing sector was already booming even before the global pandemic. Although e-retailing offers many opportunities for businesses and consumers, there are several issues associated with e-consumer protection.

This book examines how consumers are protected on the online marketplace in the context of ASEAN countries.

Specifically, this project: (i) Discusses the six issues of e-consumer protection (e.g., information about transaction, product quality, privacy, security, redress, and jurisdiction); (ii) Examines the policy/governance approach adopted by different sectors to address the issues of e-consumer protection; and (iii) Proposes a multi-sector governance framework for e-consumer protection.

Three short case studies on Lazada in Singapore, Shopee in Vietnam, and Zalora in Malaysia are also included to illustrate how well-known e-retailers protect their e-customers.

Overall, this book is interdisciplinary, including research on consumer protection, governance, management, and policy/regulation. It provides sources of information and knowledge which focus on both theoretical and practical aspects of e-consumer protection in ASEAN countries. Also, the roles from different sectors are examined to produce comprehensive findings and analysis of the governance process.

CHAPTER 1

Introduction of E-Consumer Protection in E-Retailing in ASEAN

Introduction

This book investigates the issues associated with consumer protection in e-retailing (or e-consumer protection). It also examines the roles of e-retailers, government, industry, and consumer associations in the current policy framework for e-consumer protection, and cooperation among groups of stakeholders. In addition, this book proposes a multisector governance framework with e-consumers as one of the main sectors.

This book consists of four chapters excluding the introduction and the conclusion. An overview of each chapter is presented here. Chapter 2 examines six issues associated with e-consumer protection, such as (i) information disclosure, (ii) product quality, (iii) security, (iv) privacy, (v) redress, and (vi) jurisdiction. Chapter 3 discusses the current policy framework for e-consumer protection, highlighting the roles of the public sector (government or the state), the private sector (business or e-retailers), and civil society (the third sector or civil society organizations). Chapter 4 outlines the weaknesses of the current governance framework for protecting e-consumers and proposes a four-sector governance model to enhance e-consumer protection. Chapter 5 illustrates how e-retailers protect their e-consumers in the real life by examining three e-retailers, namely Lazada in Singapore, Shopee in Vietnam, and Zalora in Malaysia.

Specifically, this introduction chapter discusses various concepts pertaining to e-retailing and business transactions. It also explains the advantages and disadvantages of shopping online. Consumer rights and consumer protection are elaborated in the next section, followed by a brief explanation of governance and e-consumer protection.

E-Retailing

Concept of E-Retailing

The definition of e-retailing (electronic retailing) is important because it helps us decide which transactions are e-transactions. It can thus help us identify the distinctive features of e-retailing and traditional commerce. This, in turn, allows the comparison and contrast of the attributes of customer protection in both online and offline marketplaces. In practice, e-retailing, e-commerce, and e-business have been used interchangeably although there are differences among these modes of commerce.

The continuous and rapid evolution of e-retailing in the context of political, socioeconomic, and technological changes, consumer demand for new products (goods and services) and processes, changes in business practices in terms of customer–supplier relationship, payment mechanisms, and implementation of advanced technological applications creates difficulties in finding a comprehensive and common definition for e-retailing (Weill and Vitale 2001; Ha 2012, 2013, 2017). Several definitions are used by different organizations. For example, e-retailing is defined as:

consumer-facing e-commerce transaction … excludes online job search services, financial services and billing services. (Dobbs et al. 2013, p. 1)

Weill and Vitale (2001) propose particular elements of an e-business, including

marketing, buying, selling, delivering, servicing, and paying for products, services, and information. (p. 5)

The OECD (2002) offers a broader definition of e-commerce that is also applicable to e-retailing:

the sale or purchase of goods and services, whether between businesses and households, individuals, governments, or other public and private organizations, conducted over the computer-mediated networks. The goods and services are ordered over those networks, but the payment and the ultimate deliver of the good and service may be conducted on or off-line. (p. 89)

The OECD definition is more comprehensive than other definitions in that it clearly includes the mode of conduct for transactions (over computer-mediated networks) and the modes of payment and delivery of goods and services (online or offline). Goods refers to any tangible products, whereas services include “messaging and a variety of services” which enable the searching, dissemination, and delivery of information as well as “negotiation, transaction, and settlement” (Rahman 2000, p. 5).

From the consumers’ perspective, business transactions include three main stages, namely (i) pretransaction (e.g., collection of information about goods and services, prices, features/specifications, terms and conditions, business name, address and contact, sales and promotion, information from other e-retailers for comparison); (ii) transaction (e.g., the order, negotiation, and agreement on the terms and conditions, transacted prices, the mode of payment and delivery), and (iii) posttransaction (e.g., the receipt of goods and services, the requests for a refund, an exchange, or after-sales services, such as guarantee, warranty, maintenance, repair, and sending complaints or compliments to e-retailers) (Fergusson 2000; Ha 2017; Ha and Coghill 2008).

In traditional commerce, all three stages are conducted in a physical marketplace. In e-retailing, the first two stages are usually done online, whereas the delivery in the third stage can be executed both online and offline, depending on the nature of goods/services purchased. Hence, according to the OECD (2002) definition, the basic difference between online and offline transactions is exhibited in all three stages. And the OECD definition is adopted for discussion in this volume.

Advantages and Disadvantages of E-Retailing

E-retailing has offered several benefits to users, such as speed, convenience, availability (i.e., 24 hours per day, 7 days a week), flexibility, and available information about goods and services online and reduction of costs to search for information (Doolin et al. 2005; Kim and Lennon 2012; Kita et al. 2018; Lokken et al. 2003). A survey in the United States in April 2020 revealed that 51 percent and 21 percent of the respondents explained that price and fast and convenient delivery affected their decisions to shop online (Clement 2020). E-consumers are able to select from a wide range of products and services, goods and services can be purchased at a better price, and communication between e-consumers and e-retailers is faster (Hui and Wan 2007). E-consumers can also avoid discrimination based on religion, gender, and other factors (Alboukrek 2003). E-consumers can browse and purchase products online via different channels and devices (laptops, desktops, tablets, phones) (Wagner, Schramm-Klein and Steinman 2020). Additionally, from a macro-economic view, e-consumers can “ capture a much larger fraction of the surplus created by the online distribution channel than firms” (Duch-brown et al. 2017, para. 67).

However, many factors have deterred Internet users from shopping online, including deceptive advertising, guarantee and warranty, unauthorized billing, late or nondelivery of products, wrong product delivery, shipping costs, poor quality of products and services, unclear price and payment, unclear terms and conditions, lack of information about redress, misleading information, and security and privacy (Aïmeur, Lawani and Dalkir 2016; Aragoncillo and Orús 2018; Invest Northern Ireland undated; Kaushik et al. 2020; Oliveira et al. 2017; WTO 2020). The recent COVID-19 pandemic has also entailed many supply chain bottlenecks of online purchases and delivery of goods (WTO 2020). This issue has grown bigger due to new health regulations and travel restrictions that have disrupted international transport and logistics services (WTO 2020). Other factors that discourage Internet users to shop online include the need to touch, feel, see, and try a product and to talk to a salesperson before purchasing (Mann and Liu-Thompkins 2019). Also, e-consumers also worry about difficulties in refund and exchange when purchasing goods online (Consumer Affairs Victoria 2003, 2004; Lokken et al. 2003).

In addition, since e-consumer trust is essential for e-retailers to drive consumer e-transactions (Lin, Wang and Hajli 2019), practices of unscrupulous e-retailers and other cyber threats have eroded e-consumer trust and confidence in e-retailing (Deloitte 2015). According to Deloitte (2015), e-consumers are more active now, and 73 percent of consumers would not engage with a company if the company did not keep their data safe and confidential. Also, given the rapid development and adoption of advanced technology, and the cross-border nature of e-retailing, e-consumers are also worried about insecure e-transactions (Huia and Wan 2007). Many difficulties regarding governance, such as applicable laws and regulations, the enforcement of local laws in another jurisdiction, and cross-border activities have also arisen (e.g., how to ensure that goods and services can meet international standards of health and safety). The situation is worse when there has been an increase in the number of complaints associated with e-retailing, especially during the COVID-19 pandemic and cross-border e-transactions (Fletcher 2020; WTO 2020). Greene (2020) stated that customers of Amazon in the United States were very frustrated with e-sellers during the COVID-19 lockdown, and more than 11 percent of reviews of e-sellers were negative in the past one month. Further, e-consumers are less likely to purchase online if they perceived there is a higher level of risk, such as “performance risk (i.e., low product quality), psychological risk (i.e., mental discomfort), financial risk (monetary loss), and payment risks (i.e., information misuse)” (Lin et al. 2019, p. 331).

Thus, there is a need to examine the attitudes of e-consumers toward these factors and whether there are emerging risks and threats in e-retailing. Another question is how and by whom e-consumers are protected in the online market and what issues need to be addressed in order to protect them. The next section discusses the basic rights of consumers and the justification for e-consumer protection.

E-Consumer Rights and E-Consumer Protection

Similar to traditional commerce, there have been some forms of market failure in the online marketplace. For example, information asymmetry may occur due to insufficient information posted on commercial websites. Another example is bad business practices adopted by e-retailers which may cause market inefficiency and negative externality, that is, tarnish the reputation of the industry. WTO (2020) explained that:

Online consumer protection is one of the challenges that the COVID-19 pandemic has highlighted. There have been reports of fraudulent and deceptive practices, with some online sellers offering fake or unsafe hand sanitizers, surgical face masks or disinfectants for sale, and of price-gouging practices by certain manufacturers and retailers seeking to cash in and profit from the surge in demand. (p. 5)

E-consumer protection in e-retailing is defined as the protection of consumers’ interests in commercial transactions by implementing regulation/guidelines, coregulation, and self-regulation (Ha 2017; Romanosky 2016; Subirana and Bain 2005). Such protection includes the policies and activities of government, e-retailers, and industry and consumer associations to address issues associated with e-retailing and to protect the consumer rights of citizens who shop online (Ha and McGregor 2013).

In 1962, to empower general consumers in social and economic activities, President John Kennedy of the United States introduced four basic consumer rights: the rights to (i) safety, (ii) information, (iii) choice, and (iv) representation (Consumers International 2006; Ha and Coghill 2008). These rights were adopted by various international consumer organizations. Later, another four rights were added as a result of the consumer movement led by Consumers International (USA) (Consumers International 2006). In 1985, the United Nations adopted the eight basic consumer rights, namely the rights to (i) safety, (ii) be informed, (iii) choose, (iv) be heard, (v) satisfaction of basic needs, (vi) redress, (vii) consumer education, and (viii) a healthy environment (Ha 2017; Ha and Coghill 2008; Singh 2002). However, these rights apply to consumers in both online and offline markets. They were not specially designed for e-consumers. The UN’s guidelines were reviewed and revised in 1999, and then in 2015 in order to be up-to-date and can address the current and emerging issues and challenges encountered by consumers all over the world (Consumers International 2020).

Therefore, consumer protection aims to “protect the interest[s] of consumers” in commercial transactions (Quirk and Forder 2003, p. 300). Consumer protection is a channel to implement the eight universal basic consumer rights. Also, the development of e-retailing has entailed a number of e-consumer protection issues which have been “uniquely e-related” because some issues only occur on the online environment, such as phishing, spam, and computer viruses (Round and Tustin 2004b, p. 1).

This study focuses on e-consumer protection in e-retailing because of “lack of adequate [e-]consumer protection” (Goldsmith and McGregor 2000, p. 124) and lack of respect for consumer rights (Scottish Consumer Council 2001). E-consumers are entitled to enjoy the eight basic consumer rights and ...