Department of Education

Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

E-COMMERCE VS. TRADITIONAL COMMERCE IN CASTILLEJOS, ZAMBALES:

A COMPARATIVE STUDY OF PROFITABILITY

by

ARANGORIN, SHIEDROSE ALLAINA

BALIZA, PATRICIA MAY
BUITIZON, HANNAH CRIS
MOTITA, VANJO

A Research Paper
Submitted in Partial Fulfilment of the Requirements for
Accountancy, Business and Management (ABM) Strand

Castillejos National High School – Senior High School

Castillejos, Zambales

March 2020
CHAPTER 1

INTRODUCTION
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Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

Background of the Study

E-Commerce is defined as buying and selling of goods, products, or services using the

internet means of exchange. E-commerce is also known as electronic commerce or internet

commerce. These services provided online over the internet network. Over the last few decades

or so, e-commerce platforms have slowly penetrated our daily lives. Today, online giant like

Amazon is well known for their great deals and convenient buying options. There is no doubt

that the history of e-commerce is eventful. The history of e-commerce can be traced back to the

1960s when the Electronic Data Interchange was developed. It was intended to replace mail and

fax because it made it possible to exchange data through digital transmission without the need

for human intervention. Not long after that, in 1979, the English inventor was credited with

developing the concept of online shopping. Two websites put online shopping on the map for

good in 1995. Amazon, perhaps the most prominent online retailer today, started out as an online

bookshop and offered more titles than its offline competitors. In 2001, they launched their first

mobile website. There is no stopping e-commerce at this stage, particularly with major

advancements in technology coming in fast.

E-commerce is often mistaken with e-business, but they have nothing to do with each

other. E-commerce only refers to the goods and services transaction between a seller and a
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

consumer, while e-business concept is wider than the e-commerce. E-commerce is like an online

shopping market where customers can buy goods and services easily from their home in just

using their phones, laptop or any gadgets and the goods will be delivered at your exact house. E-

commerce is a latest and upgraded type of Traditional commerce because in it there is also an

exchange of goods. In E-commerce the word E stands for “electronic” but when you use it you

will surely say that the word E stands for “easy”. You don’t have the need to go anywhere for the

exchange of goods and services. You can do all of these things online with the comfort of sitting

home, with the use of the internet. E-commerce is often used to refer to the sale of physical

products online, but it can also describe any kind of commercial transaction that is facilitated

through the internet. In e-commerce you must describe products for sale with text, photos, and

multimedia files. In E-commerce most of the time and money can be saved in spending on

traveling and selecting the goods. The payments can be made in any form of digital modes such

as Credit Card, Debit Card, G-Cash, Digital Wallets or Net Banking. E-Commerce provides

greater benefits in buying goods and services easily. If you want to create an e-commerce you

must look at what people wear and how they behave. Observe and write down any ideas you may

think of—without filtering them. Always think about solving people’s problems and bear in

mind that the entrepreneur’s mind needs training. The most important thing is that you have this

idea clearly in mind: don’t sell products, solve problems.

Traditional Commerce is the process of buying, selling or exchanging products, services

or information, is usually physical, meaning there is the existence of a physical store. It is one of
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

the oldest purchasing methods for products and services. It's done by nearly everyone around the

globe. Just go to a store or marketplace, choose an item and pay for the product. Traditional trade

is part of a business that involves all the business-friendly activities. Trade and trade auxiliaries

are the two main types of actions. Trading is the purchase and sale of goods and services for

money, of course. Auxiliary trading refers to business-related activities such as banking,

transport, insurance, packaging, marketing and advertising, and more. More about traditional

trade is that it includes all the activities that make direct exchange between the manufacturer and

the consumer of goods and services. Production of goods is not directly reaching the consumer.

Reasonably it goes through various trade-included activities. It also requires a retail store and an

inventory of housing. Traditional commerce is a face to face interaction with consumers or

customers and thrives based on word of mouth. Personal interaction is the key component of a

business’s experience success with traditional commerce. It began at the time of the barter

system which was introduced in the early millions of years ago. The barter system defines the

exchange of goods with other goods instead of money where money was not available during

those days. This is where Traditional Commerce began and has been continuing till today in the

form of exchanging money rather than with only goods. Many businesses that trade their goods

and services such as this network within society are establishing relationships with city leaders,

chambers of commerce, as well as sponsoring local sports teams and events to attract business

and develop community relations. Traditional commerce allows a buyer to be physical inspect
 Department of Education
Region III
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CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

goods and test out services before making a purchase therefore, personal communication is a key

factor for business success when relying on traditional trade.

Following the discussion above, both traditional and e-commerce are modes of

exchanging goods and services. Each has its pros and cons. e-Commerce is like conventional

commerce with the major difference being the platforms via which the exchange and business

transactions occur. E-commerce saves consumers a lot of time and is therefore convenient

because you can buy goods and services in the comfort of your home or just from anywhere at

any time. Traditional commerce works in such a way that you have to take time and go to the

place/ store where goods and services are stocked hence consuming a lot of time. E-commerce is

not appropriate for perishable goods, and high-value items, so traditional commerce is the one

that can better work with such. On the other hand, it is not suitable for software or music

purchases. Hence, both modes are needed in the market today.

We are conducting this study to know which of these has the more profitable because it

can help the future business owners or even us to decide which business is easy and good for

running a business.

Conceptual Framework

E-Commerce vs. Traditional

Commerce in Castillejos,
Zambales:
A Comparative Study of
Profitability
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Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

Profile of the respondents

 Availability of
in terms of:
products
 Type of Business  Quality
Used  Price
 Age  Location
 No. of Years in  Reliability
Business
 Transparency of the
owner

Collection of Data
 Survey Questionnaire

Analysis of Data
 Percentage of Distribution

Profitability of e-commerce and

traditional commerce
Statement of the Problem
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Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

This study aims to identify the comparison between the profitability of E-commerce and

traditional commerce businesses. Specifically, this study aims to answer the following questions:

1. How may respondents be described in terms of:

a. Type of Business

b. Age

c. No of Years in Business

2. What is the comparison between the profitability of e-commerce and traditional

commerce businesses?

3. How e-commerce and traditional commerce does affects the buying behaviour of the

customer?

Hypothesis

Hypothesis of the study were made to determine if there is a significance difference

between the profitability of e-commerce and traditional commerce.

Null Hypothesis

There is no significance difference between the profitability of e-commerce and

traditional commerce.
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

Alternative Hypothesis

There is significance difference between the profitability of e-commerce and traditional

commerce.

Definition of Terms

This part of the study aims to define some important words used in our study.

Amazon. It is one of example of e-commerce, amazon is an online store for

purchasing and downloading software applications and mobile apps. It
enables you to shop through internet using your gadgets.

E-Commerce. It is a process of buying and selling of goods, products or services over the
internet by using cellular phones, laptops, computers and other gadgets.
Ecommerce refers to both online retail and online shopping as well as
electronic transactions or transaction of money and funds.

Profitability. It is the ability of a business to produce a return on an investment. The

efficiency of e-commerce and traditional commerce to gain more profit.

Traditional Commerce. It is a process of buying and selling products, goods, and services
within a single industry or face to face interaction with customers
or seller. It is a personal transaction or business network within the
community.

Importance of the Study

 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

This study aims to be help or a tool to show the study of profitability between the

comparison of E-commerce vs. Traditional commerce, so the online seller, traditional seller, the

economy and the individuals will know how to respond or react if there is a chance that they will

be facing any problems relating to this study.

This study aims to help:

Online seller. In this study online seller may know on what they will do to help their

business more profitable through online

Traditional seller. This study traditional seller may know on what will they do to help their

business more profitable through traditional

To individuals. The study may encourage the individuals to make their own business like

e-commerce or traditional commerce

To economy. It may help the economy to improve and develop the `

economy's growth

To future researcher. The study will guide them to their study and become their reference on

their research

Scope and Limitation

This study will reflect the comparison between E-commerce and Traditional commerce

in terms of Profitability at Castillejos, Zambales. The information that will be gathered through
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

survey-interview, surveys questionnaires, and observations will be based on the comparison

between E-commerce and Traditional commerce in terms of Profitability, and how did it helped

to improve shopping comfort for the consumers.

 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

CHAPTER 2

REVIEW OF RELATED LITERATURE

Related Literature

Foreign

According to a statement by Amrish Rau, CEO of PayU India “Around 40 per cent of

COD was driven by black money according to a study done two years ago.” Demonetization

cracked down the whip on black money forcing people to go digital. In fact, the first 2 months

after Demonetization did see a decline in e-commerce growth in India as there was a reduction in

sales. The cash crunch and cap on ATM withdrawal limits affected the buying capacity of

majority of consumers, especially customers in tier-2 and tier-3 cities who are used to the

payment mode of COD. Some of the online retailers had to temporarily suspend their COD

payment option. Redseer Management, a research and advisory firm, projected in August 2016

that the e-commerce industry in India would see a growth of $79.41 billion by 2020. But

Demonetization managed to upset the numbers and the growth for 2020 is currently pegged at

$47.45 billion.

As we all know, internet and e-commerce are entirely committed towards every

developed country. But we think it can be accomplished and can make a remarkable benefit to

developing countries also if an ideal business purpose can be made. Ohidujjaman et.al, 2013
 Department of Education
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CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

clearly discussed that E-commerce is a revolution & turning point in online business practices

and can make a huge contribution to the economy and Hasan et.al, 2010 also indicated that

currently, e-commerce organizations have increasingly become a fundamental component of

business strategy and a strong catalyst for economic development. A huge amount of research

works has been done on e-Commerce which is basically on online shopping. A large group of

researchers has found out and also pointed out the necessity and possibilities of Online

Shopping. On the other hand, limitation of ecommerce is found and at the same time, they

provided essential suggestion and came to a prediction to make Online Shopping more useful for

the consumers. But the contribution of traditional marketing is also inescapable but compare to

online shopping it is less effective we think. So on this basis, Mehrdad Salehi et.al, 2000 found

out distinguish between online marketing & traditional marketing. Though most of the people of

Bangladesh especially the rural people are not enough capable of operating internet to run the

online business. For that reason, they need to be dependent on traditional marketing.

Local

In the Philippines, e-commerce is mostly being implemented by major retailers and

multinational corporations for bank-to-bank exchange. A number of Business-to-consumer

transactions have emerged through the years such as auctions, online shopping, and online

banking (Lacson, Pasadilla, 2006). This just shows that Filipino businesses welcome this new

opportunity in selling goods since 16% of the population is using Internet. This new marketing
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

strategy will not only benefit those big companies but also the small businesses who cannot

afford to advertise their products. Just by creating a website in a very affordable cost would

make the business grow in terms of sales and enhance the company image as well.

Philippine firms have yet to fully tap the potentials of e-commerce that will help them to

compete in domestic and global markets. In the process of preparing themselves to conduct e-

commerce, these firms will be changing the way they do business. These changes are expected

to have an impact on the welfare of Philippine workers. Most efforts to measure the economic

effects of e-commerce—including those on workers’ welfare—have focused on the U.S. and

Europe, who are considered to be the leaders in e-commerce. (Roberto, 2002) In general, it

discuss the changes in the nature of work from the front to back office is likely within the sectors

performing services Employment demand for these industry, they may be focused away from

agents and blue collared workers, toward higher management and executive staff.

As Filipinos entered the 21st century, local e-commerce transaction reached Php 1

billion. It shows that there’s at least one billion transaction sales growth annually. If this trend

continues, figures can reach up to Php 20 billion as more businesses conduct online transactions.

If significant economic growth takes place in the next 10 years, these estimates may even double

or triple (Toral, 2004).

Information and Communication Technology (ICT) has become and will continue to be

an integral part of the day-to-day life of every Filipino across all levels of our society. The
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

occurrence of communication technology around the world necessitates that government get on a

cohesive and coordinated strategy on how to prepare its citizens to survive, live and thrive in a

digital world.(The Philippine Digital Strategy Transformation 2.0: Digital Empowered Nation

2011).

Related Studies

Selling and buying through electronic media is one of the fastest growing methods of

trading worldwide. Organizations are engaging in Business to business (B2B) trading where

companies trade and exchange information using the World Wide Web. Organizations and

consumers are transacting through Business to consumer (B2C) or Consumer to Consumer

(C2C) where companies deal directly with customers through electronic media. This study

sought to determine the effect of e-commerce on business profitability in the communication

sector. The population of the study was 218 firms as listed by CCK. The data was gathered using

a questionnaire and this analyzed using combination of descriptive, inferential and relational

statistics. The findings of the study indicate that e-commerce leads to an increase in turnover and

customers which ultimately leads to an increase in profitability. Further the studies pointed out

that focus on having an online presence, online lead generation and online sales led to increased

business profitability. This information is useful to both the Government and businesses keen on

adopting e-commerce. The study further recommends faster adoption of 4G networks and also

laying of sea cables to make internet charges competitive and affordable to both businesses and
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Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

consumers. In the emerging electronic environment, knowing how to create customer-centered

web sites is of great importance. Web sites are being widely deployed throughout industry,

education, government, and other institutions. In practice, the importance of the use of Web

technology for electronic commerce (EC) activities has been discussed widely. Electronic

Commerce is a way of conducting business by companies and their customers performing

electronic transactions through computer networks. EC can help business organizations cut costs,

interact directly with customers, run more smoothly and in a timelier manner, and even better, it

can help an organization outperform its competition. In the Internet era, users experience an

organization’s Web site’s quality before they decide whether to commit themselves to the

organization (Nielsen 1999). Further, Nielsen (1999) notes that the Web site functions as a

“window” through which users have their initial interaction with the organization. Evans (1999)

asserts that its design crucially affects their perception and attitude toward the organization. In

the last ten years, studies have focused on the design of Web sites for general information

seeking and for electronic commerce purposes. In the Web environment for general information

seeking and business-to consumer electronic commerce, users are customers. Understanding

their expectations and how they feel about the Web sites they use is becoming a very serious

concern. A company’s continued success comes from two groups: new customers and repeat

customers. Since it always costs more to attract new customers than to retain current customers,

customer retention is more critical than customer attraction. The key to customer retention is

customer satisfaction. Delighting customers goes beyond satisfying them. Delighted customers
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Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

are more effective advocates for a company than all the paid advertisements it places in the

media. While the success of a company or an organization is dependent on many factors, its Web

site plays a central role. In the Internet era, users experience an organization’s Web site’s quality

before they decide whether to commit themselves to the organization. The Web site functions as

a “window” through which users have their initial interaction with the organization. Its design

crucially affects their perception and attitude toward the organization (Nielsen, 2000).According

to Nielsen (2000), web site simplicity should be the goal of web page design because users

always focus on the contents and interface. Therefore, it is important to ensure that web page

design can work with different platforms .Nielsen, (2000) explains that content is the vital part of

web sites due to the first appearance to users. Quality of the content is one of the two most

important determinants of e-commerce web usability. Quality of production (e.g. well-crafted

writing, beautiful pictures and multimedia) is graded in the second rank. Therefore, content

developers should take the following questions into account: “What is relevant for me?” and

“How does this web site help me to solve the problems or answer the questions?” Furthermore,

since web users are goal driven and impatient, the provided content needs to be focused towards

speedy answers and usefulness to the users.In general, the e-business systems published on the

Internet should be matched for the paradigm of the universal design highlighting on user contexts

of anyone, anywhere and anytime. If a business wants to be successful, a good website is

probably a good place to start first, and it seems the opposite is true as well. Across the globe

there are over two billion internet users and this number grows by two hundred million annually
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

hence the need to evaluate the benefits of using internet and specifically for the ecommerce, the

benefits of using the website in relation to the business performance (Schneider 2003).Good

websites not only attract and sale to customers, but also increase the potential of return visits.

This raises important implications for organizations thinking of making an appearance on the

internet (as well as presenting them with pertinent issues to keep in mind when designing their

websites) Lyer et al. (2000). Also, high quality websites lead to a favorable attitude towards the

websites and products and services offered (Liu et al., 2001). A web site can improve

communications with other organizations, thus improving the efficiency of business processes by

increasing direct sales and reducing costs (Zona Research Inc, 2000). Schneider (2003) suggests

that the benefit of improved communication extends also to the businesses customer base, in that

the organization can receive feedback directly from customers. Zona Research Inc. (2000) states

that poorly constructed web sites can lead to lost revenues from non-realized transactions and

negatively affect organization image. Harley et al., (1998) concluded that poorly designed web

sites can lose 50 per cent of potential sales when people cannot find what they are looking for,

and that 40 per cent of users do not return to web sites who uttered negative first experience .E-

commerce continues to grow in leaps and bounds and some of the latest trends aimed at making

it a powerful domain adopted from the Netcraft Survey (2012) include; Personalized services

may not be new but it is definitely going to be one of the popular trends in e-commerce. By

continuously monitoring the buying pattern of consumers using the newest technologies, the

content of the site can be designed to meet the needs of target audience. Apart from e-commerce
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

being more personalized and mobile, technology will be playing an important role in making it

more realism based. . Social media is one of the reliable methods to market products and

services. Channels like Facebook and Twitter are just getting better along with some new

additions like Pinterest which helps in establishing a foothold for business benefit. In 2013 the

integration between e-commerce and social media is all set to become more intense.

Relationship of Previous Studies to Present Ideas

The relationship of the previous studies to the researchers’ present ideas is that both

studies shows and compares the profitability rate of being in e-commerce and in traditional

commerce businesses. Both also cite what kind of strategies do sellers needs to do to make their

business more profitable than others. The researchers used the previous studies and ideas as a

guide for their research to become more truthful and reliable. Through this work of them, this

will let the business owners know which is more profitable, e-commerce or traditional commerce

businesses.
 Department of Education
Region III
Schools Division of Zambales
CASTILLEJOS NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Castillejos, Zambales
_____________________________________________________________________________________

CHAPTER 3

RESEARCH METHODOLOGY

Research Design

This study aims to identify the comparison between the profitability of e-commerce

businesses to traditional commerce businesses. The researchers utilized a comparative research

design. Both qualitative and quantitative research methods will be applied in this study.

Population

This research study will use 20 respondents. It is composed of 10 e-commerce and 10

traditional commerce within the vicinity of Castillejos, Zambales.

Sampling Method
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The sampling method is purposive random sampling. The setting where the study will be

taken is in the field. Researchers purposely random select different store (as traditional

commerce) and e-commerce businesses both here in Castilejjos, Zambales as their respondents.

Purposive sample is a non-probability sample that is selected based on the characteristics of a

population and the objectives of the study. Purposive sampling is also known as judgmental,

selective, or subjective sampling.

Data Collection Procedure

The techniques of data collection would be a survey questionnaire with an open-ended

question. In part I which includes the profile of the respondents, part II will be the qualitative

questions, a five-point Likert Scale where in respondents will put a check or the rating scale they

prefer and in part III, it is an open-ended questions that the respondents will ask to give their own

preferences on the given question.

The question formulated will be answered by the respondents. Those questions will help

the researchers to make a conclusion on which is more profitable, e-commerce or traditional

commerce. Survey questionnaire will be the main instrument in gathering the data.

Data Analysis Procedure

Defining questions that will be presented in survey questionnaires.

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SENIOR HIGH SCHOOL
Castillejos, Zambales
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Distribution of questionnaires to be answered by 20 respondents.

The data collected will be tabulated according to category.

Researchers will analyze the data through getting average rating per responses
and will prepare conclusion as follow.

Finally, researchers can clarify whether reject or fail to reject the null
hypothesis.

Treatment of Data
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For the statistical treatments of the research data, this study will utilize frequency and

distribution, mean, and t-test. Researchers will use frequency and percentage distribution for the

first part of the survey and mean, as well as t-test for the second part of the survey questionnaire.

Though this statistical treatment, accepting or rejecting the null hypothesis will be stated. For the

part three, theme will be used because it is an open-ended question.

Frequency and Percentage Distribution. Used to determine what proportion of the

respondents belongs to a specific category.

f
Formula is %= × 100
n

Where:

% is the percentage

f is the frequency

n is the total number of respondents

100 is a constant value

t-test. A special type of ANOVA

Formula is