Introduction
competitors, and increased imports can result. Emerging challenges posed by e-commerce include tax base
erosion and profit-shifting. Several countries—such as the PRC—have begun to adopt unilateral measures such
as value-added tax (VAT) on e-commerce transactions pending any global solution.
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An additional risk inherent
in the growth of e-commerce relates to inequities and inclusion. The divide between those able to benefit from
buying and selling online and those who lack the tools and knowledge to do so can widen.
. Definition and Types of E-commerce
The most widely used definition of e-commerce is from the Organisation for Economic Co-operation and
Development (OECD):
“...the sale or purchase of goods or services, conducted over computer networks by methods specifically
designed for the purpose of receiving or placing of orders. The goods or services are ordered by
those methods, but the payment and the ultimate delivery of the goods or services do not have to be
conducted online.…The type is defined by the method of placing the order. To be excluded are orders
made by telephone calls, facsimile or manually typed e-mail.”
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The above definition makes it clear that an order must be placed online—via the internet, extranet, or electronic
data interchange—for e-commerce to occur but the payment does not have to be electronic. E-commerce
transactions can take place between and across a wide variety of counterparts, including individuals, consumers,
enterprises, governments, and other public and private organizations (Box 1.1).
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Although it does not fall within the formal definition of e-commerce itself, social media can play a role in
e-commerce. Sellers may not have a formal online shop with an order form but receive orders via messages
over Facebook, WhatsApp, Instagram, and other platforms. Trust, or a lack of it, is a critical factor in the growth
of online shopping in using these platforms.
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Although quite prevalent, this informal C2C e-commerce is not
often captured in the formal e-commerce definitions or statistical frameworks and this makes it difficult for
government to collect revenue taxes.
There are three factors that facilitate e-commerce transactions: (i) internet access, (ii) mechanisms for paying
for goods and services ordered online, and (iii) solutions for their delivery (Figure 1.1). The country’s legal and
regulatory framework is also important.
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These influence the extent to which enterprises and consumers are
willing to transact online. For example, electronic transactions need to have legal validity, online payments
need to be accepted, and consumers need to be protected.
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An Asian Development Bank (ADB) and CAREC
15
A. Hagiwara, K. Gonzales, and J. Wang. 2019. Taxation Challenges in a Digital Economy—The Case of the People’s Republic of China. ADB Brief.
No. 108. Manila: ADB. https://www.adb.org/sites/default/files/publication/504616/adb-brief-108-taxation-digital-economy-peoples-republic-
china.pdf.
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OECD. 2011. Guide to Measuring the Information Society 2011. Paris: OECD. http://www.oecd.org/sti/ieconomy/.
oecdguidetomeasuringtheinformationsociety2011.htm.
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It is also useful to distinguish between e-commerce and digital trade, with the latter defined as the transfer of data, products, or services by
electronic means, usually the internet, and facilitates buying, selling, and servicing of physical goods and services. See also OECD, WTO, and IMF.
2020. Handbook on Measuring Digital Trade. Version 1. https://www.oecd.org/sdd/its/Handbook-on-Measuring-Digital-Trade-Version-1.pdf.
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V. Curzi. W. Lecoq, and N. Quéré. 2019. The Impact of Social Media on E-commerce Decision Making Process. International Journal of Technology
for Business. http://dx.doi.org/10.5281/zenodo.2591569.
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ADB and UNESCAP. 2018. Embracing the E-commerce Revolution in Asia and the Pacific. Manila. https://www.adb.org/sites/default/files/
publication/430401/embracing-e-commerce-revolution.pdf.
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The United Nations Conference on Trade and Development (UNCTAD) Global Cyberlaw Tracker is the first-ever global mapping of cyberlaws.
It tracks the state of e-commerce legislation in the field of e-transactions, consumer protection, data protection/privacy, and cybercrime
adoption in the 194 UNCTAD member states. https://unctad.org/topic/ecommerce-and-digital-economy/ecommerce-law-reform/summary-
adoption-e-commerce-legislation-worldwide.