The Legal Status of Online Marketplace in B2C E-Commerce
The Evolution and Legal Framework of Electronic Commerce
Following the advancement of science and technology in the 20th century, the emergence of computers and the internet catalyzed the rise of electronic marketplaces. Consequently, contracts conventionally executed face-to-face or via postal services have been superseded by agreements concluded within electronic markets and digital environments. Among these digital agreements, sales contracts undoubtedly occupy the most prominent position.
In the contemporary era, millions of transactions are processed daily through various electronic commerce (e-commerce) platforms. According to a 1999 report published by the World Trade Organization (WTO), the fundamental impact of electronic commerce was projected to manifest in two ways: first, as an interaction where traditional goods are ordered electronically but delivered physically; and second, as the direct provision of services through electronic media.
Global and Domestic Market Dynamics
According to reports published by TÜSİAD, despite global economic growth falling below expectations, the global transaction volume of the B2C electronic commerce market reached approximately 3.5 trillion USD as of 2019. The top five market participants, based on their projected results in USD, were China (634 billion), the USA (504 billion), Japan (123 billion), the United Kingdom (103 billion), and Germany (70 billion).
Parallel to these statistics, although the electronic commerce sector in Turkey appeared to be influenced by global developments and exchange rate fluctuations in 2018, the growth trend persisted at a rate of 42% in TRY terms, while remaining at 7% in USD terms. By the end of 2019, the e-commerce market surged to approximately 83.1 billion TRY—comprising 44.9 billion TRY in retail and 38.2 billion TRY in non-retail sectors. These figures represent a 39% increase compared to 2018, which closed at 59.9 billion TRY. Furthermore, research indicates that between 2015 and 2019, the share of online retail within total retail rose from 7.9% to 12.3% in developed countries, from 3.3% to 6.7% in developing countries, and from 2.9% to 6.2% in Turkey.
The global pandemic of 2020 also exerted a profound influence on electronic commerce. According to a study conducted in Turkey covering the period between March 9, 2020, and April 12, 2020, e-commerce rates for Fast-Moving Consumer Goods (FMCG) across 32 different categories surged from 57% to 171%, personal care products from 67% to 171%, baby food from 56% to 122%, and tea/coffee from 91% to 258%.
Financial and Legal Risks
These statistics demonstrate that sales conducted via electronic commerce are increasing rapidly, and traditional trade is being systematically replaced by digital counterparts. However, this rapid transition introduces various financial risks for both firms and consumers. In a commercial relationship, if parties harbor no doubt regarding potential breaches of contract, the need for risk mitigation remains absent. Nevertheless, since individuals in e-commerce—much like in daily life—engage in relationships with extensive financial dimensions, the financial risks they encounter are virtually limitless.
A primary financial risk concerns the issue of trust: specifically, the assurance that the product will be delivered in exchange for the price paid and that the delivered item possesses the specified characteristics. For instance, critical issues arise regarding:
Performance/Non-performance: Whether a product purchased from the USA via credit card will be delivered.
Aliud Performance: Whether the item received is indeed the product ordered.
Defective Performance: Whether the product matches the specifications advertised on the website.
Refundability: Whether the sales price will be refunded in the event of a deficiency or discrepancy.
Given that electronic commerce legislation is not yet fully settled, financial risks inherently bring about legal risks. It is, therefore, imperative to delineate the legal framework of the financial risks emerging from the transition from traditional to electronic commerce. While establishing legislative frameworks that permit and support e-commerce is a priority, another significant challenge is the adaptation of traditional contract law to the digital sphere. In other words, the formal requirements of law—traditionally bound to paper—must be satisfied within the context of electronic commerce.
Note: This article was published in the September 2020 issue of the Istanbul Medeniyet University Faculty of Law Journal. Click here to read the full article.