Online shopping mania

Southeast Asia, including the Philippines, has become a virtual gold mine for online shopping.

Proof of this is that many online shopping malls are now on expansion mode.

Lazada, Southeast Asia’s largest online shopping website, has just announced that it has raised $250 million from a group of investors including Tesco PLC, Access Industries, Investment AB Kinnevik and Verlinvest.

This marks the first investment by multichannel retailer Tesco into a pure online player in the region. According to Tesco, as South East Asia’s 600 million consumers begin to use smartphone technology to access retailers online, Lazada has established a strong position from which to grow.

Lazada is a pioneer in Southeast Asian e-commerce with around 1,500 employees across five Southeast Asian countries including the Philippines, Malaysia and Thailand.  Just recently, it launched Lamido in Indonesia and Vietnam to tap into the large informal e-commerce market of C2C transactions which includes thousands of shops on social networks such as Facebook.

Zalora, an online fashion start up, was also able to raise P4.9 billion in new funds.

According to the Philippine Retailers Association (PRA), online shopping holds potential for retailers in the Philippines. Although less than three percent of Filipinos shop online, the PRA has been pushing e-commerce as a new avenue for retailers.

PRA vice president Paul Santos said that the e-commerce industry is worth around P3 billion and strong growth is expected as internet users increasingly use tablets and smartphones to access web-based shopping services.

In the same article from the Oxford Business Group, it was observed that online retailers have taken note, and the e-commerce sector has been bolstered by the recent entry of new players, including auto retailer Sulit and Singapore-based penny-auction site Soldgers.

However, the article noted that online sellers face challenges, including finding the right payment mechanism. Credit card usage is relatively low, with 2.5 million card holders. According to Inanc Balci, co-founder and managing director of Lazada Philippines, an online shopping website, consumers are likely to use the internet to research purchases but hesitate to carry out transactions online. In response, Lazada has introduced cash-on-delivery to eliminate the need for a bank card, he said. (oxfordbusinessgroup.com)

Meanwhile, EuroMonitor International revealed that with online shopping gaining popularity in the Philippine market, Internet retailing has recorded a double-digit growth of 11 percent during 2012.

It said that this growth has been stimulated by the presence of group buying sites that promise the best deals for buyers. Geared towards the young professional demographics, Groupon offers discounts on travel, consumer foodservice, health and beauty services, packaged food, beauty and personal care brands, consumer health products, and a lot more. The success of group buying sites like Metrodeal, Cashcashpinoy, and Ensogo introduced Internet retailing to a wider base of buyers and instil confidence in online transactions among Filipino buyers. (www.euromonitor.com)

The report revealed that the market for the local internet retailing is quite fragmented with more than 40 percent of the market sales shared by smaller players. It is estimated that the international operator Amazon.com holds 40 percent of total sales. The large share of the company is attributed to the popularity of its store among upscale Filipinos who order imported products through this online store. Local buyers have strong confidence in Amazon due to its security and wide product range, it added.

EuroMonitor said that Internet retailing in the Philippines will continue to see vibrant performance during the medium term 2013-2017. “The channel’s performance will be further pushed by the increasing number of Filipino customers who are more confident enough to purchase from online companies through their experience of group buying sites. The increasing number of credit card owners in the country, together with the improving logistics will support the growth of the category. Growth prospects during the forecast period will remain positive yet will be more moderate at a five percent CAGR. The total sales from the channel will cap P18 billion by the end of 2017,” it pointed out.

I don’t think though that the fact that the credit card usage in the Philippines is really a bane for online retailing. CashCash Pinoy and Metrodeal for instance allows payment for online purchases to be made through the banks over-the-counter, via ATMs, among others.

It is no wonder that ABS-CBN Corp., which recently entered into a joint venture with Korea-based CJ O Shopping Corp. to put up O Shopping Channel, is looking at online shopping as a possible new venture.

ABS-CBN chairman Gabby Lopez told this writer that putting up an online retail website is a logical next step for them.

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