Filipino entrepreneurs harness power of e-commerce

MANILA, Philippines -  The online marketplace has become much busier than it used to be. The Philippines’ e-commerce market is expected to grow a compounded annual rate of 101.4 percent from 2013 to 2018 due to rising internet and social media usage, according to a study by Ken Research.

As the market grows, so does the list of players and the variations in the kind of business that they offer.

The country’s e-commerce landscape can be classified into three – B2B, B2C, and C2C.

A paper presented by Janette Toral of digitalfilipino.com identified some of the B2B or business-to-business (B2B) players as TradeKey, Alibaba.com, Tradeford, and SAP Ariba.

Then there are the so called B2C or business to consumer marketplace online sites like Lazada, Zalora, Takatack, Galleon which serve as middlemen between product and service providers and the consumers. Within this B2C classification are other subclassifications like those which operate cross-border (Amazon, eBay, AliExpress), daily deals (Metrodeal, CashCashPinoy, DealGrocer), and verticals or brands that sell to consumers online like Mango, Adidas, Foodpanda; and lifestyle and travel sites like Agoda, Booking.com, AirBnb, Philippine Airlines, to name a few, Toral mentioned.

There is also the C2C or consumer-to-consumer which also has its subclassifications.

The classifieds or P2P would include Carmudi, Lamudi, OLX, Mitula, ZipMatch, among other names. Those who would like to sell or lease their vehicles, real property can use these sites to look for buyers or lessees while those who would want to buy or lease can also look for available items on these sites.

Then there are these C2C marketplaces where those who want to sell their goods but are individuals rather than business entities can post their items online while individuals buyers can also buy these consumers items through these online marketplaces, the same article explained.

Among these C2C marketplace players are Shopee, Etsy, Carousell, and Reloved.

And then there are the enablers which allow these players to do their business such as logistics providers (LBC, Xend, JRS, Air 21); payment gateways (dragonpay, PayPal, ECPay) and mobile wallets offered by the telcos, banks and others; marketing services providers including social media and search engines (Google, Facebook); e-commerce software providers, to name a few, Toral said.

Exponential growth

The United Nations Conference on Trade and Development (Unctad) ranked the Philippines 9th in the Unctad’s B2C e-commerce Index 2016 among emerging economies in Asia and Oceania. It forecasts e-commerce retail revenue to reach $1.2 trillion last year compared to $994 billion in 2015.

The index showed internet penetration in the Philippines at 40 percent, with only three percent of adult consumers having credit cards, only 42 secure servers per million people, and the country having a 48 percent reliability in terms of postal services.

The head of one of the biggest e-tailers has said that while the current market size of e-commerce in the Philippines is only 0.2-0.3 percent of non-food, non-travel retail sales, it is projected that it will leap to around four percent in five years’ time.

Non-food, non-travel retail, he said, is a $70 billion industry which is estimated to reach $110 million by 2020 and e-commerce is going to be $5 billion. As the number of internet and smartphone users increase and as the Philippines’ GDP grows, there will be more e-commerce users and a more aggressive e-commerce growth in the country, he said.

One of the companies that is taking advantage of this growth by thinking out of the box and offering something unique to Filipinos is Shopee.ph.

Launched only in 2015 in the Philippines as a buy and sell platform at around the same time it was started by its Singapore-based parent SEA Ltd. (formerly Garena), the Shopee community in the Philippines has grown by leaps and bounds in terms of number of participants and volume of sales, which can be attributed to its unique business and value proposition and its genuine bid to develop more Filipino micro, small and medium entrepreneurs.

According to the Global Entrepreneurship Monitor, entrepreneurship is an emerging career path for Filipinos with 46 percent viewing it positively and 66 percent claiming that they have entrepreneurial skills. Many are starting young. About 45 percent of those in the early stage entrepreneurship belong to the 18 to 34 age bracket.

Macy Castillo, head of commercial business for Shopee Philippines, believes that investing in e-commerce platforms can open opportunities for aspiring Filipino entrepreneurs by connecting them to the increasingly tech-savvy consumer.

Castillo has an extensive experience in e-commerce and finance with a solid educational background to back it up. She graduated with a Bachelor of Science and Applied Math degree from Pepperdine University in California and a Masteral Degree in Public Management and Governance from the London School of Economics and Political Science in the UK.

She worked for three years in banking and finance in Los Angeles and London and then joined Zalora Philippines at around the time it entered the market where she stayed for four years.

Social marketplace

Shopee is a mobile-first social marketplace where everyone can browse, shop, and sell anytime and anywhere. It is a platform tailored for Southeast Asia, combining the authenticity of a C2C marketplace with payment and logistical support, making online shopping easy, secure and fuss-free. As shopping on mobile devices becomes the new norm, Shopee aims to become the region’s mobile commerce destination of choice.

Shopee was soft-launched in June 2015 and officially launched November of the same year. Available for free download on the App store and Google Play, it had over 20 million downloads in Singapore, Malaysia, Indonesia, Thailand, Vietnam, Philippines and Taiwan. Its most popular categories are fashion, beauty, and home and living.

It is more mobile or m-commerce oriented because some of the features do not work on the desktop.

Since it started in the Philippines, its volume and value of sales has grown seven times.

Shopee works in close collaboration with local entrepreneurs and retailers to establish an extensive range of high-quality product listings and partners with third-party logistics providers to ensure swift and secure delivery of products.

The company describes its proposition in seven ways. first, one can buy and sell in less than 30 seconds anytime, anywhere by simply snapping a picture, describing the product, and then setting a price (sell in a dash); second, eliminating fraud and transaction risks with Shopee Guarantee which is the app’s secure payment method (Castillo explains that the seller does not receive the payment which Shopee holds in escrow until the buyer has received the item); third, seller assistant tool which helps sellers to organize order, manage customers, and measures store performance; fourth, a social marketplace which allows users to connect with other users and to discover the latest trends and deals through the app’s Follow and Like functions, Live Chat features, Hashtags and more; fifth, the ability of users to share their favorite products and shops on their social media platforms via simple tap; sixth, third-party logistics providers’ support to ensure swift and secure delivery of products; and lastly, a seller centre which is an extension of the seller assistant.

In the Philippines, Shopee has partnered with LBC and Black Arrow for pick up and delivery of items nationwide.

One very interesting and unique feature of Shopee is the live chat function with allows a prospective buyer to chat with the seller, ask questions about the product, and then make an offer or even haggle. Castillo said that compared to other countries, more Filipinos would like to use this chat function and talk to the seller.

Another uniquely Filipino trait is their inclination to “follow” their sellers. “We Filipinos are more social. About 70-80 percent of Filipino buyers follow their sellers compared to only 60 percent in other countries,” she said.

Mobile entrepreneurs

Recognizing the fact that credit cards only have a three to four percent penetration rate in the country, Castillo said that Shopee offers other modes of payment like cash-on-delivery and bank deposits, whether over-the-counter or online.

Unlike other e-commerce market players which generate revenues from advertisements, transaction fees, or fees from optional site features, right now, Shopee does not charge its users (which includes sellers of pre-loved items) but is more concerned about improving user experience. The company is also shifting from mainly individual sellers to brands like Belo Essentials, Memo Express, and Samsung which will be selling their products to the Shopee community, but again Shopee is not charging. In short, Shopee is not generating revenues at the moment and even spends for the cost of delivering some items to the buyers.

Their business model however allows Shopee to later charge a commission from hosting business sellers, or even accommodate ad placements, or charge for optional app features.

But these are still not in the immediate horizon for Shopee and Castillo is content with the fact that they are helping develop a generation of mobile entrepreneurs. Shopee conducts gatherings among sellers who want to hone their skills in online selling, teaching them how to take great features of their products and how to write effective product descriptions. It does not charge for these and even takes care of the venue and free food. Shopee has held a number of these trainings under Shopee University which it will hold soon online in partnership with telcos.