Philippines lags on eCommerce adaption — report

CEBU, Philippines — While the Philippines is tagged as the "texting capital" in the world with almost half of the population using smart phones, the country is still lagging behind  in terms of eCommerce adaption.

A new report on e-commerce in Southeast Asia (SEA), "The State of eCommerce in Southeast Asia 2017," revealed that the Philippines only posted 15 percent improvement in eCommerce adaption, compared to Vietnam's 26 percent and Indonesia's whooping 87 percent.

On the other hand, Vietnam merchants are leading the way in average conversion rate in SEA, with a conversion rate of 30 percent higher than the average.

Conversion rate is defined as the percentage of website visits that turn into a product purchase.

Singapore displays the second highest conversion rate, closely tied with Indonesia.

According to the report, a new white paper from iPrice, an online shopping aggregator based in  Kuala Lumpur, Malaysia, 2017 has been a vital year for e-commerce in Southeast Asia, with gross merchandise value of firsthand goods surpassing US$10 billion in 2017, up from $5.5 billion in 2015, with a stunning 41,percent compound annual growth rate over the past couple of years.

“Among other major events, 2017 in SEA eCommerce has seen Amazon's long awaited entrance in one of SEA's market, the fast rise of Shopee's Mobile-First platform, the $250M record-breaking Sales by Lazada's Online Revolution Campaign and the increasing capital deployed by Chinese's bitter enemies Alibaba and Tencent, in an attempt to 'win' the market," the report said.

The report leveraged iPrice's proprietary data to shed light on some of the most important e-commerce metrics in the six largest Southeast Asian markets, namely, Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnam.

On mobile traffic, the study said its rise in SEA's e-commerce "appears unstoppable." In the past 12 months, mobile has grown on average 19 percent now accounting for 72 percent  of the overall e-commerce web traffic, said the report.

“SEA eCommerce is a mobile-first economy, leap frogging all the Western economies when it comes to the importance of Mobile commerce in the traffic generated by each eCommerce operator," the report added.

As for payment methods, due to low credit card penetration in the region (except Singapore), e-commerce players have had to come up with a much more diverse range of payment solutions.

Cash on delivery is being offered by more than 80 percent of merchants in Vietnam and Philippines, and less than 20 percent in Singapore and Malaysia.

Another study conducted by International Trade Centre (ITC) entitled; New Pathways to E-Commerce: A Global MSME Competitiveness Survey, stated  engaging into eCommerce or online business is too challenging as infrastructure is not yet supportive, plus the cost of putting everything online is too high.

Main e-payment challenges reported in the survey include a missing link between third- party e-payment service providers and local banks, foreign exchange controls, no availability of e-payment providers, no online banking system, lack of knowledge in e- payment, and difficulty in signing up for encryption solutions.

E-commerce is transforming the global trade landscape and opening up the international market, but for MSMEs in developing countries, like the Philippines, this is still considered an uphill battle.

Countries like the Philippines, which are still developing, considerable challenges prevent MSMEs from tapping into its potential, the report said.

Barriers to setting up an online international presence often limit firms to the domestic market. This matters because e-commerce offers great potential to deliver economic growth, jobs and entrepreneurial opportunities.

According to the ITC survey, the limited availability of e- payment solutions was frequently reported as a bottleneck, with a visible gap between developed (14%) and developing countries (20%). (FREEMAN)