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THE DIGITALFILIPINO STATSREPORT THE DIGITALFILIPINO STATSREPORT
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here’s no doubt that the Internet canchange the way our entrepreneurs dobusiness. For most of them, the high cost of putting up the necessary infrastructure is amajor hindrance to reach that stage.Although there are a lot of providers offeringfree e-commerce solutions, entrepreneursdon’t simply buy such an idea especially if the long term plans and viability of thecompany is questionable. It is the same if the service provider is a startup.However, entrepreneurs are being requestedto go online right now to start dealing withsuppliers and major customers over theInternet, with the use of email and e-commerce. In two years, the same importantbusiness partners will demand for it. This isa trend we’re seeing to happen to buyersespecially those who are members of business-to-business e-commerce sites likeBayanTrade.com.According to Gartner’s Spotlight report“SMBs: Tiptoeing Through the Internet”, webcontent management and e-commercesolutions prices are falling, making this yearan excellent time for Small and Medium sized
The following are useful references for thisreport.Ipsos-Reid - The U.S. Internet Fact Page(http://www.ipsos-reid.com)Computer Industry Almanac(http://www.c-i-a.com)“More is Not Enough: Bandwidth End UseForecast and Analysis Study”, International Data Corp.(http://www.idc.com)GartnerG2 (http://www.gartnerg2.com)SMBs: Tiptoeing Through the Internet,Gartner Spotlight Report, Gartner Inc.(http://www4.gartner.com/ 1_researchanalysis/focus/smb011402.html )Strategic Market Segmentation: How toMarket to the Rich, the Middle Class and the“Masa”Dr. Ned Roberto, LifeCycle Press/Salt & LightVentures(ISBN 971-8611-02-9)DigitalFilipino.com 1st Philippine InternetUser Habits Survey WAP site(http://tagtag.com/jct)DigitalFilipino.com 2nd Internet User HabitsSurveyBusinesses (SMBs) to invest in these areas.Jim Downing, VP and research director forGartner advised SMBs to experiment now withInternet services that they perceived to betoo complex and expensive to implement.“During these trials, SMBs can gauge thepotential benefits of the Internet to theirbusiness and determine whether, and when,to embrace it more fully.”Web content management allows SMBs toupdate their website content easily andquickly. However, this costs a lot in theearlier years of the Internet phenomena. Now,any SMB can avail of these solutions atreasonable cost (US$50 per month and up).So many things have been said and writtenas to how SMBs can benefit if they go online.At the end of the day, I believe that thosewho will make the right moves now and investin building their Internet infrastructure will be part of the market rebound when the timecomes. As companies, both buyers andsuppliers, are trying to reduce cost and keeptheir business afloat, the Internet providesan affordable medium in communicating withcustomers and reach out to new markets.
SMBs SHOULDINVEST IN THEINTERNET NOW
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THE DIGITALFILIPINO STATSREPORT THE DIGITALFILIPINO STATSREPORT
Copyright 2002 byJanette Toral ,DigitalFilipino.com.All rights reserved. This report or any part of it may not be reproduced, stored, transmittedin any form and means without the writtenpermission from the author.Layout, design and illustrationsbyAntonio Bucu.StatsReport subscribers who would like toask questions related to this report can email the writer at:
Janette@digitalfilipino.com
or call
+63-917-4974922
ABOUT THE WRITER
Janette Toral
is an IT writer, speaker, consultant, educator and lobbyist. She founded the PhilippineInternet Commerce Society last September 1997 and got heavily involved in working for thepassage of the country’s Y2K Law and E-Commerce Law.She has written articles for international publications such as Business Online, asia.internet.com,and World Executive Digest. She published her first book in June 2000 titled, “DigitalFilipino: AnE-Commerce Guide for the eFilipino”.She’s frequently invited at various IT conferences to talk about information technology, web,outsourcing, and wireless developments in the Philippines.An IT practitioner, she has more than 13 years of combined experience in the areas of research,training, marketing, business planning, technical support, and project management.Welcome to the first issue of the DigitalFilipino.com StatsReport!I’ve been following local and global information technologydevelopments and assess its impact on Filipino’s lives. Despitethe economic crisis, Internet and e-commerce is continuouslygrowing as the users are beginning to achieve maturity andsensibility with their online needs.DigitalFilipino.com (http://www.digitalfilipino.com) started asa website in September 1999 to promote my first book,“DigitalFilipino: An E-Commerce Guide for the eFilipino.” Sincethe book launch last June 2000, the site has evolved and becomean e-commerce research site. With the changing demands ininformation technology (IT), we began covering developmentsin the area of outsourcing and wireless technologies.I also have an active discussion group (http://groups.yahoo.com/ group/digitalfilipino) that started last September 1999 as anannouncement list. It became a public discussion group inNovember 2000 with more than 1700 members at present. Idefinitely don’t know everything and this community serves asan important venue in keeping in touch with various Internetuser concerns and points of view.Knowing that my site is a resource for researchers, I created a public message board athttp://efilipino.community.everyone.netwhere queries can be posted. More than 900 research-relatedquestions, answers, and announcements have been posted to date.Since last year, I’ve been doing Internet User Habits survey during exhibits and personal speakingengagements. The results of our 2000 survey work can be found in our WAP site(http://tagtag.com/jct) posted last June 12, 2001.Pressure from peers urging me to come up with a book 2 has always been there. However, I thought of coming up instead with this personal monthly newsletter referred to as
DigitalFilipino.com StatsReport
where subscribers can get updated results of our survey every month.Yes,
DigitalFilipino.com
has evolvedagain! More than anything else, this is yourpublication. I want you, my subscribers, todrive the content from this point on. Tell mewhat information you need and will do mybest in producing the results in future issues.The Filipino has so much potential in makingits mark and be recognized in the areas of web, outsourcing, and wireless. May thispublication help you in making wise decisionsand get the information that you need in themost affordable and timely manner.Mabuhay!
Janette Toral
Writer
SUBSCRIBE TO DIGITALFILIPINO STATSREPORT
DigitalFilipino StatsReport
is a monthlynewsletter giving an analysis on local andinternational statistical developments in thefield of information technology, Internet, e-commerce, outsourcing, and wirelessmarkets. As DigitalFilipino.com also does itsown research and person-to- person surveys,its up-to-date status is also included in everymonthly report.In addition, subscribers are invited toparticipate in our monthly briefing where andwhen the report is released. The fee for thisservice is only US$150 per year (for the first120 subscribers). This package includes 12reports with the option of participating inour monthly briefing.To subscribe, please email Janette@digitalfilipino.comthe following:Type of subscription: (personal/business)Company Name:Address:Phone Number:Fax Number:Person to receive the report:Position:Email:Website URL:Research areas of interest:(please be detailed as possible)
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ommon mistake of our local merchants is the mentality of simplybuilding a website and wait for itsbuyers to come. A lot offered various servicesthat are available in traditional brick andmortar stores. Competing in such anenvironment is very limited and does notprovide any unique advantage. Althoughtargeting overseas Filipino workers can beattractive, one must remember that theirbuying habits are driven by seasonal occasions.Merchants engaging in the online businessshould formulate strategies to makethemselves the shopping site of choice, bothonline and offline, for its target buyers.There are so many ways that the merchantscan reach out to its customers. I considerthe mobile phone as the most importantmarketing channel today. Our survey showsthat all local online buyers have mobilephones and send an average of 18 textmessages a day. More than half of them areusers of value-added services.Notification of new products, regular updateson topics of interest, and allowing registeredbuyers to do a quick search on products canprovide a lot of value to any online business.The online merchant must look into onlineand offline channels in doing business tomake the buying experience convenient forthe customer. Perhaps, this is the reasonwhy MyAyala.com is slowly gaining groundin the market. Providing a service thatintends to compliment the existing offeringsof the center, especially its movie theater,is driving consumers to their end. However,its online mall can still be improved.Instead of doing everything alone, onlinemerchants should consider partnering withcontent providers and network operators toachieve business objectives at the least costpossible.In the end, only those who’ll be able toachieve the highest customer retention will succeed. Customer usage must be studieddiligently in order to come up ongoingprograms to achieve customer loyalty andincrease sales.
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t is estimated that there are 490 millionInternet users worldwide as of end-2001.By 2005, this can reach up to 1 billion.The Computer Industry Almanac predicts thatincreasing portion of Internet users in 2005will be using wireless devices such as web-enabled cellphones and personal digital assistants (PDAs) to go online. This can reachup to 48%. In developed countries, thewireless device will be supplemental to PCInternet access for most users.In the Philippines, we estimated that thenumber of Internet users as of end 2000 is 2million. As more and more Filipinos goingonline everyday, we expect to reach 3.5million Internet users by end of this year.This is due to the fact that the number of small and medium sized businesses (SMB),especially in the export sector, accessing theInternet is growing at exponential rates.Also, more and more schools are connectingonline, providing access points for thestudents.A good example that I can share inthis regard is our personal experiencein supporting Manila FAME(http://www.citem.com.ph). In the year2000, we began judging website entries byexporters. At that time, there were only 7exporters having online presence. Thisincreased to 45 in 2001 and close to 100this year. This does not include those whodon’t have websites but began using email in their daily dealings. We intend to coverthe developments in the SMB area in ourfuture issues.By the year 2005, we’re expecting to seewireless devices to be the primary Internetaccess point for Filipinos as we reach seven(7) million. This is a common trend that will be seen in countries with low Internetpenetration.
ONE BILLIONINTERNET USERSIN 2005
GETTINGBUYERSATTENTION
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THE DIGITALFILIPINO STATSREPORT THE DIGITALFILIPINO STATSREPORT
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n the Philippines, there are various reports as to how much has Filipinos bought online.I’m currently doing a survey on this one and hope to be able to provide a much moreconclusive figure in future issues.The Philippine Internet User Habits survey happened 1st half of last year (2000), Respondentsare from Tacloban, Davao, Cebu, Cagayan De Oro, Zamboanga, and NCR. From that survey, wewere able to summarize that Filipino online shoppers buy books, computer software, musicCDs, computer hardware, and mail-order items. Popular shopping sites were Amazon(http://www.amazon.com), Barnes and Noble (http://www.bn.com), E-Bay
(http://www.e-bay.com), Yahoo Shopping (http://www.yahoo.com), and CDNow
(http://www.cdnow.com).This year, the research began last February. Respondents are from Cebu, Davao, Manila,Iloilo, Batangas, and from different parts of the country.Response from online buyers show that the top 5 products and service, out of 20, Filipinosbuy online are books (54%), computer software (33%), domain name (31%), web hosting(25%), and computer hardware (24%). The top 5 sites, out of 79 named, where Filipinobuyers shop are Amazon (http://www.amazon.com) (54%), E-Bay (http://www.e-bay.com)
(11%), MyAyala (http://www.myayala.com) (11%), Network Solutions(http://www.netsol.com) (8%), Barnes and Noble (http://www.bn.com) (6%), and
Register.com (http://www.register.com)(6%).Obviously, what this tells us is that Filipinos are still fond of buying the latest books online.Amazon.com and Barnes and Noble have remained consistent among Filipino buyers becauseof its vast selection of book resources. Local bookstore sites should take this seriously. A lotof earning opportunities are being lost by the local bookstore to these online sites. Theymust innovate or else lose the market they are supposed to earn their revenues from.Although local auction sites did not click, E-Bay remains to be a favorite as the site serves ashaven for good buys and deals.Surprisingly, a local site has entered our list. MyAyala.com began achieving acceptanceamong Filipino buyers. To think that a lot said in the past that buying movie tickets onlineand reserving theater seats won’t do well, but think again. Most of MyAyala.com buyers thatwe interviewed visit the site for that specific purpose. What more if all movie theaters andevents nationwide will have this facility? I believe that this can play a big factor in helpingthe entertainment industry.It is interesting to see also that a lot of the people we interviewed have invested significantlyonline by buying a domain name and avail of web hosting services. On the down side, it onlyshows that foreign web hosting providers are the ones benefiting at this stage. Until ourlocal providers become more competitive in their service offerings, it will continuously losemarket share from competitors abroad.
METHODOLOGY
The result of our Internet user habits survey does not speak for the entire industry. I gatherdata through traditional means and will cover more location and depth as it progress. I hopethat this effort will help guide readers in assessing various research reports, to come up withbusiness decisions. This will be updated regularly and mention the sites where Filipinos buyfor every product category and the amount spent in future issues.
THE FILIPINOONLINE SHOPPER
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lot of the local dotcoms fail asresources were wasted by puttingup online sites that compete withproducts available through direct sales andnearby shops. Some merchants created anall-in-one shopping site, trying to target abroad segment of the market, withoutunderstanding the Internet, lifestyle habits,and attitude of its target market. Majorityof the present sales by merchants are fromoverseas Filipino workers and hardly from thelocal Internet community.A lot relied as well with online advertisingas its main source of revenue. Admittedly,there’s no silver bullet solution that canguarantee e-business success. There’s noeffective benchmark and role models thatcan be used as a guide in determining thesuccess factor of e-business as everyone isstill struggling for survival until now.However, there are small lessons here andthere learned along the way shared indiscussions with entrepreneurs and e-business managers.It is no longer enough to say that one wantsto target the rich, middle class, or themasses. One must take the effort inunderstanding their habits, culture, andlifestyle. A good book on this subject is Dr.Ned Roberto’s “Strategic MarketSegmentation: How to Market to the Rich,the Middle Class, and the Masa” (ISBN 971-8611-02-9). The classes of Philippine society,I believe, are accurately depicted in thisbook. To compliment, I’m sharing here mytake on Dr. Roberto’s book and some onlinebusiness pointers that can be taken intoconsideration by our readers.Based from the shopping habits that we’veseen from our survey, majority of our onlinebuyers right now belongs to the upper middleclass and the smart nouveau rich (SNR)market segments. Most products bought aremeant for oneself rather than a gift forsomebody else.
SMART NOUVEAU RICH (SNR)
The Class AB usually refers to the rich people.Dr. Roberto classified them into three types.They are the born rich, gross nouveau rich(rags-to-riches), and smart nouveau rich(SNR). For this part, I’ll only focus on the lastone.The SNR is a practical person that does notengage in lavish spending and gift giving.However, once in awhile, it indulges oneself in “self-gifts” as a form of reward,inspiration, or morale booster in tough times.The online buyers from this segment are greattargets for “self-gift” type of products andservices. Merchants should strategize thepackaging of one’s website and gear towardsthe “indulge” message in its marketing. Astimes are tough and people are pushed tothe limit, products and services that will giverelief and understand the pressure of thissegment will definitely attract attention.Great bargains but practical items can alsobe of interest to this segment.
UPPER MIDDLE CLASS
The middle class sector or Class C passedthe poverty level and are doing reasonablywell in their lives. Dr. Roberto classified thissegment into two groups: upper middle classand the broad C segment. For this part, we’ll look into the first one.The upper middle class is composed of people who are in the peak of their careersand businesses. They have hectic work andbusiness schedules. They are the pressuredones as well in ensuring that their familywill have good food on the table, high-quality education for their children,and take care of oneself in termsof health and grooming. Thepressure and stress of thissegment are considered asself-inflicted because of their desire to achievetheir dreams andambition. These are thepeople who will movelater on to the Class ABsegment. They caneither become anSNR or a grossnouveau rich (GNR).The GNR are peoplewho became richbut not ready for it. In order to fit in, theyengage in extravagant spending and richlifestyle activities.The SNR online buyers are maturing. Theyappreciate the value of the Internet andmobile banking. They can be considered asthe most active user of Internet services.Some of them are surfing the Internet usingGPRS-enabled mobile phones. For the onlinemerchant, they are the prime target for giftproducts intended to be given to loved onesand corporate clients. They are also targetfor products and services that caters towhims and needs of people on the go thatcan help them in their daily “beingorganized” rituals and “on-the-go” powerlooks and lifestyle. However, one mustconstruct its offer and service so well thatit would become the preferred provider of choice than its physical world counterparts.Because of their busy lifestyle, marketingto this segment must be complimented inall forms such as direct marketing and tri-media advertising, in order to merit itsattention. Offers must be made in itssimplest and quickest form.There are online buyers in other segmentsof Philippine society but their habits andlifestyle still needs to be understood furtherfrom our end before giving more inputs.We’ll tackle that in future issues.
GUIDELINES FORMERCHANTS
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