THE DIGITALFILIPINO STATSREPORT
SMBs SHOULD
INVEST IN THE
INTERNET NOW
T here’s no doubt that the Internet can
change the way our entrepreneurs do
business. For most of them, the high cost of
putting up the necessary infrastructure is a
major hindrance to reach that stage.
Although there are a lot of providers offering
free e-commerce solutions, entrepreneurs
don’t simply buy such an idea especially if
the long term plans and viability of the
company is questionable. It is the same if
the service provider is a startup.
However, entrepreneurs are being requested
to go online right now to start dealing with
suppliers and major customers over the
Internet, with the use of email and e-
commerce. In two years, the same important
business partners will demand for it. This is
a trend we’re seeing to happen to buyers
especially those who are members of
business-to-business e-commerce sites like
BayanTrade.com.
According to Gartner’s Spotlight report
“SMBs: Tiptoeing Through the Internet”, web
content management and e-commerce
solutions prices are falling, making this year
an excellent time for Small and Medium sized
8
THE DIGITALFILIPINO STATSREPORT
Businesses (SMBs) to invest in these areas.
Jim Downing, VP and research director for
Gartner advised SMBs to experiment now with
Internet services that they perceived to be
too complex and expensive to implement.
“During these trials, SMBs can gauge the
potential benefits of the Internet to their
business and determine whether, and when,
to embrace it more fully.”
Web content management allows SMBs to
update their website content easily and
quickly. However, this costs a lot in the
earlier years of the Internet phenomena. Now,
any SMB can avail of these solutions at
reasonable cost (US$50 per month and up).
So many things have been said and written
as to how SMBs can benefit if they go online. The following are useful references for this
At the end of the day, I believe that those report.
who will make the right moves now and invest
in building their Internet infrastructure will Ipsos-Reid - The U.S. Internet Fact Page
be part of the market rebound when the time (http://www.ipsos-reid.com)
comes. As companies, both buyers and
suppliers, are trying to reduce cost and keep Computer Industry Almanac
their business afloat, the Internet provides (http://www.c-i-a.com)
an affordable medium in communicating with
customers and reach out to new markets. “More is Not Enough: Bandwidth End Use
Forecast 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 to
Market to the Rich, the Middle Class and the
“Masa”
Dr. Ned Roberto, LifeCycle Press/Salt & Light
Ventures (ISBN 971-8611-02-9)
DigitalFilipino.com 1st Philippine Internet
User Habits Survey WAP site
(http://tagtag.com/jct)
DigitalFilipino.com 2nd Internet User Habits
Survey
THE DIGITALFILIPINO STATSREPORT
STATSREPORT
Copyright 2002 by Janette Toral ,
DigitalFilipino.com.
All rights reserved. This report or any part of
it may not be reproduced, stored, transmitted
in any form and means without the written
permission from the author.
L a y o u t , de s i g n a n d il l u s t r a t i o n s
by Antonio Bucu.
StatsReport subscribers who would like to
ask questions related to this report can email
the writer at:
Janette@digitalfilipino.com
or call
+63-917-4974922
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field of information technology, Internet, e-
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GETTING
THE DIGITALFILIPINO STATSREPORT
Welcome to the first issue of the DigitalFilipino.com StatsReport!
ONE BILLION BUYERS
I’ve been following local and global information technology
developments and assess its impact on Filipino’s lives. Despite INTERNET USERS ATTENTION
the economic crisis, Internet and e-commerce is continuously
growing as the users are beginning to achieve maturity and
sensibility with their online needs.
IN 2005
C
ommon mistake of our local
merchants is the mentality of simply
DigitalFilipino.com (http://www.digitalfilipino.com) started as
a website in September 1999 to promote my first book,
“DigitalFilipino: An E-Commerce Guide for the eFilipino.” Since
I t is estimated that there are 490 million
Internet users worldwide as of end-2001.
By 2005, this can reach up to 1 billion.
online, providing access points for the
students.
building a website and wait for its
buyers to come. A lot offered various services
the book launch last June 2000, the site has evolved and become that are available in traditional brick and
an e-commerce research site. With the changing demands in A good example that I can share in
mortar stores. Competing in such an
information technology (IT), we began covering developments The Computer Industry Almanac predicts that this regard is our personal experience
environment is very limited and does not
in the area of outsourcing and wireless technologies. increasing portion of Internet users in 2005 in supporting Manila FAME
provide any unique advantage. Although
will be using wireless devices such as web- (http://www.citem.com.ph). In the year
I also have an active discussion group (http://groups.yahoo.com/ targeting overseas Filipino workers can be
enabled cellphones and personal digital 2000, we began judging website entries by
group/digitalfilipino) that started last September 1999 as an attractive, one must remember that their
announcement list. It became a public discussion group in assistants (PDAs) to go online. This can reach exporters. At that time, there were only 7
buying habits are driven by seasonal
November 2000 with more than 1700 members at present. I up to 48%. In developed countries, the exporters having online presence. This
occasions.
definitely don’t know everything and this community serves as wireless device will be supplemental to PC increased to 45 in 2001 and close to 100
an important venue in keeping in touch with various Internet Internet access for most users. this year. This does not include those who
user concerns and points of view. Merchants engaging in the online business
don’t have websites but began using email
should formulate strategies to make
Knowing that my site is a resource for researchers, I created a public message board at In the Philippines, we estimated that the in their daily dealings. We intend to cover
themselves the shopping site of choice, both
http://efilipino.community.everyone.net where queries can be posted. More than 900 research-related number of Internet users as of end 2000 is 2 the developments in the SMB area in our
online and offline, for its target buyers.
questions, answers, and announcements have been posted to date. million. As more and more Filipinos going future issues.
There are so many ways that the merchants
online everyday, we expect to reach 3.5
Since last year, I’ve been doing Internet User Habits survey during exhibits and personal speaking can reach out to its customers. I consider
million Internet users by end of this year. By the year 2005, we’re expecting to see
engagements. The results of our 2000 survey work can be found in our WAP site the mobile phone as the most important
(http://tagtag.com/jct) posted last June 12, 2001. This is due to the fact that the number of wireless devices to be the primary Internet
marketing channel today. Our survey shows
small and medium sized businesses (SMB), access point for Filipinos as we reach seven
that all local online buyers have mobile
Pressure from peers urging me to come up with a book 2 has always been there. However, I thought of especially in the export sector, accessing the (7) million. This is a common trend that will
coming up instead with this personal monthly newsletter referred to as DigitalFilipino.com StatsReport phones and send an average of 18 text
Internet is growing at exponential rates. be seen in countries with low Internet
where subscribers can get updated results of our survey every month. messages a day. More than half of them are
Also, more and more schools are connecting penetration.
users of value-added services.
Yes, DigitalFilipino.com has evolved
again! More than anything else, this is your
Notification of new products, regular updates
publication. I want you, my subscribers, to
drive the content from this point on. Tell me on topics of interest, and allowing registered
buyers to do a quick search on products can
what information you need and will do my
best in producing the results in future issues. provide a lot of value to any online business.
The Filipino has so much potential in making
The online merchant must look into online
its mark and be recognized in the areas of
web, outsourcing, and wireless. May this and offline channels in doing business to
make the buying experience convenient for
publication help you in making wise decisions
and get the information that you need in the the customer. Perhaps, this is the reason
most affordable and timely manner. why MyAyala.com is slowly gaining ground
in the market. Providing a service that
Mabuhay!
intends to compliment the existing offerings
of the center, especially its movie theater,
Janette Toral is driving consumers to their end. However,
Writer its online mall can still be improved.
Instead of doing everything alone, online
merchants should consider partnering with
ABOUT THE WRITER content providers and network operators to
Janette Toral is an IT writer, speaker, consultant, educator and lobbyist. She founded the Philippine achieve business objectives at the least cost
Internet Commerce Society last September 1997 and got heavily involved in working for the possible.
passage of the country’s Y2K Law and E-Commerce Law.
She has written articles for international publications such as Business Online, asia.internet.com, In the end, only those who’ll be able to
and World Executive Digest. She published her first book in June 2000 titled, “DigitalFilipino: An achieve the highest customer retention will
E-Commerce Guide for the eFilipino”. succeed. Customer usage must be studied
She’s frequently invited at various IT conferences to talk about information technology, web, diligently in order to come up ongoing
outsourcing, and wireless developments in the Philippines. programs to achieve customer loyalty and
increase sales.
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.
7
THE DIGITALFILIPINO STATSREPORT
GUIDELINES FOR
MERCHANTS
A
lot of the local dotcoms fail as
resources were wasted by putting
up online sites that compete with
products available through direct sales and
nearby shops. Some merchants created an
all-in-one shopping site, trying to target a
broad segment of the market, without
understanding the Internet, lifestyle habits,
and attitude of its target market. Majority
of the present sales by merchants are from
overseas Filipino workers and hardly from the
local Internet community.
A lot relied as well with online advertising
as its main source of revenue. Admittedly,
there’s no silver bullet solution that can
guarantee e-business success. There’s no
effective benchmark and role models that
can be used as a guide in determining the
success factor of e-business as everyone is
still struggling for survival until now.
However, there are small lessons here and
there learned along the way shared in
discussions with entrepreneurs and e-
business managers.
It is no longer enough to say that one wants
to target the rich, middle class, or the
masses. One must take the effort in
understanding their habits, culture, and
lifestyle. A good book on this subject is Dr.
Ned Roberto’s “Strategic Market
Segmentation: 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 this
book. To compliment, I’m sharing here my
take on Dr. Roberto’s book and some online
business pointers that can be taken into
consideration by our readers.
Based from the shopping habits that we’ve
seen from our survey, majority of our online
buyers right now belongs to the upper middle
class and the smart nouveau rich (SNR)
market segments. Most products bought are
meant for oneself rather than a gift for
somebody 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
6 3
(rags-to-riches), and smart nouveau rich
(SNR). For this part, I’ll only focus on the last
one.
The SNR is a practical person that does not
engage 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 great
targets for “self-gift” type of products and
services. Merchants should strategize the
packaging of one’s website and gear towards
the “indulge” message in its marketing. As
times are tough and people are pushed to
the limit, products and services that will give
relief and understand the pressure of this
segment will definitely attract attention.
Great bargains but practical items can also
be of interest to this segment.
UPPER MIDDLE CLASS
The middle class sector or Class C passed
the poverty level and are doing reasonably
well in their lives. Dr. Roberto classified this
segment into two groups: upper middle class
and 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 careers
and businesses. They have hectic work and
business schedules. They are the pressured
ones as well in ensuring that their family
will have good food on the table, high-
quality education for their children,
and take care of oneself in terms
of health and grooming. The
pressure and stress of this
segment are considered as
self-inflicted because of
their desire to achieve
their dreams and
ambition. These are the
people who will move
later on to the Class AB
segment. They can
either become an
SNR or a gross
nouveau rich (GNR).
The GNR are people
who became rich
THE DIGITALFILIPINO STATSREPORT
THE FILIPINO
ONLINE SHOPPER
but not ready for it. In order to fit in, they
I
n the Philippines, there are various reports as to how much has Filipinos bought online.
engage in extravagant spending and rich
I’m currently doing a survey on this one and hope to be able to provide a much more
lifestyle activities.
conclusive figure in future issues.
The SNR online buyers are maturing. They
The Philippine Internet User Habits survey happened 1st half of last year (2000), Respondents
appreciate the value of the Internet and
are from Tacloban, Davao, Cebu, Cagayan De Oro, Zamboanga, and NCR. From that survey, we
mobile banking. They can be considered as
were able to summarize that Filipino online shoppers buy books, computer software, music
the most active user of Internet services.
CDs, computer hardware, and mail-order items. Popular shopping sites were Amazon
Some of them are surfing the Internet using
(http://www.amazon.com), Barnes and Noble (http://www.bn.com), E-Bay
GPRS-enabled mobile phones. For the online
(http://www.e-bay.com), Yahoo Shopping (http://www.yahoo.com), and CDNow
merchant, they are the prime target for gift
(http://www.cdnow.com).
products intended to be given to loved ones
and corporate clients. They are also target
This year, the research began last February. Respondents are from Cebu, Davao, Manila,
for products and services that caters to
Iloilo, Batangas, and from different parts of the country.
whims and needs of people on the go that
can help them in their daily “being
Response from online buyers show that the top 5 products and service, out of 20, Filipinos
organized” rituals and “on-the-go” power
buy online are books (54%), computer software (33%), domain name (31%), web hosting
looks and lifestyle. However, one must
(25%), and computer hardware (24%). The top 5 sites, out of 79 named, where Filipino
construct its offer and service so well that
buyers shop are Amazon (http://www.amazon.com) (54%), E-Bay (http://www.e-bay.com)
it would become the preferred provider of
(11%), MyAyala (http://www.myayala.com ) (11%), Network Solutions
choice than its physical world counterparts.
(http://www.netsol.com) (8%), Barnes and Noble (http://www.bn.com) (6%), and
Register.com (http://www.register.com)(6%).
Because of their busy lifestyle, marketing
to this segment must be complimented in
Obviously, what this tells us is that Filipinos are still fond of buying the latest books online.
all forms such as direct marketing and tri-
Amazon.com and Barnes and Noble have remained consistent among Filipino buyers because
media advertising, in order to merit its
of its vast selection of book resources. Local bookstore sites should take this seriously. A lot
attention. Offers must be made in its
of earning opportunities are being lost by the local bookstore to these online sites. They
simplest and quickest form.
must innovate or else lose the market they are supposed to earn their revenues from.
There are online buyers in other segments
Although local auction sites did not click, E-Bay remains to be a favorite as the site serves as
of Philippine society but their habits and
haven for good buys and deals.
lifestyle still needs to be understood further
from our end before giving more inputs.
Surprisingly, a local site has entered our list. MyAyala.com began achieving acceptance
We’ll tackle that in future issues.
among Filipino buyers. To think that a lot said in the past that buying movie tickets online
and reserving theater seats won’t do well, but think again. Most of MyAyala.com buyers that
we interviewed visit the site for that specific purpose. What more if all movie theaters and
events nationwide will have this facility? I believe that this can play a big factor in helping
the entertainment industry.
It is interesting to see also that a lot of the people we interviewed have invested significantly
online by buying a domain name and avail of web hosting services. On the down side, it only
shows that foreign web hosting providers are the ones benefiting at this stage. Until our
local providers become more competitive in their service offerings, it will continuously lose
market share from competitors abroad.
METHODOLOGY
The result of our Internet user habits survey does not speak for the entire industry. I gather
data through traditional means and will cover more location and depth as it progress. I hope
that this effort will help guide readers in assessing various research reports, to come up with
business decisions. This will be updated regularly and mention the sites where Filipinos buy
for every product category and the amount spent in future issues.
 What Filipinos Buy Online (2000) Where do Filipino Online Buyers
Surf Purchase Average – 2000/2001
• Books •
What Filipinos Buy Online (2000) 2000
• Computer software • What Filipinos Buy Online (2001) • Yahoo.com • Yehey.com ␣ 21-24
2001
Civil Status • Amazon • • Music • • Google.com • BWorldOnline.com
• Books • 25-28
• Barnes and Noble • • Computer Hardware • • Inq7.net • DFNN.com
• Computer software •
• Ebay • • Catalog/Mail Order • • CNN.com • PinoyCentral.com 29-32
• Domain name •
• Yahoo • • Hotmail.com • PinoyMail.com

Age Group
• Travel services • 33-36
• CDNow • • Philstar.com
• Web hosting •
37-40

41-45
Demographic Profile NCR – 72% Respondents (357) Where do Filipinos Buy Online
Single – 38% 37% of married/widowed/ Mindanao 16 and below
(2001) 46-55
Married – 58% separated with 2 kids
Region XI – 7% 17-20 Amazon (54%)
Widowed – 1% 29% with 1 kid 56 and up
Separated – 3% 26% with 3 kids. Region XII – 1% 21-24 Ebay, MyAyala (11%)
Visayas 25-28 Network Solutions (8%) 0 500 1000 1500 2000

Age Group
29-32 Barnes and Noble, Register.com (6%) Purchase Amount
Region VI – 1%
33-36 Top Mobile
Civil Status - Married Region VII – 8% 37-40 US$522.13 average annual purchase per user
Luzon 41-45
VAS Applications
21-24 * Some are separated
** Some are widowed Region V – 1% 46-55
25-28
Age Group

56 and up Where do Filipinos Buy Online (2001) • Logos and icons •

39-32 Region III –3%
39-32 Region IV – 4% 0 5 10 15 20 25
• Ring tones •
33-36 Percent (%) • 21-24 years old • Picture messages •
37-40 – Books, computer software, • Daily News •
41-45 * Buyer's Profile Respondents Profile (357) information services • Banking •
46-55 **
16 and below • 46-55 years old • Games • Mobile VAS Users
56 and up 44% PDA ownership
0 20 40 60 80 100
ISP Subscription 17-20 – Books, travel services, music CD
Pacific Internet 21-24
Percent (%) 86% access the Internet PLDT DSL
21-24 * Amazon.com favorite shopping site Number of Text Messages
25-28 Sent Daily (2001) 25-28

Age Group
from Work Infocom • 25-28 years old 29-32
29-32

Age Group
Mozcom – Books, computer software,
96% computer ownership 33-36 21-24 33-36
DigitelOne
37-40 domain name, web hosting 25-28 37-40
72% access the Internet 41-45 • Shopping sites 29-32

Age Group
41-45
from home 46-55 – Amazon.com 33-36 46-55
56 and up – Network Solutions 37-40 56 and up
0 20 40 60 80 100 – E-Bay 41-45
Percent (%) 0 10 20 30 40 50 60 70 80
Health Sites • 29-32 years old 46-55
Percent (%)
Online Buyers
Non-Buyers w/ Credit Card
– Books, domain name, web hosting 56 and up
47% of online buyers search for • Shopping sites 0
Non-Buyers w/o Credit Card 5 10 15 20 25 30 35
health information online – Amazon.com Daily Text Messages Sent
Education • Yahoo • – E-Bay
• WebMD • – Register.com
60% college graduates
23% Computer Science grads
• Google • Health Sites • 33-36 years old
14% Business administration grads • Dr. George, eDiets • – Books, computer software,
37% masteral graduates
21-24 Buyers' Profile
54% with MBA 25-28 home electronics, travel services
12% with MCS (computer science) 29-32 • 37-40 years old 43% Online Banking
Age Group

3% college level 33-36 – Books, computer hardware BPI – 52%

PCI - Equitable – 13%
37-40 • Shopping sites Unionbank – 10%
41-45 – Amazon.com
Personal Annual Income 46-55 – MyAyala.com
21-24 56 and up Buyers' Profile
25-28 Online Bankers
0 20 40 60 80 100
Age Group

39-32 Percent (%)

39-32 21-24
33-36 25-28

Age Group
37-40 29-32
41-45 * 33-36
46-55 **
37-40
56 and up
41-45
0 200 400 600 800 1000 46-55
Income (Thousands)
56 and up

0 10 20 30 40 50 60 70 80
Percent (%)
STATSREPORT
JUNE 2002
4 5