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THE DIGITALFILIPINO STATSREPORT 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
Businesses (SMBs) to invest in these areas.
Jim Downing, VP and research director for
Gartner advised SMBs to experiment now with
putting up the necessary infrastructure is a Internet services that they perceived to be
major hindrance to reach that stage. too complex and expensive to implement.
Although there are a lot of providers offering “During these trials, SMBs can gauge the
free e-commerce solutions, entrepreneurs potential benefits of the Internet to their
don’t simply buy such an idea especially if business and determine whether, and when,
the long term plans and viability of the to embrace it more fully.”
company is questionable. It is the same if
the service provider is a startup. Web content management allows SMBs to
update their website content easily and
However, entrepreneurs are being requested quickly. However, this costs a lot in the
to go online right now to start dealing with earlier years of the Internet phenomena. Now,
suppliers and major customers over the any SMB can avail of these solutions at
Internet, with the use of email and e- reasonable cost (US$50 per month and up).
commerce. In two years, the same important
business partners will demand for it. This is So many things have been said and written
a trend we’re seeing to happen to buyers as to how SMBs can benefit if they go online. The following are useful references for this
especially those who are members of At the end of the day, I believe that those report.
business-to-business e-commerce sites like who will make the right moves now and invest
BayanTrade.com. 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)
According to Gartner’s Spotlight report comes. As companies, both buyers and
“SMBs: Tiptoeing Through the Internet”, web suppliers, are trying to reduce cost and keep Computer Industry Almanac
content management and e-commerce their business afloat, the Internet provides (http://www.c-i-a.com)
solutions prices are falling, making this year an affordable medium in communicating with
an excellent time for Small and Medium sized 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
8
THE DIGITALFILIPINO STATSREPORT
GETTING
THE DIGITALFILIPINO STATSREPORT

Welcome to the first issue of the DigitalFilipino.com StatsReport!
ONE BILLION BUYERS
STATSREPORT 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
Copyright 2002 by Janette Toral ,
DigitalFilipino.com.
growing as the users are beginning to achieve maturity and
sensibility with their online needs.
IN 2005
C
ommon mistake of our local
All rights reserved. This report or any part of merchants is the mentality of simply
it may not be reproduced, stored, transmitted
in any form and means without the written
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
permission from the author. 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
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 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
by Antonio Bucu. 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
StatsReport subscribers who would like to 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
ask questions related to this report can email 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
the writer at: 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.
Janette@digitalfilipino.com 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
or call 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
+63-917-4974922 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
SUBSCRIBE TO DIGITALFILIPINO 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
STATSREPORT (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
DigitalFilipino StatsReport is a monthly 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
newsletter giving an analysis on local and 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
international statistical developments in the Also, more and more schools are connecting penetration.
users of value-added services.
field of information technology, Internet, e- Yes, DigitalFilipino.com has evolved
commerce, outsourcing, and wireless again! More than anything else, this is your
Notification of new products, regular updates
markets. As DigitalFilipino.com also does its publication. I want you, my subscribers, to
drive the content from this point on. Tell me on topics of interest, and allowing registered
own research and person-to- person surveys, buyers to do a quick search on products can
what information you need and will do my
its up-to-date status is also included in every best in producing the results in future issues. provide a lot of value to any online business.
monthly report.
The Filipino has so much potential in making
The online merchant must look into online
In addition, subscribers are invited to its mark and be recognized in the areas of
web, outsourcing, and wireless. May this and offline channels in doing business to
participate in our monthly briefing where and make the buying experience convenient for
publication help you in making wise decisions
when the report is released. The fee for this and get the information that you need in the the customer. Perhaps, this is the reason
service is only US$150 per year (for the first most affordable and timely manner. why MyAyala.com is slowly gaining ground
120 subscribers). This package includes 12 in the market. Providing a service that
reports with the option of participating in Mabuhay!
intends to compliment the existing offerings
our monthly briefing. of the center, especially its movie theater,
Janette Toral is driving consumers to their end. However,
Writer its online mall can still be improved.
To subscribe, please email
Janette@digitalfilipino.com Instead of doing everything alone, online
the following: merchants should consider partnering with
ABOUT THE WRITER content providers and network operators to
Type of subscription: (personal/business) Janette Toral is an IT writer, speaker, consultant, educator and lobbyist. She founded the Philippine achieve business objectives at the least cost
Company Name: Internet Commerce Society last September 1997 and got heavily involved in working for the possible.
Address: passage of the country’s Y2K Law and E-Commerce Law.
Phone Number: She has written articles for international publications such as Business Online, asia.internet.com, In the end, only those who’ll be able to
Fax Number: and World Executive Digest. She published her first book in June 2000 titled, “DigitalFilipino: An achieve the highest customer retention will
Person to receive the report: E-Commerce Guide for the eFilipino”. succeed. Customer usage must be studied
Position: She’s frequently invited at various IT conferences to talk about information technology, web, diligently in order to come up ongoing
Email: outsourcing, and wireless developments in the Philippines. programs to achieve customer loyalty and
Website URL: increase sales.
An IT practitioner, she has more than 13 years of combined experience in the areas of research,
Research areas of interest:
training, marketing, business planning, technical support, and project management.
(please be detailed as possible)
7
THE DIGITALFILIPINO STATSREPORT THE DIGITALFILIPINO STATSREPORT

GUIDELINES FOR THE FILIPINO
MERCHANTS ONLINE SHOPPER
A
lot of the local dotcoms fail as (rags-to-riches), and smart nouveau rich 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.
resources were wasted by putting (SNR). For this part, I’ll only focus on the last 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
up online sites that compete with one. lifestyle activities.
conclusive figure in future issues.
products available through direct sales and
nearby shops. Some merchants created an The SNR is a practical person that does not The SNR online buyers are maturing. They
The Philippine Internet User Habits survey happened 1st half of last year (2000), Respondents
all-in-one shopping site, trying to target a engage in lavish spending and gift giving. appreciate the value of the Internet and
are from Tacloban, Davao, Cebu, Cagayan De Oro, Zamboanga, and NCR. From that survey, we
broad segment of the market, without However, once in awhile, it indulges oneself mobile banking. They can be considered as
were able to summarize that Filipino online shoppers buy books, computer software, music
understanding the Internet, lifestyle habits, in “self-gifts” as a form of reward, the most active user of Internet services.
CDs, computer hardware, and mail-order items. Popular shopping sites were Amazon
and attitude of its target market. Majority inspiration, or morale booster in tough times. Some of them are surfing the Internet using
(http://www.amazon.com), Barnes and Noble (http://www.bn.com), E-Bay
of the present sales by merchants are from GPRS-enabled mobile phones. For the online
(http://www.e-bay.com), Yahoo Shopping (http://www.yahoo.com), and CDNow
overseas Filipino workers and hardly from the The online buyers from this segment are great merchant, they are the prime target for gift
(http://www.cdnow.com).
local Internet community. targets for “self-gift” type of products and products intended to be given to loved ones
services. Merchants should strategize the and corporate clients. They are also target
This year, the research began last February. Respondents are from Cebu, Davao, Manila,
A lot relied as well with online advertising packaging of one’s website and gear towards for products and services that caters to
Iloilo, Batangas, and from different parts of the country.
as its main source of revenue. Admittedly, the “indulge” message in its marketing. As whims and needs of people on the go that
there’s no silver bullet solution that can times are tough and people are pushed to can help them in their daily “being
Response from online buyers show that the top 5 products and service, out of 20, Filipinos
guarantee e-business success. There’s no the limit, products and services that will give organized” rituals and “on-the-go” power
buy online are books (54%), computer software (33%), domain name (31%), web hosting
effective benchmark and role models that relief and understand the pressure of this looks and lifestyle. However, one must
(25%), and computer hardware (24%). The top 5 sites, out of 79 named, where Filipino
can be used as a guide in determining the segment will definitely attract attention. construct its offer and service so well that
buyers shop are Amazon (http://www.amazon.com) (54%), E-Bay (http://www.e-bay.com)
success factor of e-business as everyone is Great bargains but practical items can also it would become the preferred provider of
(11%), MyAyala (http://www.myayala.com ) (11%), Network Solutions
still struggling for survival until now. be of interest to this segment. choice than its physical world counterparts.
(http://www.netsol.com) (8%), Barnes and Noble (http://www.bn.com) (6%), and
However, there are small lessons here and
Register.com (http://www.register.com)(6%).
there learned along the way shared in UPPER MIDDLE CLASS Because of their busy lifestyle, marketing
discussions with entrepreneurs and e- The middle class sector or Class C passed to this segment must be complimented in
Obviously, what this tells us is that Filipinos are still fond of buying the latest books online.
business managers. the poverty level and are doing reasonably all forms such as direct marketing and tri-
Amazon.com and Barnes and Noble have remained consistent among Filipino buyers because
well in their lives. Dr. Roberto classified this media advertising, in order to merit its
of its vast selection of book resources. Local bookstore sites should take this seriously. A lot
It is no longer enough to say that one wants segment into two groups: upper middle class attention. Offers must be made in its
of earning opportunities are being lost by the local bookstore to these online sites. They
to target the rich, middle class, or the and the broad C segment. For this part, we’ll simplest and quickest form.
must innovate or else lose the market they are supposed to earn their revenues from.
masses. One must take the effort in look into the first one.
understanding their habits, culture, and 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
lifestyle. A good book on this subject is Dr. The upper middle class is composed of of Philippine society but their habits and
haven for good buys and deals.
Ned Roberto’s “Strategic Market people who are in the peak of their careers lifestyle still needs to be understood further
Segmentation: How to Market to the Rich, and businesses. They have hectic work and from our end before giving more inputs.
Surprisingly, a local site has entered our list. MyAyala.com began achieving acceptance
the Middle Class, and the Masa” (ISBN 971- business schedules. They are the pressured We’ll tackle that in future issues.
among Filipino buyers. To think that a lot said in the past that buying movie tickets online
8611-02-9). The classes of Philippine society, ones as well in ensuring that their family
and reserving theater seats won’t do well, but think again. Most of MyAyala.com buyers that
I believe, are accurately depicted in this will have good food on the table, high-
we interviewed visit the site for that specific purpose. What more if all movie theaters and
book. To compliment, I’m sharing here my quality education for their children,
events nationwide will have this facility? I believe that this can play a big factor in helping
take on Dr. Roberto’s book and some online and take care of oneself in terms
the entertainment industry.
business pointers that can be taken into of health and grooming. The
consideration by our readers. pressure and stress of this
It is interesting to see also that a lot of the people we interviewed have invested significantly
segment are considered as
online by buying a domain name and avail of web hosting services. On the down side, it only
Based from the shopping habits that we’ve self-inflicted because of
shows that foreign web hosting providers are the ones benefiting at this stage. Until our
seen from our survey, majority of our online their desire to achieve
local providers become more competitive in their service offerings, it will continuously lose
buyers right now belongs to the upper middle their dreams and
market share from competitors abroad.
class and the smart nouveau rich (SNR) ambition. These are the
market segments. Most products bought are people who will move
METHODOLOGY
meant for oneself rather than a gift for later on to the Class AB
The result of our Internet user habits survey does not speak for the entire industry. I gather
somebody else. segment. They can
data through traditional means and will cover more location and depth as it progress. I hope
either become an
that this effort will help guide readers in assessing various research reports, to come up with
SMART NOUVEAU RICH (SNR) SNR or a gross
business decisions. This will be updated regularly and mention the sites where Filipinos buy
The Class AB usually refers to the rich people. nouveau rich (GNR).
for every product category and the amount spent in future issues.
Dr. Roberto classified them into three types. The GNR are people
They are the born rich, gross nouveau rich who became rich

6 3
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
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