Philippine E-Commerce Roadmap

Updates

Janette Toral
Digitalfilipino.com
 “All the ingredients are in place for the Philippines to be the world capital of ecommerce,
just as it once was for SMS and now is for Facebook penetration, according to Lazada’s CEO
Inanc Balci.”

http://www.rappler.com/business/168299-ecommerce-asean-ph-top-penetration
 Business
Objectives & Vision: E-Commerce as an
Success
Criteria Economic Growth Contributor
& Philippines Competitive
100,000
Advantage
MSMEs do
E-Commerce Fast & Cost
Competitive
Government
Internet
E-Payment
Access
Implementation
30% of
Filipinos do
E-Commerce
Effective
Merchant & E-Commerce at
Consumer Cybercrime
25% GDP
Protection Enforcement
& Prosecution
 E-Commerce Roadmap
Deliverables
INTERNAL VALUE
UPSTREAM DOWNSTREAM
CHAIN
• Philippine Internet • Consumer Protection • Seal of Trust
Broadband on E-Commerce • PKI / Digital
Masterplan • National Single Signature
• Customs Window Implementation
Modernization Law • Anti-Cybercrime • Cross-Border E-
(Updating of Tariff enforcement Commerce Policies
Regulations) • E-Government • E-Commerce
• New Telco / VAS Payment Education
Players • Simplified Tax system • Sector development
• National Retail • National Privacy • Private Sector
Payment System Commission Leadership
• E-Notary
Internet Connectivity
 What is the E-Commerce Index?

• E-COMMERCE INDEX (ECI)

PHILIPPINES tracks e-commerce
intensity in the Philippines, and
measures the extent of B2B
online engagement in three
industries – Manufacturing,
Retail/Wholesale, and Services. A
Composite E-Commerce Index
reflects the overall e-commerce
intensity in all three industries.
 25%
50%
75%
100%

0%
Aug 13

2017: January to July

Sep 13
Oct 13

2014 to 2016: 12 months

2013: August to December
Nov 13
Dec 13
Jan 14
Feb 14
Mar 14

2013
Apr 14

28%
May 14
Jun 14
Jul 14
Aug 14
Sep 14
Oct 14
Nov 14
Dec 14

2014
Online Purchases
Jan 15

29%
Feb 15
Mar 15
Apr 15
May 15
Jun 15
Jul 15
Aug 15

2015
Sep 15

43%
Oct 15
Nov 15
Dec 15
Jan 16
Feb 16
Mar 16
Apr 16
May 16
2016

Jun 16
51%
Jul 16
Aug 16
Sep 16
Overall, Online Purchases for September 2017 are at 63%.

Oct 16
Nov 16
3 per. Mov. Avg. (Online Purchases)

Dec 16
Percentage of Online Purchases, Composite (August 2013 to September 2017)

Jan 17
2017

Feb 17
58%

Mar 17
Apr 17
May 17
Jun 17
Jul 17
Aug 17
Sep 17
Percentage of Online Revenues, Composite (August 2013 to September 2017)

In September 2017, percent of online revenues for all three industries are
down to 38%.

100%

75%

50%

25%

0%
Sep 13

Nov 13

Feb 14

Apr 14

Feb 16

Apr 16

Nov 16

Feb 17

Apr 17
May 14

Sep 14

Nov 14

Feb 15

Apr 15
Jun 14

May 15

Sep 15

Nov 15
Jun 15

May 16

Sep 16

Sep 17
Jun 16

May 17
Jun 17
Aug 13

Mar 14

Jul 14
Aug 14

Mar 15

Jul 15
Aug 15

Mar 16

Jul 16
Aug 16

Mar 17

Jul 17
Aug 17
Oct 13

Dec 13
Jan 14

Oct 14

Dec 14
Jan 15

Oct 15

Dec 15
Jan 16

Oct 16

Dec 16
Jan 17
Online Revenues 3 per. Mov. Avg. (Online Revenues)

2013 2014 2015 2016 2017

18% 24% 34% 47% 50%

2013: August to December
2014 to 2016: 12 months
2017" January to September
Percentage of Payments done through Online Banking, Composite (August 2013 to September 2017)

Percentage of payments done through online banking stays within range at 41% in
September 2017.

50%

38%

25%

13%

0%
Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug
13 13 13 14 14 14 14 14 14 15 15 15 15 15 15 16 16 16 16 16 16 17 17 17 17
Online Banking

2013 2014 2015 2016 2017

10% 18% 26% 38% 40%

2013: August to December
2014 to 2016: 12 months
2017" January to September
 Extent of Online Engagement in the Manufacturing Industry
Weighted to Actual Values, January to September 2017

PurchasesRevenuesOnline Banking
80%
70% • Percentage of Online Purchases as of
63% September 2017 for Manufacturing is up
60% to 70%, as companies purchased 73% of
the time through online.
45%
• Percentage of Online Revenues were at
40%
65% in September, bringing the 9-month
2017 mean to 63%.
20% • Manufacturing companies paid bills,
purchases, etc. through online banking
48% of the time in September. Mean
0% percentage of payments done online for
Purchases Revenues Online Banking 9 months in 2017 is at 45%.
 Top 5 Sub-Industries in the Manufacturing
Industry in terms of Percentage of Online
Purchases, January to September 2017

1 COMPUTERS, ELECTRONICS, SEMI-CONDUCTORS

2 PLASTIC PRODUCTS

3 PARTS AND ACCESSORIES FOR MOTOR VEHICLES

4 ELECTRICAL EQUIPMENT AND COMPONENTS

5 MACHINERY AND APPLIANCES

*Other sub-industries with significant number of sample sizes but have lower percentages: (1) Breads, Noodles, and other Carbohydrates,
(2) Chemical Products, (3) Fabricated Metal, (4) Garments and Apparel, (5) Health and Personal Care Products, (6) Processed Food, Dairy Products,
(7) Snacks and Sweets
** Other sub-industries also included in the study but sample sizes are not significant to show percentages
 Motorcycle sales influenced
by e-commerce
• First semester 2017 sales at 614,896 units.
– Total sales could hit 1.8 million units this year
• Growth of sector attributed to e-commerce as
parts and accessories became easy to
purchase online.

http://www.businessmirror.com.ph/phl-to-overtake-thailand-in-motorcycle-sales-this-year/
Extent of Online Engagement in the Retail-
Wholesale Industry Weighted to Actual
Values, January to September 2017

PurchasesRevenuesOnline Banking • Trends in Retail/Wholesale continue

60%
to show that companies are more
53%
engaged in online than their
47% 43% customers, as online purchases have
40% 37% a higher percentage difference than
34%
33% online revenues (+9%).
26% • Companies purchase their goods
20% 43% of the time, while only
generating 34% of their revenues
13%
online.
6%
• Payments made through online
-1%
banking is still hovering at around
Purchases RevenuesOnline Banking 37%.
 Top 3 Sub-Industries in the Retail/Wholesale
Industry in terms of Percentage of Online
Purchases, January to September 2017

RETAILING AND WHOLESALING OF COMPUTERS,

1 ELECTRONICS, AND ELECTRICAL RELATED PRODUCTS
RETAILING & WHOLESALING OF MACHINES, APPLIANCES, AND
2 OTHER ELECTRONIC EQUIPMENT
RETAILING AND WHOLESALING OF NON-SPECIALIZED
3 PRODUCTS

*Other sub-industries with significant number of sample sizes but have lower percentages:(1) Retailing & Wholesaling of Motor Vehicles, Parts, and Accessories,
** Other sub-industries also included in the study but sample sizes are not significant to show percentages
 Retail Sector Growing
• Philippine retail sales grew by 10.6% year-on-year
in the 1st half of 2016, with retail sales totaling
P926 billion. (Philippine Statistics Authority).
• Retail sector is expected to make up 20% of the
country's gross domestic product (GDP) by 2025.
(AT Kearney)
• Industry growing due to population and their
consumption.
• Disposable incomes are growing, driven by OFW
remittances and young people employed in the
BPO sector.

http://www.rappler.com/business/178607-philippines-retail-industry-ecommerce
 Traditional to Online Grocery Shopping
• The grocery retail market in the Philippines is
forecast to grow on average 9.3% year-on-year
between 2016 and 2021, which will make it the
fifth-largest grocery retail market in Asia.
• Grocery retail sales in the Philippines are set to
amount to PHP7.08 trillion (US$149.99bn) by
2021 from PHP4.53 trillion (US$95.98bn) in 2016.
• Lazada plans to go into grocery delivery in the
next two years.
http://www.marketing-interactive.com/igd-philippines-to-become-fifth-largest-grocery-retail-
market-in-asia/
 Shopee #1 C2C Mobile App
• Shopee has over 4 million downloads in the
Philippines
• Provides live chat feature that allows buyers and
sellers to communicate directly — even allowing
the very Filipino tradition of “tawad” on the app.
• Shopee users spend 25 minutes daily browsing
the app and are highly social, with over 86% of
buyers chatting first with the seller before making
a purchase compared to only 75% in the other six
countries.

http://technology.mb.com.ph/2017/08/21/shopee-paves-the-way-for-mobile-commerce/
 Ayala Group - Zalora
• Ayala group has obtained approval from the
Philippine Competition Commission (PCC) to
acquire a 49% stake in Zalora Philippines.
– Ayala Corp. acquired 43.3% of BF Jade E-Service
Philippines, the company that owns and operates
Zalora Philippines.
– Ayala Land Inc., BPI Capital Corp. (a unit of Bank of the
Philippine Islands) and Kickstart Ventures Inc. (a unit
of Globe Telecom) also agreed to buy stakes in BF-
Jade.
– In total, the group has gained control of 49 percent of
the online platform.

http://business.inquirer.net/235044/ayala-purchase-zalora-stake-okd
Extent of Online Engagement in the Services
Industry Weighted to Actual Values, January
to September 2017

60%
54%
• Through 9 months in 2017, Services
45% firms purchase online twice as often as
they generate revenues online, with
32%
54% online purchases and 27% online
30% 27%
revenues.
• Moreover, payments done through
15% online banking are at 32% through 9
months in 2017, which is just slightly
0%
below 2016’s 33%.
Purchases RevenuesOnline Banking
 Top 3 Sub-Industries in the Services
Industry in terms of Percentage of Online
Purchases, January to September 2017

1 HEALTHCARE SERVICES

2 BPO and IT SOLUTIONS

3 REAL ESTATE

*Other sub-industries with significant number of sample sizes but have lower percentages: (1) Construction, (2), Banking Services, (3) Freight Services
** Other sub-industries also included in the study but sample sizes are not significant to show percentages.
 Top 3 Sub-Industries in the Services
Industry in terms of Percentage of Online
Revenues, January to September 2017

1 BPO and IT SOLUTIONS

2 FREIGHT SERVICES

3 BANKING SERVICES

*Other sub-industries with significant number of sample sizes but have lower percentages: (1) Construction, (2), Real Estate, (3) Healthcare services
** Other sub-industries also included in the study but sample sizes are not significant to show percentages.
Logistics
Source: Achilles Reyes, CheckMeOut
Source: Achilles Reyes, CheckMeOut
 Courier / Logistics
• PhilPost • GoMoto
• Air21 • Grab Delivery
• 2GO • LalaMove
• JRS Express • NinjaVan
• Xend • Transportify
• LBC • Rite.ph
• ABest • Metrowidecourier.com
• Sonic Express • Vrush.ph
• Fastrack.com.ph • Clinqnship.com
• DHL • Zoom Courier
• FEDEX
• TNT
 National Retail Payment System
• A shared clearing and settlements system
allowing banks to offer digital financial
services in an inter-operable way.
• Targets to digitize 20% of retail transactions by
2020. Currently, only 1% of the 2.5 billion
payment transactions made in the Philippines
is electronic.

http://www.epaypilipinas.com/latest-updates/news/banks-non-banks-establish-peso-
net-instapay/
 National Retail Payment System
• PESO Net
– pertained to the replacement of checks.
– facilitates fund transfer from one account or payer to
one or several accounts and are not time-critical.
• Instapay
– Immediate availability of funds. A real-time electronic
fund transfer system allows payers to direct financial
institutions to “irrevocably transfer funds held in his
account to the account of a payee, who receives the
full value immediately” in a 24/7 service capacity.
Source: Achilles Reyes, CheckMeOut
 Payment Gateway
• BancNet • Paypal
• AsiaPay • 2Checkout
• Paynamics • CCNow
• Payoneer
• iPay88
• MLEPay.com
• PayMaya.com
 2016 Visa Consumer Payment
Attitudes Survey
• Big improvement on Filipinos’ appreciation of the
electronic payment system, with six out of the 10
respondents saying they prefer electronic
payments rather than paying in cash.
• 49% of Filipinos are carrying more cards and 29%
carry less cash since they consider e-payments
safer than carrying cash.
• 70 percent would prefer payments to be
automated while 66 percent said using cards was
safer than paying in cash.
http://www.interaksyon.com/filipinos-becoming-e-payment-savvy-survey/
http://business.inquirer.net/235294/filipinos-show-high-interest-in-cashless-payments-for-
security-convenience-survey
 2016 Visa Consumer Payment
Attitudes Survey
• Most of these online transactions involve bills
payments and purchases of personal electronics,
fashion and accessories, travel and beauty and
cosmetics.
– Filipinos were the most interested in contactless payments
at 74 percent, and used them for groceries (58 percent),
bills and fines (32 percent), and food and beverages (26
percent).
• Data from the VisaNet showed that e-commerce in the
Philippines is growing above 30% year-on-year.
• E-Payments only account for about nine percent of
consumer spending.
http://www.interaksyon.com/filipinos-becoming-e-payment-savvy-survey/
http://business.inquirer.net/235294/filipinos-show-high-interest-in-cashless-payments-for-
security-convenience-survey
Reached high point of US$7500

Currently at US$6500
https://www.linkedin.com/pulse/blockchain-technology-
great-news-publishers-bad-middlemen-allen
http://www.pymnts.com/blockchain/2017/blockchain-tracker-is-retail-ready-for-implementation-yet/
Source: Achilles Reyes, CheckMeOut
 E-Commerce Education
• Our projects:
– Certified E-Commerce Program for Trainers
– Certified Digital Marketing Specialist Program
– Certified Digital Influencer Marketing Specialist
– Certified Branding and Influencer Marketing
Specialist
Bogo City Cebu Tagum City
Carmona Cavite Maasin City S.Leyte
Cabadbaran City Quirino
Dapitan City ZDN Del Carmen Siargao
Cauayan City San Carlos City NegOc
Dumalinao ZDS Mati City
Catanduanes Masbate
Plaridel MisOc Aurora
Lamitan Basilan Zamboanga City
Balanga Bataan Allen N. Samar
Oton Iloilo Kalibo
Polangui Albay San Fernando La union
Alabel Saranggani
Tarlac
#5 Digital Signature & E-Identity
E-Notary
 Simplified Tax System

Make electronic official receipt and

invoices as a default – not option.
 Cross-Border E-Commerce
• Ratification of UN Convention on:
– Contracts for International Sale of Goods;
– Use of Electronic Communication in International
Contracts - Electronic Communication Convention
Online Online
Revenues Purchases

E-COMMERCE

GDP
 Global
eGDP
5.3%

Source: Boston Consulting Group, EIU

*Philippine percentage is based on our computations. This is as of September 2017.
DigitalFilipino.com
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• http://bit.ly/ecomlearn
• http://bit.ly/ecomactivation