MAKATI, Philippines – The popularity of online marketplaces has created the urge among Filipino consumers to transact online. Men and women of all ages are now learning to embrace online shopping as part of their daily lifestyle. Tangible products, perishable goods and even services can now be purchased from across the Philippines with just a few clicks. We live in a digitally-driven age where almost anything can be sold and bought online.
E-commerce has radically altered the way Filipinos shop forever. Gone are the days when one needs to spend two to three hours shopping in a mall. In fact, online stores often offer more convenience and product selection than traditional brick and mortar shops. As a result, online retailing has taken the country by storm for the last 5 years. Studies have also shown that the Philippine ecommerce industry is expected to grow to USD 2 billion by the end of 2015. This presents huge business opportunities for startups and small merchants who wish venture into the online landscape.
Benefits, Opportunities and Roadblocks Facing New E-commerce Entrants
The continuous growth of e-commerce in the Philippines offers a lot of revenue potential to startups who plan to launch a new business online and to small business entrepreneurs who desire to transition from a brick and mortar setting to an online biz.
Starting out with an e-commerce business model is a great way to kickoff especially for merchants who don’t have the capital to invest on a physical store. Unlike a traditional retail business that requires a hefty amount of investment, an online store doesn’t require complicated infrastructures such a staffing, physical establishment, and facilities to be implemented. This allows e-commerce businesses to save tons of money on expenses such as overhead costs, utility bills, maintenance, inventory and much more. Setting up an online business is also quick and easy which greatly reduces the “time-to-market” of merchants.
Aside from the savings, establishing an online business allows one to exponentially broaden their customer base and reach out to both local and international markets. Unlike a traditional store that has a fixed location, an e-commerce website enables merchants to sell virtually anywhere. On the other hand, a brick and mortar store’s location is fixed, which means that its market is only limited to its proximity. In the end, e-commerce businesses enjoy significantly higher sales revenues than its traditional counterparts.
In an online business, almost everything is managed digitally thereby allowing merchants to easily monitor and control their businesses whenever and wherever they want. In-depth analysis on peak sales periods, product trends, actionable insights and businesses performance can also be easily tracked and measured via analytics which enables merchants to develop new strategies to meet business objectives.
Although the e-commerce space provides a myriad of opportunities for new online ventures, merchants also face quite a number of challenges that are common across all industries regardless of business size. These blocks may come in the form of e-commerce giants who already have a big chunk of the market share. Though several successful online businesses already exist, there’s still ample room for new entrants to grab a share of the market.
Setting up and running an online business is no small task. It requires a lot of commitment just to get started at the right track. With that said, merchants need the following to start an online business; a website, a payment gateway provider, and a merchant account. Developing an e-commerce site is somewhat relatively easy since there are ready-made customizable website templates that are available online.
Selecting the right payment gateway provider to deliver the right payment mix is another story. Merchants must carefully consider which payment methods they should provide their target market. In the Philippines, local merchants have the freedom to choose either to accept credit cards or alternative payments online. Failure to select the right payment type that fits the target market may lead to lost sales.
The last requirement is a merchant account. Majority of the banks in the Philippines impose stringent requirements regarding payment processing which deter startups and small businesses from accepting credit card payments online. One such rule is that businesses should have a security bond deposit. This leaves most merchants with no choice but to offer alternative payments to their customers to complete transactions.
Online Credit Card Payments Still Matter
Card penetration in the Philippines may still be relatively low but banks nowadays are working aggressively to increase their cardholder base. Despite its low penetration rate, credit card payments still remain to be one of the top online payment methods utilized in the country. While alternative payment methods such as e-wallets, direct debit and over-the-counter cash payments have grown popular throughout the years, they may not always be “the best” option to pay online.
Online merchants who want to sell high-ticket items might find it impractical to process payments via alternative means since a credit card is much more appropriate to use for expensive transactions. Unlike in credit card payments where an online shopper can easily make a purchase at the comfort of one’s home, alternative methods of payment like e-wallets require the account to be funded first whereas cash payments demand the physical presence of the customer at payment outlets to complete the transaction.
“Alternative payments are easily accessible for everyone, but online payments via credit cards can prove to be much more convenient. Therefore, startups and small businesses must learn to adapt the right payment strategy before going online,” said Mr. Mau San Andres, Senior Manager at AsiaPay Philippines.
Paving the Way for Startups and Small Businesses
“In order to provide an equal opportunity for startups and small businesses to participate in the e-commerce landscape, we’ve entered into an agreement with BDO and have now adopted a payment aggregator model to process credit card payments on behalf of merchants,” said Mr. San Andres.
As a payment aggregator, also known as payment facilitator, PesoPay will facilitate credit card acceptance on behalf of its merchants. All payments are collected into one central account. In such cases, AsiaPay now acts as the “master merchant” whereas online businesses are referred to as “sub-merchants”. With this set up, merchants who do not have a merchant account can now accept online credit card payments with minor requirements to comply. In line with this new payment model, PesoPay now offers a “Basic Plan” exclusive for startups and small businesses.
“eCommerce in the Philippines is still at its early stages. Now is the best time for startups and small businesses to take the leap into the digital space. With our new payment aggregator model and basic plan package, we expect that more merchants will enter the scene and drive e-commerce growth further,” says Mr. San Andres.
To learn more about AsiaPay Philippines and its proprietary payment gateway platform called PesoPay, visit www.pesopay.com or call (+63-02) 887-2288 / 887-0088 local 27. ADVT