Philippine e-commerce hits $1.6 billion
The Philippines is a booming market for the e-commerce industry with an annual revenue of around $1.6 billion in 2017, according to Ofri Kadosh, a co-founder and CEO of online payments startup Payo.
“Filipinos are getting more hooked up with purchasing products and services online. In fact, the user penetration is at 35.2 percent for 2018 and is expected to hit 47 percent in 2022, as revealed by a report released by a research organization, Statista,” Kadosh says.
“While these numbers show that the e-commerce sector continues to thrive in the country, 72 percent of its population remains unbanked. Thus, many local merchants lose out on millions of customers who prefer cash,” he says.
Kadosh says to reach more customers, merchants need to adopt a payment option trusted and used by most Filipinos—cash on delivery. Some may say that going cashless is the direction of the digital age, but with 93 percent of the Filipinos using CoD when shopping online, it is arguable that cash is not going anywhere just yet, he says.
“With the e-commerce revenue expected to reach $5.5 billion in 2020 in the country, it is important to understand how the CoD business model changes the way e-commerce in emerging markets, like the Philippines, run,” he says.
Kadosh says while online retail giants such as Lazada and Zalora once controlled 90 percent of the e-commerce transactions, a shift in the last few years made independent sellers launch their own platform through Shopify, Instagram and Facebook, which accounts for 40 percent of the transactions today.
This holds tremendous potential for small merchants to scale their business and make use of CoD payment option to reach more customers and, at the same time, increase their revenue, he says.
The CoD gateway system helps merchants who do not have e-commerce platforms seal the service of partner couriers. This allows small merchants, as well as big brands, to work with a number of couriers while covering different parts of the country to keep pace with the items being delivered while helping retain the purchasing tensions of their customers.
According to a Kuala Lumpur-based online shopping aggregator, iPrice, more merchants in the Philippines are integrating CoD services to their consumers. This is understandable with the number of Filipinos who still prefer CoD when buying online.
For countries with low number of bank accounts and credit-card penetration, such as the Philippines, CoD allows e-commerce platforms be available to more consumers.
“It is a crucial time for merchants to make use of CoD gateway system that provides a full-suite of technological solutions, such as fraud detection, data analysis, and courier optimization,” says Kadosh.
Payo, a CoD gateway system, empowers the merchants with abilities to seize control of the CoD process, reduce cancellations and increase revenues, as it manages and simplifies transaction for e-commerce platforms. It is the only payment gateway to take the CoD logistic process to a technological level allowing merchants to integrate and offer solutions to their customers, says Kadosh.
“There will be other payment options in the future but cash transactions are not going anywhere and it is time for merchants to start harnessing its benefits,” he says.
14 April 2018