Daily Tribune (Philippines) - HotSpot
E-COMMERCE EMPOWERS EVERY‘JUAN’ TO BE SUCCESSFUL ENTREPRENEURS
The Philippines saw exponential growth in the e-commerce space in the last five years, but the Covid-19 pandemic propelled its massive adoption to an unprecedented level. The thriving sector is forecast to grow four times by 2025 to $15 billion. “The pandemic has shown us the potential of e-commerce that can open a wider market for startups,” said Kim Lato, chief executive officer and founder of gadget e-commerce platform Kimstore. “We learned that we can reach a wider market by selling our products and services online. And we don’t even need a brick-and-mortar store.”
Lato cited the latest data from the Philippine Statistics Authority showing the country’s population at 110 million, 75 million of which use the Internet and shop online.
“Interesting fact is, we always have an issue in terms of the Internet speed, but that did not stop our customers from shopping online,” Lato added.
The Philippines is, indeed, an exciting market for regional players because of the vast potential of its untapped market. The country is home to nearly 75 million active Internet users, the second largest in Southeast Asia. It has the third largest number of people who shop online for consumer goods at 39 million, amounting to up to $3.55 billion with an annual growth of +42.5 percent. Online shopping in the Philippines is ranked only next to Indonesia and Vietnam in the ASEAN region.
More importantly, virtually all these Internet users are active on social media. According to research by Hootsuite and We Are Social, the Philippines has 89 million active social media users. This allows marketers
to reach out to a more extensive audience reach and promote their offerings cross-border on Facebook, Instagram, Twitter, and online marketplaces.
Most businesses agreed that the Philippines offer an optimal location to expand their e-commerce operations. Filipinos spend up to 10 hours daily on social media, with 56 million active users per day. Most, or 96.5 percent, access the internet through their mobile phones.
Around 82 percent of the population aged between 16 and 64 purchased a product online through mobile devices or computers, and nearly 89.3 percent intently searched for a product or service to buy.
At the height of the pandemic, almost all categories of products sold on e-commerce platforms, like fashion, food, gadgets, appliances, and electronic products, grew. However, the strict mobility restrictions slowed down sales in travel and accommodations.
All of this information points to the overall growth of the e-commerce space in the Philippines, with optimistic forecasts for the coming years. It also makes the country one of the best avenues for enterprises to succeed.
Lato is taking all these data as a good sign for every “Juan” to adopt the digital age to upscale their business operations.
“The consumers will have a bigger opportunity to shop online, and more entrepreneurs can sell their products in social media marketplaces. You have to agree that everything sold online is considered e-commerce,” she added.
Lato went on to say that she started Kimstore as an e-commerce site in 2006 when she was in her teens, and her online platform is still doing great business. She insists that anybody can be a success story too if only they dream about it and persevere to achieve that dream.
“Focus on your goals,” she added.
“Nothing is impossible. All you need is to dream and dream big. You can start a business with only P5,000 or P20,000, and the amount of capital should not stop you from starting. You must be passionate and accept that your number one supporter will be yourself and your family. Mine is my mother.”
It is crucial, too, to leverage technology, particularly online platforms that are critical in the digital transition, providing virtual channels for the growth of small and medium enterprises.
“e-commerce allows SMES to reach a wider market even if you are small or medium-sized operations by selling online. You have to go digital,” Lato added.
The inconvenience brought by the Covid-19 pandemic accelerated the digital adoption among Filipinos. E-commerce has become the norm for food, medicine, electronics, and even luxury purchases.
True to her advocacy to help small and medium enterprises to overcome the cost challenge of putting up their online store, Kimstore is offering small merchants to create their microsites within its platform.
The merchants need to provide Kimstore with vital details, including authorized distributorship of certain products. Kimstore will take care of everything, such as social media promotions and other marketing channels.
“We started this year, but we were surprised by the positive response from our partners. A good number of them reached out to us, and they want to partner, so we decided to expand our system and enhance it into an online platform for electronic gadgets,” Lato said.
But Lato reminded the merchants of the importance of building a positive relationship with their customers, especially when starting their online store.
She said the social media market is a community where people share feedback from their sellers, mainly positive and negative experiences.
“You need patience and establish a good rapport with your customers to gain more likes on your Facebook page. Remember, it’s a community. Take care of your customers and reach out to them, or ask them about their experience buying your product or services,” Lato added.
She added that it is also crucial to ask your customers how to improve your product or services further to gain their trust better.
Moving forward, Lato said she plans to expand Kimstore outside of Metro Manila and open multihubs like the Starbucks or Mcdonalds concepts, where every city has a Kimstore hub that will cater to all the electronics needs of the consumers.
Indeed, the Philippines saw massive growth in the e-commerce industry, and the potential is growing exponentially. Among all the country’s GDP contributors, the digital economy grew by about 55 percent in 2020. This year, the e-commerce industry could make up half of the country’s GDP.
Twenty-twenty-one was a watershed year for the Philippines startup space, data from the Philippine Venture Capital Report 2022 study commissioned by the Foxmont Capital Partners and Boston Consulting Group said.
The researchers said domestic startups raised $1.03 billion in 2021, with a record 92 deals, up from the
$369 million and $152 million raised in 2020 and 2019, respectively. In the first two months of 2022, $310 million has been raised, with six out of eight deals Series B and C deals.
On the homefront, marketing consultancy firm Ronin partnered with the Makati City government to launch the RISE (Resiliency Innovation Sustainability and Entrepreneurship) Challenge, a tripartite program that aims to bring together the government, the private sector, and the academe with the goal of encouraging innovation and entrepreneurship.
“We had almost 200 startups who pitched their ideas on the launch of RISE. We picked 20 among them, from which eight startups emerged as winners and received a P500,000 equity grant from Makati City,” said Yani de Guzman, founder and CEO of Ronin.
The eight winners underwent a 12-week mentoring program before they were ready for a Pitch Night to meet with the country’s top investors and pitch their business models to open new investment opportunities.
Aya Laraya, the co-founder of Ronin, added, “The RISE Challenge was created to open opportunities to entrepreneurs who are not from well-off families who can afford to be unemployed to pursue their innovative ideas.”
He explained it is difficult for middle-class individuals to become entrepreneurs because they have to support their families financially and cannot stay out of their job for at least three months.
In partnership with local government units, budding entrepreneurs in RISE will be provided starting funds to develop their ideas while receiving rigorous training in all aspects of the business to ensure they can scale up and succeed.
“We wanted to create a system that would allow those people to get their ideas running. At the end of it, the goal is to bridge them to funders,” Laraya added.
De Guzman explained entrepreneurs would also undergo the RISE incubator program, which aims to provide participants with a structured environment wherein they can turn their ideas into investment-ready enterprises.
She said, “It does this by focusing on a startup’s financials and making entrepreneurs realize that good ideas are not enough — they have to be supported by good financials in order to attract funding from investors.”
The discussions to launch the RISE Challenge started in late 2020, but due to the pandemic, it was established in 2022. De Guzman said their first partners were the city of Makati and the University of Makati but added they are open to expanding our partnerships to include other LGUS and universities.
To be accepted in the incubator program, startups must have an innovative idea and be willing to listen and be taught, De Guzman said. “They must also be willing to move their business to the LGU supporting the event.”
“Ultimately, it’s by putting them in front of Angel investors who would have the interest and capacity to invest in early-stage startups,” she added.
According to de Guzman, she sees a bright future for the Philippine startup space “but will be very challenging as we still don’t have a lot of the support systems and resources available in other countries.”
“Early-stage programs and investors will provide entrepreneurs, not from the upper economic classes, with social, intellectual, and financial resources,” De Guzman added.