Surging online economy

A recent regional survey of online shopping behavior shows interesting trends that can help private companies and even the government, specifically its tax-collection agencies, plan strategies.

The buying habits not only of Filipinos, but practically also of everyone else across the globe, have been altered greatly by the COVID-19 pandemic. For Philippine companies and entrepreneurs wanting to see what lies ahead and how digitalization is shaping up, the findings of a regional survey conducted by the iPrice Group, a Kuala Lumpur-based company that operates a search website in seven countries across Southeast Asia and compares and catalogs more than 500 million products, should prove insightful. The Bureau of Internal Revenue, for its part, can use the data to draw up its program on how to effectively target online businesses that need to pay taxes.

The rise of internet selling is evident in the number of Filipinos who have opted for this path, peddling a variety of stuff from food to household items and cheap products sourced mainly from China. From June to September this year, the BIR said it registered 7,262 web-based businesses. Last Sept. 30 was the deadline set by the BIR for all online sellers to register their businesses for taxation purposes.

The regional survey covered consumers in the Philippines, Indonesia, Malaysia, Vietnam, Thailand, and Singapore. Dubbed “Map of E-Commerce” report, it showed the Philippines’ online economy fast catching up with its Southeast Asian neighbors. Forced to stay home during the survey period covering the second quarter of 2020 when the Duterte administration imposed the most stringent lockdown in the region, Filipinos, according to the survey, had the highest increase in the use of shopping apps, at 53 percent, in Southeast Asia. The Philippines also had the highest increase in spending, at 57 percent, among the countries covered.

Another interesting finding is that fashion retail sites appear to be falling out of favor among consumers. In the Philippines, fashion sites’ web traffic declined by 30 percent compared to last year’s level. Fashion online sites have taken the biggest hit regionwide as clothing and apparel become less of a priority while people stay home because of the pandemic.

On the other hand, electronics sites (those selling mobile phones and audio and video gadgets) experienced a 59-percent jump in web traffic. An earlier study by the same group showed that the number of Filipinos searching for Wi-Fi adapters soared 518 percent, ostensibly as they prepare to spend more of their time online.

In the region, sports and outdoor products are the most ordered, growing by 34 percent during the second quarter.

The survey also showed an upsurge in the total sessions in shopping apps in the Philippines, reaching 4.9 billion from April to June this year. It had been expected that online businesses in countries that underwent strict physical distancing measures would experience growth in mobile app usage, but the Philippines’ growth was particularly noteworthy as it indicated that the country was catching up with its regional peers. Before this, Filipino consumers were known to patronize brick-and-mortar stores as reflected in the big number of shopping malls in the country. However, digital adaptation was forced, and apparently sped up, by the strict lockdown measures imposed by the government to contain the spread of COVID-19.

The only sad part in the findings is that multinational companies are gaining more web traffic while local companies lose out. In the Philippines, these foreign selling platforms cornered 97 percent of the market, leaving just 3 percent to homegrown sites. Vietnam and Indonesia are the only two countries in the survey where local companies have a bigger share in web traffic than the multinational companies they compete with for consumers. This can, however, be turned into an opportunity for homegrown Filipino talent to find creative ways to grab market share from the foreign websites. Local sellers just need to find more compelling ways, and offer more compelling products, to pique the interest of local consumers.

The dreaded pandemic has inadvertently given the internet economy in the Philippines a big push. It is now up to the government to lay a safe groundwork for e-commerce, for telecommunication companies to provide fast, affordable, and reliable services, for online sellers to abide by the rules and regulations, and for consumers to exercise prudence and awareness in transacting online.