AS the world economy seemed to have taken a full stop in 2020, one industry seemed to have defied the pandemic and flourished despite the lockdowns that crippled many establishments. It’s not the Business Process Outsourcing industry, which has sustained our economy in the past decade and has displayed spectacular growth last year. It’s the E-commerce industry that has taken the cudgels of driving the Philippine economy forward in the new normal.
Since last year, no less than National Economic Development Authority Acting Secretary Karl Chua highlighted the importance of online shopping and marketing platforms as an economic driver in the new normal. Many businesses and consumers have been forced to transact businesses online using electronic transactions, including cashless payment systems, and other financial technology platforms.
Online marketplaces catering to B2C and C2C markets have seen tremendous growth. I bet you have heard of Shopee, Lazada, Zalora, G-Cash, Paymaya, GrabPay, among other E-commerce platforms and online marketplaces? Online food and goods delivery services like FoodPanda, Lalamove, and GrabFood have also flourished amidst the lockdowns. These online platforms have been crucial in sustaining the retail, food, hospitality, and services sectors greatly affected by the pandemic. Without these digital platforms, I doubt that such businesses would be thriving in this already depressing economy.
E-commerce has also driven the Philippine digital economy with an astounding growth of 55 percent in 2020, according to the latest E-Conomy SEA 2020 report. With many businesses and industries shifting most of their sales online, brick-and-mortar selling has suddenly become a thing of the past. Despite vaccinations that give hope to the opening of many retail and tourism-related businesses, the arrival of deadlier and more transmissible variants and mutations of the Covid-19 virus has solidified the need for E-commerce not only now but also in the years to come.
Since the arrival of the internet in the Philippines in 1994, internet penetration has ballooned to over half of its total population making Filipinos among the most internet-savvy people in the world. In 2020, the number of internet users in the Philippines according to Datareportal has grown to approximately 73.91 million people or more than half of the country’s total population. The digital populations mostly belong to the age group of 16 years old and above. But this data is expected to further increase in 2021. This is largely due to the pandemic which forced almost everyone from pre-schoolers to senior citizens to do most of their activities online.
“Businesses need to innovate and make full use of technology to resume operations and cater to consumer needs and preferences while still managing risks of Covid-19 infection,” Secretary Chua said. And I agree that by now businesses have already shifted most of their sales online. It would be foolish not to make the digital shift.
With the growing needs of the E-commerce sector, NEDA has also recommended legislative actions such as revisiting the E-Commerce Act of 2000 in order to make it more comprehensive in detailing transactions covered by the law, specifying the rights of consumers, and strengthening the penalties imposed on service providers. Chua even stressed that businesses in the new normal need to make online shopping easy, affordable, and secure for consumers so that they need not go out to buy what they need and want.
But so much has to be achieved in such a short period. First, internet infrastructures still need to be improved. While internet speeds have upgraded largely due to consumer clamor and the entry of a third telco player, the Philippines is still lagging in internet connection speed among its Southeast Asian neighbors. Another challenge, ICT infrastructures are overwhelmed. They suddenly have had to cater to the surge of online transactions and the increasing number of consumers during the pandemic.
Another rising concern is the proliferation of online scams and data privacy and cybersecurity threats that have also climbed over the past months. With this concern, we just hope that financial institutions are implementing better data privacy and cybersecurity measures and strictly enforcing regulations for both consumers and merchants, and establishments.
The passage of the Financial Consumer Protection Bill is also being pushed to provide the regulatory framework to protect the interest of financial consumers and reinforce confidence in financial markets. Honestly, despite the existence of emerging digital payment channels, many Pinoys remain hesitant in embracing new technology in paying for bills, groceries, and other services. But recent data are encouraging. With a 76 percent E-commerce penetration in 2020, there’s certainly more room for growth in the coming years for online selling and shopping, digital bills payment, and electronic fund transfers. In the next Freelancer column, I’ll discuss more of my growing interest in E-commerce and my journey as a seller for the growing online marketplace Shopee. Happy Weekend!