TECH4GOOD
Monchito Ibrahim
Although the lockdowns have resulted in slowing economic activities, we are actually seeing a surge in e-Commerce activities. Businesses and consumers are increasingly going digital, purchasing more goods and services online, using digital banking platforms for financial transactions, and paying using e-wallets. Businesses and consumers that have gone digital have definitely helped mitigate some of the pains as well as the economic impact caused by the pandemic. And everyone seems to have gotten comfortable with being digital.
Will this be the same scenario after this pandemic is over? Do we say goodbye to all things analog and physical? People have been talking for years about the barriers that are preventing the full development of the e-Commerce ecosystem in the Philippines. Among those are the unreliable digital infrastructure, lack of trust in online platforms, and inadequate skills needed to make online transactions. However, global E-Commerce reports show that despite these barriers, the Philippines has become a very dynamic market for everything digital. In fact, a recent Statista report on leading countries based on retail e-commerce sales growth in 2022 shows the Philippines as the fastest growing e-commerce market with a 25.9 percent YoY growth rate. A Google-commissioned Kantar SEA e-Conomy research has also identified the Philippines as the fastest growing E-Commerce market in Southeast Asia. Both findings came as a big surprise to everyone. The same Google-commissioned study says that the total value of e-Commerce transactions in the country in 2021 was over $17 billion, almost double the $9 billion in 2020. The adoption of digital banking and payment platforms in the country has grown exponentially as well. The lockdowns have pushed everyone to go digital just to be able to transact with their banks. And the use of digital payment services is now preferred over the use of cash to pay for any goods or services, whether transacted online or physically. This pandemic brought about a massive shift to digital payments which is unlikely to wane during the post-pandemic when some people will start to go back to shopping in person. The latest Asia Pacific Digital Banking report commissioned by Backbase indicates that, in 2020, the Philippines showed the biggest migration into digital banking in the ASEAN region. Banks are also expected to closely collaborate with fintech startups and telecommunications companies to improve their offering and service distribution. Last Feb. 18, I attended a virtual meeting of the E-Commerce Promotions Council organized by the Department of Trade and Industry. Attended by most of the players in the Philippine E-Commerce ecosystem, it was meant to look at the accomplishments achieved by the sector on the first year of the implementation of the E-Commerce Philippines 2022 Roadmap, aptly titled “Basta E-Commerce, madali.” Chaired by a very growth-minded Secretary Ramon Lopez of DTI, the discussion centered around the exemplary growth achieved by the sector in 2021. DTI Assistant Secretary Mary Jean Pacheco, who drives the implementation of the roadmap, presented the highlights of 2021 covering market access, digitalization of MSMEs and government, digital skills, and logistics integration, all of which represent the different dimensions of an e-Commerce ecosystem. We are now beginning to see the fruits of all the efforts of the ecosystem players: the government, the business sector, and the consumers. We hope that with the institutionalization of the E-Commerce Promotions Council, the Philippines would see a longer runway as far as its high E-Commerce growth trajectory is concerned. So far, most of the activities pushing the high growth in the Philippines are consumer-driven. UNCTAD says that in 2020, the total value of Retail e-Commerce worldwide was $4.28 trillion and is expected to rise to $5.55 trillion by the end of this year. That would combine both sales from e-Commerce and Social Commerce activities (Yes, there is a difference. This will be explained in my next column.) How do we really benefit from this growth that we are experiencing right now? The answer, I believe, is on becoming a producer ourselves. That can only be made possible if the right enabling environment is put in place. Today, there are pending legislative and regulatory policies that are being worked on, mostly trying to address consumer protection which is very critical in building a trusted environment. We need, however, to caution our government partners that, a stifling regulatory environment may not be good for us in the long run if we are to really benefit from the proliferation of E-Commerce. There has to be a balance between consumer protection and growth. Let us make sure that we do not kill the goose that lays the golden egg. So, are we seeing the end of the brick and mortar era? I believe, not within the next decade. As long as Filipinos continue to be social beings, we will still continue to see people flocking our malls. As to whether they are buying or not, that is another story altogether.