TECH4GOOD
Monchito Ibrahim
The pandemic may have caused devastation to the business sector that affected tens of thousands of enterprises in the country, but it has also brought about profound changes in consumer buying preferences. The prolonged social distancing measures and changes in consumer behaviors have led to increased demand for digital services that are expected to become permanent even as movement restrictions ease up. We are now seeing the emergence of businesses, mostly micro, small, and medium enterprises (MSMEs), powered by digital technologies as well as entrepreneurs who have become comfortable with using technology to take advantage of these changes. They all have taken to screens to manage their businesses, and expand market reach, deliver their products and services, collect, and find more effective ways to sell their products. For many, social media and e-commerce platforms are playing very important roles in this transformation.
A recent regional e-commerce report says only 34 percent of small businesses in ASEAN have an online presence. The same report also says the Philippines is the fastest growing internet economy in the region with around 12 million online consumers today and will likely reach US$40 billion in value by 2025. That is definitely a significant market that most of these digital-enabled MSMEs would like to have access to.
Last week, President Ferdinand “Bongbong” Marcos, Jr. spoke during the National MSME Summit 2022 organized by Go Negosyo and supported by the Department of Trade and Industry (DTI). He assured small businesses that strengthening and making them more pandemic-resilient is one of the top priorities of his administration. He has tasked DTI to formulate and implement strategic programs to improve key business areas that include access to technology and innovation, and access to market. He emphasized the key role that MSMEs play in fortifying the foundation of the country’s economy. Making over 99.5 percent of all businesses in the Philippines and accounting for about 63 percent of total employment, MSMEs’ role in job creation, poverty reduction, and economic revival is critical. I am also happy to see the active participation of the private sector and its willingness to work closely with the government to push a whole-of-nation approach to MSME development.
If the pandemic provided the perfect storm that became the impetus for e-commerce to grow exponentially, digital platforms may have provided the means for this development to happen. These platforms include social media and e-commerce apps. The difference between the two lies in the fact that social media mainly provide the means for the sellers and the buyers to meet while e-commerce apps provide the market ecosystem, tools to make it easier for all parties to transact, and even redress mechanisms to help protect the sellers and buyers. These e-commerce apps have provided MSMEs with the easiest path toward digitalization and making their business visible online. Platforms like Lazada and Grab have made it so convenient for merchants to sell online with the very extensive on boarding training they provide.
We still see that most online transactions today are still Online-to-Offline (O2O) in nature where purchases are made online while payments are still on a Cash-on-Delivery basis and delivery is mostly done physically. As an option, platforms like Lalamove can provide very flexible logistics support. But these platforms are very different from information apps in that they need both physical and digital infrastructure to function. We are now, however, beginning to see some of these platforms providing e-wallet facilities that make it possible for contactless payments to be made. By providing an e-wallet facility, these platforms are also beginning to address the issue of unbanked Filipinos.
Aside from making MSME entrepreneurs comfortable with using technology to run their businesses and improve operations, these platforms also provide their merchants with increased online visibility that expands their market reach. I once read about the story of a Jollijeep operator who got on board one of the food delivery platforms. She not only was able to survive the pandemic but got her business to grow to the point that she is now able to provide her family a much more comfortable life.
E-commerce platforms also provide their merchants with insights to provide them with a view into their operations, customer profiles, purchasing habits, and the effectiveness of their marketing initiatives. With this information, they can spot and respond quickly to new opportunities, address inefficiencies, discover specific consumer tastes, and direct consumers to take desired actions.
The digitization of our MSMEs has become more important than ever if we want them to really become the foundation of our economy. We have seen how the e-commerce platforms have helped saved many small businesses when the pandemic has threatened to stop their operations. These MSMEs have now grown accustomed to selling through click paving the way for them to reach a larger market. It is about time that we make these platforms become important partners in our MSME development programs.
The author is the lead convenor of the Alliance for Technology Innovators for the Nation (ATIN), vice president of the Analytics Association of the Philippines, and vice president, UP System Information Technology Foundation.