E-commerce to maintain steady growth in Philippines

The widespread availability and affordability of broadband Internet is pushing more Filipinos to transact online.

According to a recent study conducted by IT research firm International Data Corporation (IDC), Internet users in the Philippines are estimated to maintain a healthy 22 per cent compounded annual growth rate (CAGR) for the forecast period of 2005-2009.

Meanwhile, electronic commerce (e-commerce) transactions are also expected to reach a 58 per cent CAGR over the next four years.

“The upward trajectory is due to aggressive price offerings of telecommunication companies and varied service offerings from business-to-business (B2B) sectors,” said IDC Philippines research manager Manuel Ravago.

He added that although e-commerce continues to be led by the high-value procurement sites in the B2B sector, IDC also sees the business-to-consumer (B2C) sector as a significant driver for growth, although it currently lags behind B2B.

In 2004, the number of Internet users in the Philippines went up to 11.8 million compared to 3.2 million in 2002.

Even though there is potential room for growth in the e-commerce area, IDC pointed out that market players should first be able to identify the distinct types of services to offer in order to fully cater to the different needs and requirements of consumers before actually delivering them.

Players in the B2B sector must focus on enabling small-to-medium-sized enterprises (SMEs) to bring their respective businesses online.

Around 99.6 per cent of the total businesses in the Philippines is estimated to fall under the SME category.

The study also suggests that payment gateways must be able and willing to accommodate small-value transactions or micro-payments. Content services should also cater specifically to the requirements of SMEs.

Meanwhile, broader Internet coverage is also seen to drive greater consumer access and effectively expand the market bases of providers, allowing them to offer additional services.

“Although there has been a marked progression in both the Internet and e-commerce space, there are still areas that need improvement,” Ravago said.

The new Internet and e-commerce services are expected to be eventually sustained as consumers and enterprise users grow increasingly receptive to existing Internet services like music downloads, online banking, blogs, and online purchasing.

For the Philippine e-commerce industry, the report shows that addressing the fundamental issues such as payment gateways, provision for small-value transactions, increasing consumer awareness and confidence, and allaying privacy- and security-related fears can serve as catalysts for an even higher e-commerce uptake.

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