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Here’s what you should know today:

1. Uber is suspended for one month in the Philippines

The Philippines’ Land Transportation Franchising and Regulatory Board (LTFRB) has suspended Uber’s operation for one month.

The suspension order came after Uber violated the order to not accept and activate new drivers into its platform that issued on July 26 as the agency ironed out issues concerning the ride-sharing industry.

The suspension took effect on Monday night and affecting thousands of Uber’s drivers. The LTFRB recommended that Uber extend financial assistance to its affected drivers as a “form of good faith.”

Read the full story here.

2. Singapore’s SingX raises $4.5M to expand in APAC

Online remittance startup SingX has raised $4.5 million in a pre-Series A round led by angel investors from Singapore and Hong Kong.

The fintech company will use the fund to scale up customer acquisition in Singapore and develop its platform, also expand its services to Hong Kong, Malaysia, and Australia.

SingX bypasses banks and offer cheaper and more intuitive costs to do remittance transactions. It targets white collar workers and SMEs, who have more leverage and are savvier financially.

Read the full story here

3. Recommended reading: Traditional retailers in the Philippines prepare for ecommerce trend

The traditional brick-and-mortar retailers’ position as a key node in the Philippines’ consumption-driven economy, they are in danger of being supplanted by ecommerce.

Although ecommerce only contributed 2% of the total retail, it’s getting a lot of buzz and continues growing because of a lot of innovation in the sector. However, this doesn’t mean the traditional retailers are completely in disadvantage.

“Shopping has always been a sensory experience. This is what we’ve always been good at. What we want [local retailers] to realize is that if you meld this expertise with the kind of information that people get from ecommerce, where all the information on a product is readily available from price to reviews, then they can do very well,” said Paul Santos, president of the Philippines Retailers Association (PRA).

Read the full story here.

 

Here’s what you should know.

1. First Circle raises funds to enables SME lending in the Philippines

The fintech startup announced today that it has raised $1.3 million from Accion Venture Lab and Deep Blue Ventures. Last year, the company has raised $1.2 million, counting 500 Startups, IMJ, and Key Capital among its backers.

Founded in 2015, First Circle is a Manila-based online lending platform that focusses on helping small and medium enterprises (SMEs). SMEs represent 99% of all registered business in the country yet only contribute to 40% of economic output.

The company wants to make a difference by giving these companies easier access to capital.

 To date, the company has paid out over $5 million in loans.

The company remains focused on the Philippines for now but it’s evaluating potential expansion options to markets like Indonesia or Thailand.

Read the rest of the story here.

2. iPay88 recorded 161% increase in online transactions in Malaysia

Despite the apparent slump in physical retail in Malaysia, the latest data from iPay88 showed a 161% rise in its online transactions to 38.2 million transactions in last year from 14.6 million transactions in 2015.

iPay88’s Executive Director, Lim Kok Hing, attributed the spike to the growing availability of internet shopping services, like Lazada and Lelong, as well as development in mobile technology.

Malaysians are among the most avid mobile technology consumers in the world, with an estimated 17.8 million people in the country expected to be smartphone users by the end of 2017.

The data also showed the most popular category for online purchases were for games, general ticketing, fashion and apparel.

Read the rest of the story here.

3. Recommended Reading: Where is Indonesian ecommerce headed?

Indonesia’s population of over 250 million and its rapidly growing internet adoption are the good recipe for the potentials for ecommerce market in the country.

With its recently changed in regulations to allow more foreign investment in the sector, the country is hoping to attract more foreign investors.

Indonesia’s investment service agency only recently allowed 100% foreign ownership for investments above 100 billion IDR or $7.53 million for the establishment of ecommerce company in the country.

However, Tororo’s Director William Gondokusumo predicted it will not push the local ecommerce companies out of the competition because of their “community-focused” approach.

Read the rest of the story here.

Over the last few weeks, we have looked at the ecommerce landscapes in Indonesia, Thailand, Malaysia, Singapore and the Philippines to see how the five largest markets in the region are faring. The region itself is a diverse and fragmented landscape having disparate infrastructure and fickle government regulations, making it hard for global brands to find a one-size-fits-all solution to conquer $238 billion in market potential.

However, despite the diversity of each country, there is a common theme apparent for ecommerce in the region. Here’s what we have discovered from the Southeast Asian ecommerce landscape in 2016.

1. The domination of Lazada – or soon, Alibaba

One player that has succeeded in making a name for itself in every country across the region is Lazada Group. The company, introduced by Samwer Brother’s Rocket Internet in 2012, has dominated monthly web traffic by millions in almost every country. Their recent acquisition by Alibaba has only cemented their position of power and plays a key role in Jack Ma’s big plan for Southeast Asia.

The only market with local players that puts up a decent fight with the giant is Indonesia. The country has several big players in the B2B2C sector – MatahariMall and Blibli to name a few – backed by big enterprises or conglomerates. But deep pockets is not the only thing that gives these players an upper hand, local knowledge of the market is also a big advantage.

southeast asia ecommerce landscape

With the looming news of Amazon’s expansion into Southeast Asia with Singapore next year, Lazada doesn’t seem to be worried as they have the advantage of years of consumer data and its latest acquisition of Redmart is seen as the latest effort to thwart Amazon at its own game.

2. M&A as a strategy to survive

Ecommerce is a long term game. Even with a good business model, companies need to be able to sustain themselves for the marathon before they even have a chance to make profit, let alone reap the other additional benefits of going online.

This year, the region has seen a lot of acquisitions as players attempt to expand market share or make an entrance. This includes the old news of ‘Alizada’, a $1 billion acquisition that left players in the industry trembling with excitement or the acquisition of Caarly by Carousell to accommodate the growing interest of people looking for cars on the mobile platform.

Some of the acquisitions were done by non-ecommerce players hoping to expand their reach. There is the latest move by K-Fit, a subscription fitness startup, acquiring Groupon in Indonesia and Malaysia; and the exit of Zalora in Thailand and Vietnam to Thailand’s conglomerate, Central Group, earlier this year.

With hundreds of players clamoring for a chunk of market share, it’s only time before natural selection leaves only the strongest and most committed players in the arena.

3. Payments sector is saturated, but no true problem-solver

Payments is still one of the largest hurdles for ecommerce in the region despite the financing boom for Southeast Asian fintech startups in 2016. Numerous startups are attempting to create a payments product for the sake of ‘doing fintech’ but aren’t addressing fundamental payment issues like a high unbanked population.

All across the region we see players in every market trying to address local financial challenges with little success. In Thailand, the government’s effort to create a cashless society with PromptPay has been halted indefinitely when Government Saving Banks (GSB) ATMs fell victim to the cyber criminal.  

Coins.ph in the Philippines is using bitcoin to increase financial inclusion in the country but is still at a nascent stage. In Indonesia, Telcos and even ride-sharing apps are fueling the high-profile race of mobile wallets – no doubt inspired by Alipay’s and WeChat early days strategy in China – but not a single e-payment option has become widespread.

southeast asia ecommerce landscape

Bank transfers and cash-on-delivery (COD) still remain the top two most preferred payment methods and continues to cripple ecommerce.

4. The key to C2C is through mobile

Consumer-to-consumer is estimated to make up at least 30% of ecommerce market share in the region but is tricky to measure because it happens on social channels like Facebook and Instagram and payment typically happens offline.

In Thailand, around 50% of online shoppers make purchases through a social network – making it the biggest social commerce market in the world. Consequently, it has attracted Facebook to make the country its first test base for social commerce payments and Facebook Shop.

This habit of preferring social commerce pushes players to focus on mobile to be able to capture the customer in an already familiar environment. In Singapore, 38% of online shoppers are making purchases through mobile, higher than the global average of 28%, and inspires home-grown companies like Imsold, Shopee and Duriana to focus on mobile platforms to appeal to more customers.

singapore ecommerce landscape

C2C players are also seen dominating Google Play Store in the Shopping category for every market, with Shopee being the most favored in almost all the countries. In the Philippines, the platform has become the answer to the high demand for popular international brands that only recently available in the country through official offline channels

5. Delivering ecommerce packages gets easier

The rise of ecommerce in the region has also boosted logistics infrastructure. The sector has reached an all time high of funding at $28.16 million in 2015 – led by aCommerce, the tech-logistics ecommerce solutions provider, with $20.2 million before its bridge series of $10 million earlier this July.

Meanwhile, JNE, the largest logistics company in Indonesia, stated that 70-80% of its revenue came from the retail sector dominated by ecommerce and hopes to maintain its annual growth of 30-40%. German-based DHL is also reportedly raising the stakes to grab market share, including the opening of a hub in Singapore.

The on-demand delivery service, led by ride-hailing apps like Gojek and Grab, is also thriving in markets where traffic congestion is distressing like in Indonesia and Thailand. Their motorbike fleets allow them to achieve same day delivery.

Where in the Philippines, cross-border package forwarding services like ShippingCart and POBox.ph are targeting the unique high volume of cross-border transactions in the country to fuel their businesses.

The many facets of Southeast Asia’s ecommerce landscape

Despite the warnings about the region’s diversity, the core ecommerce bottlenecks in Southeast Asia boil down to one – poor infrastructure. Lazada’s strong footprint in the region did not happen overnight, its early-adopter status enabled collection of customer data and the ability to build its own infrastructure – logistics (LEX) and payments solution (Hellopay) – in almost every market. But it almost cost them its business before getting swept off its feet by Alibaba.

southeast asia ecommerce landscape

It comes to show that regional players need to be able to adapt their strategies by keeping tabs on the dynamic trends and consumer behaviors. They need to prepare for a long-term investment before hoping to make their mark in the region and if not – better stick to just one market.

Find the ECOMScape series here: Indonesia, Thailand, Malaysia, Singapore, and the Philippines.

Philippines ecommerce landscape

The Philippines, although part of Southeast Asia’s growing ecommerce family, is quite the odd cousin. It’s the only market in the region where Lazada totally dominates the competition, getting around 35 million visits per month with no second player in sight. In addition, with over 10 million overseas Filipino workers and 3 million of them in the United States, Philippines’ online shopping behavior has been heavily influenced by the US, paving the way for innovative cross-border logistics businesses.

As the second most populated country in Southeast Asia with around 100 million residents, the Philippines currently has the second smallest ecommerce market. But that’s not surprising when 46% of the population are connected to and browsing the second slowest internet connection in Asia Pacific region. On top of that, the country ranks lowest among its Southeast Asian neighbors in terms of ease of doing business, which doesn’t help to boost its online trade either.

However, there’s a bright side. Ecommerce in the Philippines is on a runway and expected to lift off to reach nearly $10 billion by 2025 outsizing Singapore and Malaysia. How developed is the market now? ecommerceIQ shares ECOMScape: Philippines to provide a quick snapshot.

1. Lazada dominates over local and regional B2C marketplaces

Lazada, Southeast Asia’s heavyweight of marketplaces controlled by the Chinese ecommerce giant Alibaba, is leading online shopping in the Philippines. It currently ranks as the 7th most popular website in the Philippines. More than 60% of Lazada’s sales in the country come from mobile devices. The marketplace has also doubled the number of merchants selling goods on its platform to 4,000 compared to a year ago.

Philippines ecommerce landscape

Other local marketplaces in the Philippines don’t come close to Lazada in terms of visitors so have found other revenue streams offering affiliate marketing or cashback through their platforms. Takatack, calling itself one the biggest discovery platforms in the Philippines, is one such example. It is both an online marketplace offering products and services from local ecommerce shops and at the same time features products from different ecommerce sites such as Zalora and Galleon.

Marketplace verticals also show potential for growth. The usually competitive Fashion & Apparel category is rather thin in the Philippines. Zalora, online fashion shopping destination focused on Southeast Asia, operates in the country. A small number of global brands have local online stores and only a handful of local merchants sell online meaning the space is wide open for new players.

Philippines ecommerce landscape

Other verticals, such as Electronics & Gadgets, Home & Living, Others, also aren’t too crowded indicating there is room for more sellers.

Yet, Phillipines’ online scene might not be too easy for foreigners to conquer as learned by Thailand’s online retailer iTrueMart. At the end of 2015 it opened online store in Philippines as their first point of expansion out of Thailand but eventually closed the shop in September 2016 after less than a year in the country.

2. Retailers test ecommerce waters through Lazada

The Philippines’ ecommerce market in 2015 was estimated at $0.5 billion or 0.5% of retail in the country as many brands and merchants were not yet committed to making the big investment of opening a full-fledged online store.

However, to test market potential, some traditional brick-and-mortar retailers are opening their shop-in-shops on Lazada. For example, popular local department store chain SM Store initially went online through a shop-in-shop on Lazada where it offers more than 4,000 items. It now has also its brand.com store, powered by Lazada.

Consumer electronics retailer Robinsons Appliances also partnered with Lazada in mid-2015 by opening an official shop on the popular marketplace. Even global brands like Samsung are adopting this strategy.

More brands and sellers will likely follow in these steps to tap online shopping opportunity and add to Lazada’s popularity.

3. C2C ecommerce thrives

Similar to other Southeast Asian countries, a consumer-to-consumer (C2C) market makes up a significant part of online shopping in the Philippines, likely at around one third of the ecommerce market as it is Indonesia.  

OLX is the largest platform for classifieds and peer-to-peer sales. Ranking as 17th most popular website in the country it started as Sulit.ph 10 years ago. Currently, it claims to attract 100,000 to 200,000 new sellers every month.

Philippines ecommerce landscape

In 2016, two other well known C2C marketplaces in the region – Shopee, supported by Southeast Asia’s largest gaming company Garena, and Singapore-based Carousell – entered the Philippines to fight for Filipinos’ hearts and wallets. Shopee’s strategy to lure sellers from Instagram and other marketplaces to its platform by offering merchants free shipping and cash on delivery in the Philippines increased the number of sellers by 40% and the number of listings sold on the app – by 60% within three months.

Philippines ecommerce landscape

As 55% Filipinos own a smartphone and 18% have made a purchase online via mobile, it comes as no surprise that Shopee and Carousell are betting on the Philippines as their next stop for growth.

Another driver of the C2C market is the Filipino preference of Western brands combined with limited options to buy them as international brands have started entering the country just recently and there still remains a significant number of underserved market segments. This fuels selling of popular brands on C2C marketplaces, where products usually don’t come directly from manufacturers but are obtained elsewhere.

4. Digital payments pick up

Around 70% of the Philippines’ population are unbanked and less than 3% of Filipinos use a credit card to make payments. Thus, opening an online store without a cash-on-delivery payment is not really an option in Philippines.

In the recent years, several new mobile wallet apps have been introduced first by local telecommunication companies. For example, PayMaya mobile wallet app and GCash app offer a virtual card for shopping online that can be topped up at various offline points throughout the country. Local banks are also launching mobile banking apps.

Philippines ecommerce landscape

Many of country’s fintech startups are attaining to the needs of the unbanked while also serving overseas Filipino workers who send remittances to their relatives. In 2014, two Silicon Valley entrepreneurs Ron Hose and Runar Petursson founded Coins.ph – a mobile blockchain-enabled platform aimed at the unbanked for easy access to financial services. This start-up raised $5 million series A funding just at the end of October, 2016.

Philippines ecomscape landscape

ePeso app allows to create a digital account with an email address, top it up through scratch cards, over the counter facilities and merchants to send and request funds, pay bills. Paylance allows users to pay and transfer money to Philippines through Bitcoin for free. While Payswitch through its web platform allows small enterprises to offer services such as electronic loading, remittances and bill payments.

5. Innovative cross-border solutions and competition among logistics service providers

While ecommerce is not yet in full swing in the Philippines the logistics landscape is dominated by local players like 2GO and LBC while in other Asian countries international players like Kerry Logistics and DHL lead. Several regional players like Thailand-based aCommerce, Singapore-based SP ecommerce and Quantium solutions provide fulfillment services to online sellers.

Philippines ecommerce landscape

Poor infrastructure, difficult geography and high rates of cash-on-delivery make the shipping of online purchased goods complex. While there seem to be plenty of third-party delivery providers, only two companies – 2GO and LBC – offer countrywide shipping. The rest ensure delivery within metro area of Manila. This limits ecommerce growth and leaves many of country’s potential shoppers underserved.

At the same time, overseas Filipino workers have facilitated the development of innovative cross-border shipping solutions for goods purchased overseas. Beyond family members carrying their Amazon orders back in one big “balikbayan” box, several unique cross-border package forwarding services like LBC’s ShippingCart, Johnny Air Plus and POBox.ph have sprung up to take advantage of this phenomenon.

Philippines ecommerce landscape

Click here to download the full, high resolution version of ECOMScape: Philippines and join the ecommerceIQ network for the first look at the next ECOMScape in our series.

For more insights on the region’s ecommerce landscape take a look at:

ECOMScape: Indonesia

ECOMScape: Thailand

ECOMScape: Singapore

Are we missing any key players? Let us know on FacebookTwitterLinkedIn

UnionBank brings Ureka Forum to Mindanao

source: UrekaForum.ph

UnionBank of the Philippines and its consortium partners are bringing the ecommerce circuit, Ureka Forum, for the first time to Mindanao. Ureka Forum is Philippines’ largest ecommerce conference, aimed to advance local SMEs innovation via ecommerce.

The conference will be held on July 23 following two previous successful conferences held in Baguio City and Iloilo City October 2015 and January 2016, respectively.

“For a long time, Mindanao has been called ‘the land of opportunity,’ and today more than ever, we expect even more investors to focus their attention on Mindanao,” said Genaro Lapez, UnionBank executive vice president and Ureka Forum’s lead convenor.

Started last year, Ureka Forum is open to all “registered SMEs coming from different industries who look at ecommerce as a necessary platform to grow and expand their businesses.

The fast growing Philippines

Philippines has one of the highest smartphone penetration rates among emerging markets in the world, but a recent study by Frost & Sullivan revealed that the Philippines lagged behind neighboring countries such as Malaysia and Vietnam in terms of ecommerce market maturity. 

The Google study showed that only 1% of small and medium enterprises or SMEs even have a website. These are the same SMEs that represent close to 98% of all registered businesses in the Philippines at which historically, employed goes to two thirds of the Philippine workforce.

Lapez believes however, things may change in the next four years and the Philippines would overrun Singapore by 2.97% by 2020.

“Assuming that there is a steady and solid economic growth and corresponding infrastructure improvements, Philippine ecommerce could grow 20.67% from 2016 to 2020 right behind leader, Malaysia,” added Lopez. He also mentioned the goal was to have no less than 100,000 SMEs doing ecommerce, representing no less than 10% of the country’s GDP by 2020.

After the last two road shows, the forum is now servicing around 150 SMEs from individual artists to retail and food corporations.  

With burgeoning industries such as business process outsourcing and knowledge process outsourcing, new commercial complexes such as shopping malls as well as constantly improving infrastructure to augment its traditional agribusiness and tourism strengths, Davao City has emerged as one of the Philippines’ rising economic cores.

A version of this appeared in The Standard on July 16. Read the full article here.

Smart Communications Inc., the wireless subsidiary of PLDT Inc. is spending $21 million (P1 billion) to expand the coverage of the country’s WiFi service reports The Philippines Star.

The project aims to expand WiFi coverage for transport hubs, government offices as well as business establishments in the country during this year. Smart Communications Inc. has stated that the $21 million budget allocated for WiFi expansion is a part of the $910 million capital expenditures set for this year.

Smart is currently working on the upgrade of the public WiFi hotspots in the four terminals of the Ninoy Aquino International Airport in Pasay City, as well as other airports in high traffic areas. This expansion will surely benefit passengers and travelers who initially had low exposure to internet connectivity at airports.

Apart from airports, Smart WiFi is also being made available to passengers waiting at the terminals of big bus companies such as Five Star Bus, Jam Liner and Victory Liner.

Smart is also penetrating public areas such as city halls, malls and coffee shops to ensure that the city becomes more enhanced in internet connectivity.

This year, Smart has aggressively broadened the company’s WiFi footprint through partnerships with government institutions and business establishments, as they all have the same goal of improving internet coverage nationwide.

The company’s WiFi rollout is also in line with their aim to help boost SMEs operations in the country.

Through Smart’s Wi-Fi service, users could enjoy free connectivity for an initial number of minutes. For continued usage, they can purchase credits from Smart, similar to how one would top up a phone with credit. Smart’s WiFi service is supported by PLDT’s fixed networks, and the company plans to implement a three year network expansion program to better connect the country at a high speed rate.

A version of this appeared in The Philippine Star on July 11. Read the full version here.