At the end of last year, Filipinos spent about $1 billion dollars shopping for goods and services online. That’s but a drop in the bucket, compared to our Southeast Asian neighbors. It also is a tiny fraction of the projected growth in e-commerce in the Philippines in the next five to six years, which is seen to grow tenfold and explode to $9 to 10 billion!
And before you click “add to cart” why not consider how you can be part of the exponential growth—not as a buyer, but by becoming a seller?
Shopee, an online marketplace, which has been in the Philippines for just three years, has already over 300,000 active sellers as of September 2018. It is also the number one app on IOS and Android with more than 21 million mobile downloads.
In keeping with the youthful energy that’s driving the platform, Shopee Philippines is headed by a millennial. Martin Yu, 34, recently got promoted from heading business intelligence to become associate director at Shopee Philippines. He is responsible for data analytics, strategic planning, and budgeting. Prior to joining Shopee, he held various roles in Credit Suisse in both Singapore and London, most recently as a Vice President, Fixed Income Strategist in Singapore. He is a Magna Cum Laude graduate with a dual degree in economics and applied science from the University of Pennsylvania.
To those who want to be part of the e-commerce phenomenon, his advice is "tomorrow can’t wait, start now." “There are a lot of opportunities to go online. We have a marketplace model which means you can just come online, sign up as a user, basically take a photo with your phone of the products you want to sell, and you can sell right away!”
Vendors, no matter how small, enjoy the same perks says Yu, “When we say e-commerce, that's anyone who sells, not just the big brands. Because if you think about the benefits, you basically reach a lot more customers by selling online. And we take care of all of the things in the middle like collecting payments and transaction fees. You don't have to think about the logistics. Someone will pick it up from your place and bring it to the customer. We take care of the payments, you just receive the money.”
An e-seller’s education
For total e-commerce newbies, there is even a Shopee University to teach you the ropes. “We teach you step by step how to sign up, and list your product. You'll learn what to put in a photo, and how to do descriptions well. It has multiple levels: beginner, intermediate, and advanced,” Yu explains.
So far, Shopee University has visited 45 cities across the Philippines, with a total of 9,000 attendees. There have been over a hundred Shopee University classes held, taking around four to five hours per session. The classes are geared toward how sellers can grow their business and boost their sales on the platform.
Announcements are made on Shopee’s Facebook group, or help line. Yu says they can basically “tell you anytime when these are coming. We like to work with local governments and other organizations so it's normally partnered.” Sellers may apply to Shopee University through this link. They may also join the Shopee University Facebook Group for more updates.
Estimates vary as to how many Filipinos actually purchase goods online. Google’s country head for the Philippines Ken Lingan has placed it at 10 percent. But Yu says the penetration has now grown. “I think about 40 percent have tried transacting on e-commerce. But even at 40 percent, it’s like one percent buying once a month or buying a lot less than what they could be. The number of repeat participants that can happen is still a lot higher.”
Shopee’s biggest base of sellers is composed of millennials, mostly aged 24 years old and up. “They’re the most willing to experiment. But no one is too old to try,” Yu encourages. “And, really, it’s just about having the willpower to try it out. Download the app, and take that first picture.”
Yu says the background of sellers is diverse, from single mothers operating at home and part-timers who check on orders after work to people who want to go all out. “There are sidelines, but there are also definitely guys who've decided this is what they want to do more. Because if you do this on a good scale, it's like a business. Basically, you don't even have to buy the store front. When you want to set up a business, you need to think about paying rent, where you will set up a store. There is a lot to think about. But if you do it on our platform, it becomes a low-risk quick test for your product.”
On the customer side, the e-commerce platform also offers what they call a Shopee guarantee, to take away buyer’s remorse. This means that they won’t pay out to the seller until both sides are happy with the transaction. “So all these are value added, to support an environment that has buyers and sellers happy. We can not be too biased one way or the other,” says Yu.
Cash (on Delivery) is king… for now
A peculiarity in the Philippine setting is the low trust of the populace in transacting online. “It's reflected on our data, a lot of people prefer to pay cash on delivery (COD), and not with their cards. I think less than five percent in the Philippines have a credit card. But even then, it's not five percent of orders that are charged to a credit card. A lot more kahit may credit card, would rather see the product and get it on COD first.”
Yu says the “cash on delivery” preference is a natural step in the evolution of e-commerce. People are more worried about something they’ve never tried. “I think here, the number of people who have not tried it is just higher than the rest of Southeast Asia. We’re still at that ‘trying’ stage.” When they've done several COD transactions, the other payment methods become more attractive. “Kasi they’ll think, ‘why do I want to leave cash at home if I can just pre-pay it. I’ll get it anyway,’” he says. “So I think we will move toward that over time. Medyo matagal lang.”
Shopee has recently claimed to have overtaken its rival Lazada for the number one position in Southeast Asia in terms of GMV (gross merchandise volume) or total value of goods sold, and total orders. For the third quarter of 2018, Shopee’s regional GMV hit $2.7 billion. Yu attributes this in part to empowering their sellers. “We want to give them the right tools to be able to sell. We want to enhance the seller experience. So, aside from just giving you the tools, we also get the traffic for people to see what you're selling. You don't have to do advertising.”
Know your market
Shopee’s rapid ascent can be traced to its aggressive marketing spending and “think local” attitude. Last December, it shrewdly enlisted Jose Mari Chan, as its endorser, someone almost synonymous to the Pinoy Christmas. “We’ve been in the market close to three years, the first few years, we spent fixing operations, getting stuff off the ground and making sure the transactions happen well,” Yu says. “We’ve got to the stage where we now want to raise the awareness of who Shopee is. And how do we get that across to our user base.” He points to them getting Anne Curtis, who he describes as friendly and knows a lot of people. “Then how do we get the right environment for Christmas here in the Philippines? That's why we chose Jose Mari Chan. So it's really our strategy in being here in the Philippines. We're local, and we want to make sure that we reach out to the right mindset of people at the right time.”
For the upcoming Valentine’s day shopping bonanza, Shopee’s hook is "win a date with popular Korean singer and vlogger Jinho Bae,” as they ride the K-pop fever sweeping the Philippines.
As for settling transactions with the seller, the platform has developed what they call a Shopee Wallet. Yu explains that it is a closed loop system where everything you sell gets paid into an account. The value there gets transferred to a normal, on-demand bank account. “We started with checks, but now it's too difficult. We recommend them to register their bank accounts. We transfer it straight to that bank account, which can be received within a banking day,” Yu explains. “The moment the buyer clicks order received, the seller gets the amount in his wallet immediately. So the moment the buyer says ‘I've received the product, I'm happy with it,’ and you click ‘I received it,’ then you get it.”
Top selling items currently are health and beauty items, and women’s fashion. There’s also a strong electronics sector from cellphones to headphones, chargers and battery packs. Motoring accessories are also fast growing. “People who own motorcycles for instance always say it's hard to find a specific part. But if you're online and you have everything that could be delivered to your door, that's something we realize works well,” Yu enthuses.
There are also the products that ride a certain fad. Last year, stainless steel straws were snapped up by the environment conscious, and became a surprise bestseller. Korean face masks—anything made in Korea actually—continue to be blockbuster items.
What makes a good seller?
There are a number of sellers based in China who are eager to partake of the coming Philippine e-commerce boom. “I would say less than one-fourth, less than one-fifth of the goods sold are from China. There are a lot of sellers, and they’re all trying. But I guess there are barriers. The local sellers have a stronger grasp of what the locals need and that's part of the whole strategy. I think what China provides us is assortment. They can give more products that are hard to find here.”
The Philippines, Yu says, has a lot to learn from China in how e-commerce has improved the daily lives of the Chinese. “It's transformed the way people live; the number of people transacting on apps instead of going to the malls has brought them more convenience. I think that's the same path that's going to happen here. More and more people are going to rely on apps to find the products they want. The malls basically give you what's available, and, of course, that’s always going be there. But if you become pickier, there’s an option. There was no option before, and you get whatever is given to you.”
Yu identifies the qualities of their top sellers. “It's really those who are quick and hardworking. A metric we use for example is chat responsiveness, how fast and how often they engage their buyers. On the other side if you’re a buyer, if you say ‘hey, this is available,’ if you hear that right away then you’re more willing to transact. The seller who’s more diligent in using the app, checking what’s top selling and has a strategy, encourages people to buy more.”
And the list of Shopee millionaire sellers grows longer as Filipinos learn to decode the secrets of success in e-commerce.
Photographs by Paul del Rosario
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