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Empowering highland MSMEs thru e–commerce
Jane B. Cadalig

ONLINE PROMOTION NEEDED -- The Department of Trade and Industry-CAR is encouraging MSMEs in the region to take advantage of the free social media platforms to expand their market through online marketing and promotion. -- Ofelia C. Empian

If you are an entrepreneur using the Internet to sell your merchandise or promote your services; or if you are a patron of products or services offered on the Net, you belong to the growing number of people engaged in online marketing.

Online marketing and shopping have become the norm these days. Thanks to Information and Communications Technology (ICT) for making the conduct of business a “seamless” undertaking. ICT has brought numerous opportunities for players in the business industry through digital or electronic commerce, which transformed how manufacturers, sellers, and consumers interact, including the manner how business firms deal with other companies.

The Philippines, whose population is a heavy user of the Internet, recognized the changes the World Wide Web has brought to the country’s business environment, which is why as early as 2000, Congress passed the Electronic Commerce Act or E-Commerce Law, which was primarily aimed at “facilitating domestic and international transactions, arrangements, or contracts through the use of ICT.” Above all, the passage of the law allowed the country to be a legitimate player in the global market.

With the advent of the Internet and with the passage of the E-Commerce Law, business companies in the country have started developing and maintaining a website in which their customers may check on their products or services and other relevant information about the enterprise. For a time, having a website translated to online presence. It was the trend before social media, a free platform, came into the picture. 

How much does it cost to open a website? Moshe Dacmeg, a website developer, said for small businesses to have a decent and professional website, the operator or owner needs to shell out P25,000 for web development. The fee includes the design, unlimited pages, blogs, maps, contact forms, and photo or video galleries. The P25,000 package includes payment for the webhosting, which is good for a year. After a year, an enterprise needs to pay for the webhosting and renewal of its domain name for it to maintain its presence on the web.

The P25,000 package is the average. The fee can be higher if the website to be developed is for a large corporation, according to Dacmeg.

The coming of social media

Fast forward to today, the existence of a website is no longer the primary gauge of an enterprise’s digital or online presence. The advent of social media has drastically changed the business landscape. Social media accounts are now becoming the main factor that determines whether or not an enterprise exists. And why not? This generation is heavily dependent on social media that one does not exist if he/she does not have a social media account. In the same manner, a company that is not visible either on Facebook, Twitter, or Instagram is losing a potential niche market.

This is why businesses have turned to these social networking sites in promoting their products or services. For small and medium enterprises, social media has become their ally in conducting online business because it is cost-efficient and because of its extensive audience reach, which entrepreneurs view as potential markets.

It is not surprising then if small and medium enterprises prefer to just open a social media account, which is free, than maintain a website that, aside from paying a start-up package, would require them to pay a yearly fee to remain on the web.

E-commerce and the micro, small,

and medium entrepreneurs

The government, through the Department of Trade and Industry, is encouraging micro, small, and business enterprises (MSMEs) to take advantage of the global economic opportunities opened for them by the Internet by doing business through e-commerce.

In the Philippine E-Commerce Roadmap 2016-2020, DTI targets 100,000 out of the 937,000 (as of 2016) MSMEs in the country to engage in e-commerce by 2020. The roadmap; which was crafted after consultations with the private sector, the academe and the government; aims, among other things, to link Filipino MSMEs at least to consumers in Southeast Asia, which in 2016 had 143.1 million Internet users, 44.2 million of which are in the Philippines.

E-commerce vis-à-vis  Internet connectivity

While e-commerce may seem to provide a very promising future for MSMEs by opening up a huge market for them locally and internationally, Internet connectivity in the country, which has been consistently ranked as among the slowest in the world, makes this reality far-fetched.

For an online business to thrive, an entrepreneur needs a reliable Internet connection, if not through a fixed broadband, at least through a mobile device.

Unfortunately for the Philippines, slow Internet speed is the norm. This has been proven in surveys done by sites that compare mobile and fixed broadband speed among nations, such as Speed Test Global Index.

In February 2018, Speed Test ranked the Philippines 93rd of 123 countries in terms of mobile Internet speed and 87th of 130 countries in terms of fixed broadband speed.

Worldwide, the average Internet speed on mobile devices is 22.16 megabits per second (Mbps) for downloads and 59.01 Mbps for uploads. In the Philippines, Internet speed on mobile phones is 12.67 Mbps for downloads and 5.89 Mbps for uploads.

Globally, the average Internet speed for fixed broadband is 42.71 Mbps for downloads and 20.39 for upload. In the Philippines, the speed for downloads is 16.09 Mbps and 13.80 Mbps for uploads.

E-commerce and Cordillera MSMEs

Like in other regions, there is no doubt MSMEs in the Cordillera are capable of making their online presence felt, especially now that government agencies, such as the DTI, are reaching out to them through the conduct of seminars and training on online business. A lot, however, are missing out on a lot of opportunities brought about by e-commerce.

The problem, according to DTI Trade and Industry Development Chief Specialist Felicitas O. Bandonill, is the lack of an infrastructure to support digital commerce.

“Supposedly in this age, every enterprise should be online, but this is difficult to achieve because of the problem on Internet connectivity, Bandonill said.

If MSMEs in other places are bothered only by slow Internet speed, MSMEs in the Cordillera are facing a greater challenge – the absence of Internet connection, especially in isolated areas where most MSMEs need help in promoting their products or services. The presence of telecommunication signals in these areas also could not totally guarantee an online business to thrive.

“We have done a lot of seminars and training on online business. In these seminars, we even invite representatives of online marketing platforms to help the MSMEs venture into online business but a lot are having a hard time going online,” Bandonill said.

She said even in capital towns of provinces, Internet connectivity is a huge concern.

Even the provincial offices of the DTI is bothered by slow or the absence of Internet connection. Primarily, this affects DTI’s online business registration process. In Apayao for instance, Bandonill said DTI personnel sometimes process business name registrations after office hours – either when they get home where their broadband speed is stable or in shops where Internet connectivity is faster.

For e-commerce to work for MSMEs, Bandonill said the DTI has been working in tandem with the Department of Information and Communications Technology to address this infrastructure gap.

She however said this remains “a work in progress.”

She said that an entrepreneur who wants to build up his or her presence online should respond or give feedbacks to an online shopper at least within 24 hours, which is tough for those who are in isolated areas.

Financial limitations, consumer protection

Even in online business transactions, consumer protection is a paramount consideration. Regulating agencies make sure that online shoppers get their money’s worth or at the most, protected from bogus sellers.

The use of social media accounts as MSMEs’ means of marketing or promoting their products and services brought another concern on how e-commerce works in the Philippines.

As far as DTI is concerned, MSMEs should involve legitimate marketing platforms in their business transactions to safeguard the interests of consumers, aside from merely using Facebook and other social media accounts. In the Philippines, Lazada and Zalora are among the most popular online marketing platforms.

By engaging the services of these marketing platforms, Bandonill said entrepreneurs and the consumers are protected.

In 2017, the DTI listed 121 MSMEs selling their products or services online. Majority of these MSMEs are using Facebook. The DTI list only includes registered MSMEs selling online and does not reflect the actual number of registered MSMEs in the region. Simply put, the list only reflects MSMEs with Facebook accounts, websites, or emails.

Bandonill said the DTI is now becoming strict in requiring that MSMEs should tap legitimate marketing platforms in transacting with their customers so that after sales concerns may be addressed properly, instead of merely doing it on Facebook.

“If products are bought from legitimate marketing platforms, the consumer can expect that it can be returned or replaced if defective,” said Bandonill.

She said business counselors in every DTI Negosyo center explain to the entrepreneurs the benefits of e-selling through legitimate online business platforms.

For MSMEs, however, tapping online marketing platforms is considered a reduction in their income. This is so because for every product sold through Lazada or Zalora, a percentage of the sale is allotted to the marketing provider.

She said some MSMEs understand how the process works, but others do not and still consider the use of online platforms as a loss in their income.

There are other platforms, such as Shopee and Shop Pinas, that are also legitimate online marketing sites and do not charge from the sales of the products or the services that they have promoted and sold online.

The difference, Bandonill admitted, is that in Lazada or Zalora, the product promotion of these platforms is massive and they are often “on the top” whenever consumers do an online search either to buy a product or to avail a service.

DTI Consumer Protection Division Chief Samuel Gallardo said that while the agency does not discriminate against the use of social media, DTI is uncompromising when it comes to consumer protection.

He said the DTI is heavily encouraging entrepreneurs to use legitimate platforms because social media is highly susceptible to fraud or deceptive acts and practices.

“While a lot of MSMEs who are using Facebook to market their products or services are legitimate sellers, the consumers should be warned that the use of Facebook is also the favorite marketing strategy of unscrupulous online sellers,” Gallardo said.

For Gallardo, social media should only serve as a complement to an existing brick and mortar store.

E-commerce in the Philippines is overwhelmed by a lot of challenges, which is why the DTI said the country’s E-Commerce Roadmap 2016-2020 needs the support of other major initiatives of the government.

Under the framework for the promotion of e-commerce, a robust e-commerce revolves around an environment for e-business, e-trade, e-services, e-governance, and e-consumer. These, however, must be protected through formulation of policies to ensure information security, data privacy, electronic payment, consumer protection, and sufficient logistics.

The Philippines has already enacted laws to strengthen e-commerce. Among these are the Data Privacy Act and Cybercrime Law.

According to the E-Commerce Roadmap, the other initiatives is the formulation of the National Broadband Plan, which aims to improve the country’s Internet infrastructure, such as speed, access, and connectivity and the integrated government Philippines project that aims to establish, upgrade, and improve government ICT infrastructure, systems, and ICT-related procedures to allow for integrated government operations.

As the country looks forward to the realization of these projects, so are the entrepreneurs who hope that in the near future, their products could reach consumers not only in the areas they are operating in, but also consumers in the global market.

The Impakabsat trade fair featuring export quality products of various groups and MSMEs in the Cordillera was one of the crowd-drawing activities in Manila last year. -- Art Tibaldo

 

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