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E-Commerce Challenges for MSMEs 2016

e-commerce challenges 2016

Since March 2016, I got the chance to meet many micro, small, and medium enterprises (MSME) as part of the DTI Negosyo Konsyumer – Expanding your Business through E-Commerce roadshow. This is the biggest e-commerce roadshow to date as it has visited many provinces including Davao, Isabela, Baguio, Iloilo, Butuan, General Santos, Vigan, Cebu, Tacloban, Tagaytay, Legazpi, Pampanga, and many more locations to come.

This circuit is part of the DTI Negosyo Center programs of educating MSMEs and to support the Philippines E-Commerce Roadmap target of empowering 100,000 MSMEs to do business online. The DTI E-Commerce Office is actively monitoring and in charge of developments in this space.

It is estimated that there are 1 million businesses to date where 99% of that are MSMEs. The target of 100,000 meant enabling the 10% to do e-commerce by 2020.

During the roadshow, we touch base with more than 2000 participants to date, most of them MSMEs, eager in knowing what they can do via e-commerce. Here are some of my personal insights gained during this caravan:

I. Lack of Online Marketplaces to Serve Provincial MSMEs

One of the entry points to get MSME started in doing e-commerce is to get them listed on popular local marketplaces in the country. However,  one dilemma realized is that not all marketplaces can accommodate MSMEs in the provinces due to lack warehouse and logistics presence to where they are located.

This means that they need to ship their products to the nearest warehouse to make their products accessible. This is a dilemma as not all MSMEs are comfortable in trusting this kind of process.

This made me realize it is time that we encourage more local marketplaces to come up that could connect to the major players in getting the MSME products listed and delivered to buyers.

II. Lack of E-Commerce Friendly Logistic Players in the Provinces

When services like CheckMeOut.ph came out, I am elated to see a service ready to carve its own blue ocean niche in the market. Its payment and package pick-up service  is limited to Metro Manila areas at the moment and it aims to make this available nationwide  this year. I hope it won’t take them long to make such a move a reality.

There was a time when Xend was most the most friendly logistics player in the e-commerce market by making package pick-up an accessible service to all sellers in Manila. However, it never got the chance to scale nationwide. I hope their neighborhood partner outlet program will enable more areas in the country to get connected to its network.

The involvement of PHLPost to talk about their logistics and warehousing services for MSMEs is a welcome move and great to see the agency having an upbeat attitude towards e-commerce. However, I hope they will be fast enough to adapt and start releasing packages that online MSMEs can avail of to compete in this market.

III. Local Marketplaces Can’t Scale to International – YET

An often asked question during the roadshow is “Will e-commerce allow me to sell overseas through the locally available marketplace platforms?” The quick answer is a NO.

Most of the players today are only capable of helping MSMEs to process orders within the country – rather than outside. Of course, if they sell through Amazon, Ebay, Alibaba, the options for international is there but the MSME carries the responsibility and risk as most of these players don’t have registered or established local presence.

I am optimistic that the newly passed Republic Act 10863 – Customs Modernization and Tariff Act will pave the way for friendlier regulations to MSMEs who would like to export their products abroad. For this to happen, the private sector must be vigilant to ensure that the law will be properly implemented.

IV. Bandwidth Challenges Impede E-Commerce Accessibility to MSMEs

Another deterrent for MSMEs to do business online is the unstable Internet connectivity which makes product uploading, and online sales monitoring not an easy task.

While in Tacloban, I offered to assist six (6) MSMEs in getting them e-commerce enabled by having our Certified E-Commerce Specialist, Entrepreneur, Professional Program students work with them to make it happen. The turn-around time for coordination takes awhile as most were having Internet connectivity issues in their local areas.

V. Integrated Payment Systems, E-Notary, & Tax Process Friendly Regime SOON

Apart from the variety of e-commerce platforms available locally, another thing noticeable are the various payment platforms available for MSMEs. It has reached a competitive stage where there is a payment service provider suitable to the needs of an MSME.

The Bangko Sentral ng Pilipinas vision of creating a connected, cost-efficient, and friendly e-payment ecosystem through the National Retail Payment System  is a welcome idea. We hope to see this become a reality at the earliest possible time.

On another point is our hope for the Bureau of Internal Revenue to release updated tax guidelines for accrediting software, applications, service providers offering online electronic receipt or sale invoice. That way, the MSME can issue electronic OR or sales invoice through marketplace platforms rather than sending them official receipt or sales invoice by paper along with a parcel especially if needed for recording of expenses.

Another important deliverable is the issuance of E-Notary Guidelines by the Supreme Court. We hope the SC to issue this soon so we can move towards full e-commerce implementation including contracts and transactions required to be notarized. This will also pave the way for the use of digital signatures to help in establishing the identity of parties entering into agreement or contracts.

VI. E-Commerce Education and Assistance Follow-Through is a Must

One day is not enough to get an MSME to do e-commerce. Follow through is necessary through education, support, and assistance coming from players in both government and private sector. The DTI Negosyo Center plays an important role in assisting MSMEs in this regard.

But we need more e-commerce advocates locally who will help the MSME get through the hurdles and stumbling blocks as they do business online. The Philippine Chamber of Commerce and Industry (PCCI) and similar organizations are encouraged to take on programs that will supplement or compliment this DTI initiative.

We also need more schools to offer e-commerce training and courses in the country.

If you are one of the MSMEs who got the chance to attend the DTI E-Commerce Roadshow and have questions that you want to be answered in the area of e-commerce, don’t hesitate to contact me via Facebook private message.

The following are also FREE E-Commerce Education and Digital Marketing Resources that MSMEs can access to learn more:

E-Commerce 101: Introduction to E-Commerce

E-Commerce 102: Planning your E-Commerce Business

E-Commerce: 103: Creating an E-Commerce Website

Digital Marketing 101 / E-Commerce 104: Promoting your E-Commerce Business

Digital Marketing 102 / E-Commerce 105: E-Commerce Legal Concerns

Digital Marketing 103 / E-Commerce 106: E-Commerce Insights Sharing

Digital Marketing 104 / E-Commerce 107: E-Commerce and Digital Marketing Sector Application

For inquiries about these modules, contact Janette Toral by sending her a private message via Facebook.

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