PLDT head urges retailers to take new look at e-commerce

Philippine retailers should take another look at e-commerce to take advantage of improvements in both wired and wireless services that may provide their businesses a fresh boost.

In a speech before members of the Philippine Retailers Association (PRA), Philippine Long Distance Telephone Co. (PLDT) president Napoleon Nazareno said it was time for the industry to look beyond its past disappointments with e-commerce.

"Much of the hype during the late 1990s turned out to be empty promises. The market just wasn’t there. However, conditions are changing and a new window of opportunity may be opening," he noted.

For instance, the number of Internet users had doubled in the past two years to over four million. He cited the rapid rise of Internet usage among PLDT subscribers, including its broadband DSL service. The number of users of PLDT Vibe, PLDT’s high-quality residential dial-up Internet service, for example, has jumped nearly 200 percent from last year to about 345,000 users.

Nazareno said the Philippine web population will grow rapidly as Internet cafes proliferate and new, more powerful technologies join the mainstream. Netopia, Epldt’s Internet café chain, now has over 100 branches and over 4,200 workstations nationwide, servicing over two million people. ePLDT is the information and communications arm of PLDT.

"If the large Filipino communities overseas are counted as well, the global e-commerce market of the Philippines no longer looks puny," he pointed out.

Finally, the success of cell phone-based mobile commerce services such as electronic loading and the recently introduced Smart Padala of PLDT’s wireless unit offers the retailing industry, including humble sari sari stores, a means to modernize their operations and offer new services. "As the Internet community in the Philippines becomes larger, it will be increasingly unwise for retailers to continue ignoring this group of web-connected, well-informed and trend-setting individuals," Nazareno said.

He cited the experience of developed economies such as the United States and Europe where Internet usage and e-commerce have quietly taken off despite the dot-com collapse in the late 1990s.

The impact of the Internet on retailing in developed economies is evident not only on the rising volume and value of online purchases (which in the US rose 26 percent in 2003 to $55 billion). The Web is also changing consumer habits as more people go online to gather product and price information before making purchases at traditional "brick and mortar" stores.

"E-commerce will not develop in the same way in the Philippines. The conditions are simply very different. But that does not mean e-commerce will not have an impact," he added.

One obvious difference is that mobile phones will have a major role in developing e-commerce in the Philippines. With over 26 million Filipinos toting cell phones, mobile phone networks make up the most pervasive communications system in the country. The retailing potential of such networks has been demonstrated by the huge success of e-products such as electronic loading of prepaid airtime.

Today, a year after the introduction of Smart Load, over 90 percent of Smart’s prepaid subscribers reload their phones electronically. Daily Smart Load transactions average over two million. Since over 90 percent of cellular phone users of the entire industry are prepaid, this truly represents a seismic shift in the way we do business, said Nazareno.

Pasa Load, a derivative of Smart Load, has also been hugely popular. Daily Pasa Load transactions also average over two million. Pasa Load enables prepaid subscribers to transfer small amounts of their own airtime to their friends and relatives. "Taken together, these two sister services make up the liveliest and extensive e-commerce system in the country," said Nazareno.

Smart Load has sparked a revolution not only in the cell phone business but also in retailing. About half a million store owners, housewives, office workers, students and others have become Smart Load retailers.

"For sari-sari store owners, electronic loads have become one of their most profitable products. As a product, it involves no logistics. It does not occupy shelf space and does not require refrigeration. There is no need to maintain an inventory. It is available on a just-in-time basis. With Smart Load, you have a product that is not limited by time or space," he added.

As more and more people "text" their purchases of e-products, they go through a massive hands-on education program in e-commerce on a scale hitherto unheard of.

"This situation creates an enormous opportunity for retailers in both modern and traditional sectors. These services are still evolving and taking new shapes and forms. I would encourage retailers to examine the possibilities that these services create for their own businesses," Nazareno said