This document discusses the potential effects of ASEAN 2015 on the Philippine e-commerce industry and develops a marketing strategy. ASEAN 2015 aims to boost connectivity, local content, seamless e-commerce, and skills development. However, the Philippine market faces challenges becoming ready for e-commerce under ASEAN 2015 due to cultural aversion to credit cards and lack of digital payment options. The document recommends educating consumers, increasing confidence in digital transactions through incentives, partnerships between online stores and credit cards, and offering cash-on-delivery to address these challenges and unlock the potential of e-commerce in the Philippines under ASEAN 2015.

1. ASEAN 2015 & The PHILIPPINE E-COMMERCE Industry
A Marketing Strategy Paper for the Philpppine E-Commerce Industry during the ASEAN 2015 Integration
January 2015

2. Introduction
Southeast Asia is
gaining recognition as a
hotbed of digital adoption
and an exciting market for
tech, media and telecom
companies.
Under ASEAN 2015 the
E-Commerce industry
would enjoy a boost in
key areas, which include:
connectivity, local
content, a seamless
environment for
electronic commerce, a
common marketplace
for ICT goods and
services, human
resource development
and e-governance.
This paper talks about the
level of readiness of the
Philippine market for
the ASEAN 2015
integration, with a focus
on the E-Commerce
industry.

3. Statement of the problem
Is the Philippine market ready for E-Commerce under the
ASEAN 2015 integration?

4. Objectives
• To discuss ASEAN 2015 and its effects in the Philippine E-Commerce Industry
• To develop a marketing strategy based on analysis and findings of the effects
of ASEAN 2015 on the Philippine E-Commerce Industry

5. AREAS OF CONSIDERATION
& ASSUMPTIONS

6. ASEAn 2015
In order to foster the growth of electronic commerce in the region, ASEAN governments commit themselves to create
a seamless favorable legal and regulatory environment in order to get buyers and sellers to buy in to doing business online.

7. The task involves measures to promote trust and confidence in the Internet including the establishment of a system of mutual
recognition of digital signatures; secure electronic transactions, payments and settlements protection of intellectual property rights;
promoting personal data protection and consumer privacy; and dispute settlement mechanisms. ASEAN governments also commit
to facilitate the flow of ICT goods and services in the region and promote investments in the sector. (ASEAN)

8. Growth
With the advancement in technology, bringing the strategy in the digital space is a
very sound plan for the region. This would help in growing the digital market.
And it could eventually result to expanding the market outside of a member
country to a regional level.

9. ReduceD
costs
This would also help in reducing
the supply chain costs and cost
of goods sold. Since these are
digital transactions, the product can
be shipped directly to the
consumers without having the need
to place it in physical stores. Brands
can also take advantage of this by
displaying their products online,
which is cheaper compared to
placing in malls or retail partners.
Although this cannot be applied
across all verticals, the industries
that would benefit most are:
Electronics and Clothing.

10. E-Governance
is weak
ASEAN 2015 is a good thing for the region, but since
there are no solid laws for digital yet, this will be
a challenge for the governments to create, enforce
and improve existing laws on a very dynamic
territory. E-governance would be the weakest link for
the 2015 vision.

11. LEARN + More Jobs
To promote a digitally equipped ASEAN community, member countries will encourage the development of skills and
proficiency in using ICT, through training and exchange of experiences. The more advanced member countries will
assist less ICT enabled members in their capacity building effort through the sharing of training resources. (ASEAN)

12. A Major Disconnect
to the Philippine
market
According to Facebook, there are 20 million
Filipinos who have graduated college and are
online. This could be an indicator of the purchase
power of Filipinos, which also reflects the need to
grow brands and businesses online.
Nielsen says that ASEAN consumers are
among the most confident in the world with
respect to their economic outlook. Three of
the world’s top 10 most confident nations hail
from the ASEAN community (Indonesia,
Philippines and Thailand).

13. Big Spenders
Fuelled by their optimism, consumers in
these markets have a growing
appreciation for premium offerings,
brands and luxury, and are readily
spending their spare cash in areas such
as leisure and travel, fashion and out-of-
home entertainment. (Nielsen, 2014) This
is a good sign of economic growth.

14. We are not
there… yet
Working on an online store project
for the biggest telecommunications
provider in the Philippines, I can say
that the Philippine E-Commerce
market is growing but we are not in
the level of Amazon in the United
States yet.

15. PHILIPPINE
CULTURE
ISSUE:
CREDIT
CARDS

16. With one of the lowest credit card penetration rates in Asia Pacific combined with its young population and growing economy, the
Philippines is an ideal market for payment providers to seek out new opportunities. The nation is experiencing thriving demand for e-
commerce due to the high cost of setting up a bricks-and-mortar presence that is able to serve the archipelago’s 7,000 islands.
(Cho, 2013)

17. The Philippines is still largely a cash-dominated society, with about 90 percent of transactions in 2012 settled in
cash. However, there has been a marked increase in the usage of cards for payment, encouraged by aggressive
promotions by issuers. Given the expanding size of the middle class, there is considerable potential for growth in the
Filipino payment cards market. (Lafferty Research, 2013)

18. Cash-On-
Delivery:
An Online
Store’s
Way-In
The penetration of Lazada and Zalora
is an attestment to the E-Commerce
growth in the Philippines. Addressing
that Filipinos culturally are very averse
of credit cards, they introduced the
concept of Cash-On-Delivery -
resulting in booming revenue for the
brands. Recently PLDT invested €333
million for a 10 percent stake in
Rocket Internet (the parent company
of Lazada and Zalora), which goes to
show the profitability of online store
businesses. (PLDT)

19. Absence Of Physical Cash
The absence of cash in digital transactions, and
the existence of credit card-only type of
payments is a very big issue for online store
brands. High brand reach on digital does not
entail digital sales conversion.

20. Theoretical Framework
The Standard Economic Theory says that standard economics relies heavily on the assumption that people are rational.
It also assumes that people are fully aware of all the options they have; can always and consistently rank their options in
accordance with their preferences; and always choose the option they like best. (Nevada Economics)

21. With this being said, we can conclude that people are very risk-averse.
The nature of credit card transactions pose a very high risk on Filipinos,
especially that most are from the middle class. Buying something not
within their means is a very risky idea, thus the low penetration of credit
cards in the Philippines. This is a major blow for the E-Commerce
industry as most online stores only accept credit card payments.

22. ALTERNATIVE COURSES OF ACTION
& RECOMMENDATION

23. Education
campaigns
from credit
card & online
store brands
When people find something very risky, they tend to not
listen and shut down all information about it. Credit card
and online store companies must realize that in order to
grow their category, they must educate the risk-averse
Filipino middle class that digital transactions coursed
through them are safe.

24. Increase confidence in digital transactions by luring the
Philippine market with free gifts
According to Nielsen, products with free gifts lure the Philippine and Vietnamese consumers. (Nielsen, 2014) To increase
the confidence in digital transactions, brands must incentivize successful digital conversions. This will help the Filipino
consumers to develop a habit of buying online.

25. Credit Card brands need to develop a strong
partnership with online-exclusive stores like Apple,
Amazon PH and eBay PH
Since online consumers have no choice but to use their credit cards in
digital transactions, online stores should strategize and work hand-in-hand
with the credit card companies to develop consumer programs that will
boost spending in the digital ecosystem.

26. Cash-On-Delivery
mode of payment
It is no secret that the Cash-On-
Delivery mode of payment is the key
to Zalora and Lazada’s success. In
order for us to create a strong digital
consumer purchasing power, we
must provide options for the credit
card-averse middle class.

27. E-Commerce, a threat for
Physical Store-Only Brands
Brands must learn how to adapt to the new age. Creating a digital
version of their store will not just expand their reach, but their sales
as well. Brands need to learn that digital online stores and its
incremental reach is the key to becoming global.

28. CONCLUSION

29. ASEAN 2015 displays a strong vision for the Philippine market to grow in the Southeast Asian region and globally. Bringing
the plans to the digital battlefield, it is very sound; especially that technology is continuously growing in the ASEAN region.

30. ASEAN’s solid plans would
be more effective if only
Filipino online consumers
would patronize it. Filipinos
have not fully embraced the
E-Commerce world yet
because they have a huge
discomfort in majority of the
online stores’ required mode
of payment – credit cards.
Historically, 90 percent of
transactions were paid in
cash and only 10 percent
can be attributed to card
payments.

31. Technology is fast-paced, but the Filipino E-Commerce culture can’t keep up with it.
It is the responsibility of the credit card companies and online store brands to
increase the confidence of Filipino consumers on buying online. Implementing this
would unlock the true potential of the E-Commerce industry.

32. ASEAN 2015 will not happen in the
Philippine E-commerce market this year,
but if we take small steps now, someday
this will eventually lead to not just
expanded markets in the region, but faster
and cheaper business processes; more
jobs on digital and a more secure and
consumer-friendly digital market space.

33. Thank you

34. Joses Sacilioc11486791
De La Salle University
StrategicPlanning
Prof. Ramon Barredo