Positive and Negative Impact of Covid-19 on E-commerce in The Philippines

Ecommerce shopping worldwide has been impacted by Covid-19 in a similar manner to many other facets of life. The pandemic has profoundly changed the way consumers shop while creating a new, unexpected reality that people needed to adapt quickly to. Travel bans, company shutdowns, remote jobs, quarantines. Additionally, restaurants, movie halls, and gyms have shut down. Undeniably that we are all living a new norm.

One of the responses we’ve found is how people are handling this time of isolation and chaos, with significant overnight changes in their shopping behavior. From bulk shopping to internet shopping, consumers are changing what they’re purchasing, where and how. As more we progress into the new reality, non-essential companies are being ordered to shut down, and people are avoiding public locations. Limiting shopping to everything but the basics is now a modern normal. Brands need to adapt and be agile to meet evolving demands.

Here in the Philippines, the Digital 2020 April Statshot survey by Hootsuite and We Are Social showed that 64% of Filipino Internet users spent more time on social media, with 23% showing a rise in their online shopping activity. With consumers resorting to more online shopping in the midst of pandemic restrictions, entrepreneurs are increasingly keen to leverage online shopping. E-commerce websites are at the forefront of these online retail platforms, with an estimated rise in sales revenues of tens of millions of pesos. Technology has now turned online business purchases into a limitless marketplace where it has become easier and more effective for both buyers and sellers. The COVID-19 pandemic has made this market a more apparent need. A health and economic crisis of this scale produce new habits of purchasing, consumer preferences and consumer trends that ultimately generate winners and market losers. All segments of e-commerce have benefited from the current conditions, while other trade forms have been rattled and have suffered significant losses.

Positive COVID-19 impact on the Filipino e-commerce

A Change in Consumer Behavior

Since so many stores are trying to close down to ensure customer and staff safety, either on a voluntary basis or due to official restrictions, more people are forced to buy online. In addition, shoppers who are seeking to keep healthy by staying away from stores, malls, and other crowded public spaces are spending so much time e-shopping at home.

Even when authorities’ constraints may be eased or entirely removed, still, many consumers would prefer to behave prudently and escape risks – a sentiment that drives shoppers to continue to favor online shopping rather than buying from physical points of sale in their city. Hence, the e-commerce sector gains from profound changes in customer perceptions and behavior.

Need generates innovation, circumstances drive advancements

Whenever such a change occurs, it immediately triggers entrepreneurs to identify new needs. This case is no different. Covid-19 has pushed for new technologies to emerge, and existing technologies to improve. E-commerce shops, couriers, courier-aggregators, cart solutions, payment gateways have all gone an extra mile to accommodate these new conditions, and the market became far more efficient, reducing barriers, costs and overheads for e-commerce businesses.

Negative COVID-19 impact on the Filipino e-commerce

The Filipino transition from cash payments to online payments is hampered by several factors such as the lack of consumer confidence in eCommerce platforms. This is where ‘Cash on Delivery’ (COD) is used as a payment mechanism that makes cash payment possible in eCommerce transactions.  Prior to the growth boom in internet markets and eCommerce platforms, cash has been the king in a shopping world dominated by brick-and-mortar stores in the Philippines, whereby money is being paid out directly at cashier counters.

According to a research done recently, many online users in the Philippines are still concerned with fraud. They have a strong reason for that as four countries in Southeast Asia were included in the top eCommerce fraud list collected by the fraud fighter service provider Sift Science. This dilemma is exacerbated by their confusion as to how they respond when they have problems with their products or when they have missed orders due to the absence of a tangible customer service unit. COD alleviates this concern because customers pay only after they have physically purchased the items. In this way, the consumer do not bear monetary damages related to merchant dishonesty or negligence. In addition, customers do not have to give any personal and financial information, such as debit card, credit card or bank account data, to the vendor while paying through COD. This defends customers from such fraudulent activities, such as identity theft and credit card theft by dishonest dealers. The security and peace of mind offered by COD are the fundamental explanation for its success in countries where consumers are concerned with fraud.

Therefore, Cash on delivery has been, and still is a major barrier for e-commerce shops aiming at the Filipino market, and the coronavirus has made this issue more apparent, also because cash still requires some sort of physical interaction between people.

Some businesses in Philippine are trying to go cashless during the COVID-19 pandemic and are asking consumers to use debit, credit or Smartphone transfers as a precautionary step, but the market finds it hard to get used to this new policy of cashless transactions, and cash payments remain a major delay in advancement for the eCommerce sector in the Philippines.

conclusion

Even while the world is expecting the new COVID-19 vaccines to be massively deployed, no one can say accurately when the epidemic will end, and if at all, will we return to the old and familiar normal again. It seems to many that some of these changes on shopping habits caused by the pandemic will linger even after this tricky epidemic has been eradicated.