Even with Philippines’ growing digital economy, firms in the country are slow in adopting e-commerce.

A study published by state think tank Philippine Institute for Development Studies (PIDS) revealed that only 1 in every 7 firms in the country adopted e-commerce in 2015.

The PIDS discussion paper “Determinants of E-Commerce Adoption of Philippine Businesses” authored by PIDS Senior Research Fellow Francis Mark Quimba and Research Analyst Sylwyn Calizo, found that “financial and insurance activities, as well as real estate activities, have seen very sharp declines in the share of establishments with e-commerce [through] the internet.”

However, the study notes that the industry and services sector are more likely to fully adopt e-commerce, compared to those in the manufacturing and primary sectors.

Industries with the highest proportion of establishments adopting e-commerce include water supply, sewerage, waste management, and remediation activities at 33.1 percent, followed by human health and social work at 25.3 percent, and accommodation and food service at 25.1 percent.

Companies using information and communications technology (ICT) in their finance, accounting, logistics, and research and development departments, “have a higher likelihood of adopting e-commerce”.

The size of a firm also affects its adoption of e-commerce.

E-commerce adoption is highest among large companies at about 15.7 percent. Meanwhile, e-commerce adoption among micro and small firms saw an increase from 5.9 percent in 2013 to 6.2 percent in 2015 and from 13.8 percent to 14.6 percent, respectively.

All over the country, e-commerce adoption is most prevalent in the National Capital Region, Central Luzon, and CALABARZON—comprising “more than half of e-commerce firms in 2013 and around 70.0 percent in 2015”, while Central Visayas and Davao Region have the biggest share in Visayas and Mindanao, respectively.

The study also found out that the more computers the firm has, the more likely the company is going to adopt e-commerce.

Maintaining the firm’s current business model is the primary reason cited by firms for their slow adoption to e-commerce.  Other reasons cited were: security and privacy concerns, unreliable internet connection, incompatibility of computer systems between consumers and suppliers, and the high development and maintenance costs of an e-commerce system.

The study urged the government and private sector, particularly micro, small, and medium enterprises (MSMEs) to adopt e-commerce in their firms to increase delivery of services, improving customer service and providing more personalized customer service.  (Rommel F. Lopez)