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5 Things to Consider Before Starting Online Business in the Philippines 2021

2021-05-27 21:50:19
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Today, thousands of Filipinos are looking to launch their own online business, enticed by the promise of profits without too much effort.

The e-commerce industry is currently skyrocketing in the Philippines, thanks to platforms like Shopee and Lazada that make it easy for people to start selling from their homes. With the majority of the population hooked on the Internet at all times and preferring the convenience of online shopping, experts have estimated that this sector will reach a whopping US$12 billion by the year 2025. 

But is it really that easy to start an online business in the Philippines?

If you’re looking to get into the country’s booming e-commerce industry, then here’s a brief guide to starting an online business in the Philippines this 2021. 

1. Refine Your Business Model

Before getting into the technicalities of an online store, it’s important to have a clear business model first. Among the things that must be defined is your target market or the people to whom you’ll be selling. Many would-be entrepreneurs fail to do this, so refrain from sourcing products or purchasing inventory without knowing the needs and wants of your desired customers. 

Conducting market research is also incredibly crucial as this will allow you to set your online business apart from the competition. In addition to gaining insight into how they market themselves, you’ll also be able to figure out what consumer needs they’re failing to address. 

At this stage, be sure to have the answers to these questions: 

  • What are the likes and dislikes of my target market?
  • What are the needs and wants of my target market?
  • How will my business solve my target market’s problems?
  • How are my competitors presenting themselves to consumers? 
  • What are my competitors good at?

2. Determine the Products and their Price Tags 

Once you have a defined business, identifying what products to sell is the next best step. Ideally, this should be something that’s high in demand and isn’t being carried by other online businesses in the Philippines. 

When determining the prices of your products, take into consideration the capabilities of your target market. For instance, if you’re hoping to sell to students, then the price tags shouldn’t be more than PHP1,000 since it’s likely this group of consumers won’t have a lot of disposable income to spend on non-essential items. 

3. Identify the Potential Costs

Unfortunately, many Filipinos tend to start online businesses because they believe that it’s easy money. This couldn’t be farther from the truth, though, which is why identifying the potential costs of your operations is extremely important. 

Besides inventory expenses, business registration fees and other startup costs must be factored in too. Even having a mere rough estimation of these will enable you to visualize the profits you’ll make, as well as the different sources of funding that you might need to tap into.  

Additionally, the financial tools that your business will be using must be established before you make your first sale. For example, corporate bank accounts are a must for business expenses and receiving payment from customers. Having a credit card separate from your personal one is also recommended since this will help keep the online business running even if your sales aren’t liquid yet. 

4. Register the Online Business

In the Philippines, registration applies to all corporations and small businesses operating in the country, even if they’re completely based online. Here’s a list of the government agencies that you’ll need to approach to legitimize your store: 

  • Securities and Exchange Commission (SEC)
    • For partnerships and corporations
  • Local Government
    • For Mayor’s Permit or Municipal License 
  • Bureau of Internal Revenue (BIR)
    • For Tax Identification Number (TIN)

If your online business has a few employees, then you should also register them with PAG-IBIG, PhilHealth, and SSS as these benefits are mandatory. 

5. Establish the Selling, Payment, and Delivery Methods 

Finally, before officially launching your online business in the Philippines, make sure that the different platforms you’ll use have already been worked out. 

For instance, will you be selling primarily on Facebook and Instagram? Or are you planning to use e-commerce websites like Shopify to help get you started? 

The various payment and delivery methods that will be utilized should also be determined. Keep in mind that the e-commerce industry in the Philippines is still heavily based on cash, which means that not providing a cash-on-delivery (COD) payment method will likely limit your sales. 

At this stage, be sure to have the answers to these questions:

  • Which platform will my online business be based on? 
  • What payment methods will I provide to customers?
  • How will I deliver orders?
  • What are my shipping rates?
  • Which couriers in the Philippines are trustworthy? 

Final Thoughts

Starting an online business in the Philippines may be exciting, but it will also be a difficult endeavor, given the challenges that you’re sure to face. Once you surpass these, though, then you’ll realize that the outcome was worth all the time, money, and effort that you poured into it. 

Good luck with starting your online business in the Philippines

Team SwiftPay

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