By Chris Buono
ONE of the biggest draws for European tourists coming to Southeast Asia are the night markets — with their incredible food, lively atmosphere, and of course, the mind-boggling array of products on sale from kitsch keyrings and exotic souvenirs to woven goods and wooden handicrafts.
The Philippines’ own unique version of the night market, which never fails to delight, are the tiangges, vibrant informal shopping destinations where street vendors set up stalls and sell locally designed and manufactured product selections.
According to the latest statistics, ASEAN saw 10.9 million visitors from the European Union (EU) in 2017, with more than 550,000 visiting the Philippines specifically. As of February 2019, that ranks the EU as the 5th of all arrivals in the country.
There is an undeniable opportunity in using e-commerce to bring unique aspects of the tiangge experience — along with its distinctive products — directly to European shoppers who have experienced the joys of tiangges. Research commissioned by UPS has shown that seven out of 10 European online shoppers have purchased from an international retailer. Within this group, 33% explained that the reason they bought products from international retailers is because they were after something “unique” — so why not take the tiangge online and showcase the best that the Philippines has to offer in handicrafts and gifts?
For the SMEs that make up more than 99.6% of businesses operating in the Philippines, taking the leap into the world of e-commerce can sometimes be daunting. Here are the main things enterprises looking to sell online in Europe need to first consider.
1. KNOW TRADE DEALS
The EU has either finalized, or is currently in the midst of negotiating, several bilateral trade deals with ASEAN nations including Malaysia, the Philippines, Singapore, and Vietnam. At present, none of these trade deals are in effect, but that doesn’t mean there isn’t more work to be done.
Entrepreneurs in countries with free trade agreements (FTA) in the pipeline should pay close attention to their impending implementation and strategize accordingly. In particular, business owners should look into whether the deal outlines any prohibited products, or whether there are any categories of products that have had import duties removed or reduced.
The importance of FTAs in driving growth and international expansion for online businesses was one of the key themes in a recent workshop that UPS Philippines organized for the members of the European Chamber of Commerce of the Philippines.
Entitled, “Exporting to the EU 101,” the workshop gathered Filipino businesses across different industries that are interested in doing business with EU markets but don’t have the technical know-how and experience in international trade.
For those doing business with countries without FTAs on the horizon, don’t worry; oftentimes currency differences and the cost of producing goods in the Philippines means you can still offer competitively priced products.
2. CHOOSE RIGHT PLATFORM/S
For many smaller businesses considering selling online, developing an entire website from scratch is simply unfeasible. Particularly so, when you consider the fact that there are online marketplaces — like Lazada or Shopee — that provide a simple, ready-made platform where merchants can sell their wares. In fact, according to UPS research, 96% of EU shoppers have already purchased goods from online marketplaces, making them ideal to reach new customers in Europe.
Before committing to any marketplace, it’s a good idea to do some research as there isn’t one platform that reigns supreme. While Amazon is active in several European countries, there are in fact many country-specific platforms that are leaders in their respective markets.
An exporter may choose to build a strategy around multiple platforms in order to maximize their chances of getting their product in front of consumers. One thing that should be noted, however, is that marketplaces will have differing requirements and regulations that pertain to sellers, so it’s important to do your research.
3. UNDERSTANDING ‘CUSTOMS’
One of the fundamentals to getting shipping right is being able to offer customers a “landed cost” — the cost of the purchase including the sale price, shipping, and any customs duties that need to be paid. In fact, UPS’s research found that 72% of European online shoppers consider this to be one of their top priorities when purchasing from international sellers.
Each EU state has its own set of trade rules and barriers to entry, so it’s important to understand each individual country’s trade regulations before you start doing business.
When a certain commodity reaches a customs territory of the EU, the owner of the commodity may face different national tax regulations, prohibitions and restrictions, as well as government agencies of different member states. Therefore, business owners must pay the correct import tariffs and taxes ensure accuracy of invoices and obey laws of each state.
Many logistics providers offer tools, called APIs, that calculate these additional costs before the customer makes a purchase, preventing sticker shock from unexpected fees when their delivery arrives.
The speed and cost of shipping is also important; again, our research found that 62% of EU online shoppers list speed of shipping as a main concern when buying internationally. Offering a range of shipping options with varying delivery speeds and prices will allow Philippine businesses to meet the needs of most customers.
While setting up an online shop undoubtedly takes work, European consumers are generally globally minded and are willing to make online purchases from anywhere in the world, as long as two key conditions are met: payment security and the total cost of the order including duties and fees. If your business plans carefully, it will soon be enjoying the benefits of a new revenue stream beyond your domestic market, as it begins to bear fruit from the other side of the world.
Chris Buono is the managing director of UPS Philippines.