Filipinos’ reliance on cash-on-delivery (COD) transactions is impacting the growth potential of electronic commerce in the country, according to e-commerce solutions startup Enstack.
Enstack, launched in February 2022, is an “all-in-one” app that provides tools that allow small and medium enterprises (SMEs) to sell online and offline.
At a press briefing in Taguig City on Friday, Enstack co-founder and CEO Macy Castillo said the majority of the transactions on its platform were COD.
“Pre-pandemic, in general, in the Philippines, 70% to 80% COD for online shopping,” Castillo said.
“That went down during the pandemic… but, it’s now back to about 50%,” she said.
Asked if Filipinos’ reliance on COD could impact the growth of e-commerce, especially small and medium online entrepreneurs, Castillo said, “I think so. Yes.”
“For COD, a lot of delivery providers are more hesitant to take COD or at least are managing risk and or limiting the amount allowed for COD,” she said.
“I think that’s a big hindrance, especially for bigger ticket items that can be sold online,” she added.
Castillo also said that the low credit card penetration and the limited payment options available fueled further reliance on COD.
“That’s definitely a hindrance in terms of growth for merchants, types of products,” she said.
Castillo said that heavy reliance on COD is more of a “cultural habit” of Filipinos, who need to inspect goods thoroughly before payment.
The Enstack chief, meanwhile, said that SMEs need to invest in tools to remain flexible amid emerging trends in the e-commerce space.
“To stand out in an increasingly competitive and challenging market, SMEs need to tap into new tech and understand the latest trends to attract and engage with customers who now expect the lines between online and offline shopping to blur. At the heart of this transition to digital is an all-in-one platform that presents numerous opportunities for SMEs to scale up and future-proof their businesses,” Castillo said. — DVM, GMA Integrated News