Electronic commerce is alive and well in the Philippines.

Some 720,000 Filipinos, 3 percent of the country’s 24 million Internet users, now spend P3.4 billion per year on e-commerce, revealed Donald Patrick Lim, President and CEO of Yehey! Corporation, the country’s number one search engine and internet portal, at a recent e-Commerce Summit held in Makati City.

Of this sum, around P75 million come from “black market purchases” via Multiply.com – a social networking site not created to be an e-commerce portal. Multiply has 10,000 “official” sellers sites and 20,000 “unofficial” seller sites. Filipinos buy from these merchants via informal channels, such as electronic wallets – Smart Money and G-Cash, not via credit cards or banks.

So far, Filipinos who engage in e-commerce only spend an average of P1,500 per year, with much room for growth, especially for the “unbanked” and the under-banked sectors of society. Of the country’s over 90 million population, only 5-6 million own credit cards, barring majority from transacting in e-commerce sites most of which only accept credit card payments.

Both buyers and sellers use Multiply “because it is easy to display products in the site,” he noted. Multiply also caters to the local “tiangge” (flea-market) mentality, which is basically transactional in nature, contradictory to that of e-Bay, which stages auctions. Significantly, the business model that works for the Philippines seems to be “social commerce,” the Yehey CEO observed.

Local sites, such as Sulit.com has 200,000 visitors per day. Ebay averages 103,000 hits daily.

At any rate, “E-Commerce has always been challenged. People are used to canvassing for the prices of items they want online but they still buy offline. ‘Research online but buy offline’ has been the consumers’ habit for the past 10 years. The question has always been, where’s the tipping point?” Lim explained. “But it’s hard to predict when the tipping point will come. Most of the things happening now didn’t exist years ago.”

Nevertheless, convergence is inevitable. In time, “It wouldn’t matter anymore where you buy, online or offline,” he pointed out. As of now, many kinks are still being ironed out. Payment gateways and platforms for classifieds are still being perfected. Security issues still need to be addressed and people-centric e-commerce sites have to be created. “But we’re already getting there.”

“Our e-commerce volume is still small but we want to be there when the market is ready. E-Commerce is a great equalizer but you don’t become an overnight billionaire. It’s still uphill battle. It’s all about people not gateways. People will buy online when they are ready. It’s one of our surprise-free futures. Soon, it will dominate the marketplace,” he underscored.

Definitely, both merchants and buyers have to nurture the industry. “Internet marketing won’t grow if we kill each other.”

For its part, G-Xchange, Inc., the wholly-owned subsidiary of Globe Telecom, stressed the importance of forging strong local and global partnerships to make small players succeed in the e-commerce market. Combining one’s resources with those of other companies makes the multiplier effect greater, urged GXI President Rizza Maniego-Eala.

Using its GCash mobile payment platform, GXI tied-up with banks and local merchants for services such as remittances, savings, loans, bills payments, among others. The arrangement allowed GCash to grow the market and expand its sales force. “For a business to develop, we have to follow a roadmap aided by solid partnerships.”

As a result of such tie-ups, GXI built a robust e-commerce ecosystem on the GCash platform allowing for C2C (Consumer-to-Consumer), B2C (Business-to-Consumer) and B2B (Business-to-Business) applications.

Aside from domestic partnerships, Eala also stressed the need for global partnerships. By reaching out to global experts, small businesses will not only have access to funding support but can learn about international best practices.

GXI benefits from the Bill and Melinda Gates Foundation’s financial and technical assistance via the Consultative Group to Assist the Poor’s (CGAP) Technology Program geared to test new mobile commerce models in low-income, rural areas, such as Bohol, Palawan and Surigao del Norte. Here, wireless technology was used to allow people to gain access to banking services.

Since launching GCASH in 2004, GXI has established a wide network of partners that includes government agencies, utility companies, cooperatives, insurance companies, rural banks, remittance companies, universities, and commercial establishments which have agreed to accept GCASH as a means of payment for products and services.