[gexla]

I couldn't imagine doing something like this in the Philippines, which I'm guessing is much like Indonesia.

Nobody has credit cards to buy anything online. Credit card alternatives haven't gained traction. People use cheap alternatives to Western Union to send money.

Nobody surfs the web except at internet cafes. And at internet cafes it's either FB or homework. Nobody aimlessly browses when they are dishing out money every hour.

Nobody uses apps. Even those with smart phones only use FB, Instagram, games and a handful of other messaging apps. Even if they did want to use apps, cheap smart phones are out of resources after installing FB and the rest of the above mentioned.

No matter the phone, everyone uses SMS.

The postal system is shady. I never order anything online. I don't even have a proper address. I don't know how the postal system is able to deliver anything.

There are exceptions to all of the above and these are likely your target market since they likely have money. But this is a small percentage.

And speaking of money. Nobody has that either.

I noticed the post mentions there are tons of Instagram shops. I have no experience with this, but the number of shops seems irrelevant to me. Anyone can start an Instagram shop, post pictures once in a while and largely be invisible. It seems that much more important would be the above logistical issues which would also be important in Indonesia.

I imagine people selling through Instagram are much like the street vendors. They see no problem with being the 4th guy within an hour trying to sell you the exact same things as the 3 guys ahead of him while you are trying to eat a meal and drink some beers. They just don't try very hard. But any money beyond whatever income they have is better than nothing.

A place like the Philippines is all about improvisation. I don't see how you could improve much on the Instagram / FB shop model. In the vast majority of cases, there is probably nothing there to improve because there is no activity. For those who do get it to work, it's probably good enough.

[melvinmt]

It's definitely super hard, but not impossible. You should read [1] how Rocket Internet expands in developing countries: they hire their own couriers who go out, deliver and take cash at the door. This way they solve both the distribution and the payment problem. This is similar to how many of China's biggest ecommerce players operate, they all have their own distribution/payments systems. If the infrastructure doesn't exist, you need to create it.

[1] http://thehustle.co/rocket-internet-oliver-samwer

[studentrob]

> they hire their own couriers who go out, deliver and take cash at the door

Yeah, that's what people in the US did before everyone had credit cards. Cash on delivery. Growing up, I remember hearing ads on TV that said "no COD" when that service was being phased out. More and more people were using credit cards.

You're right, many countries could use trusted couriers in order to spur local markets and economic growth.

Here in Taiwan you can have something sent to 7-11 or Family Mart and pay for it there. There are tons of these shops everywhere, and with the receipts lottery, the government guarantees it gets enough taxes even in a cash-based society. It's a pretty cool system and often feels funny how convenient 7-11s are here. In the US they're just a snack shop. Here you can have packages sent, do laundry, pay bills, ...

[ChuckMcM]

   > You're right, many countries could use trusted 
   > couriers in order to spur local markets and 
   > economic growth.

Ok, so that seems like the next startup right? You don't really want couriers that are carrying boxes of cash back to headquarters but it sounds like reducing friction in payment would achieve good results. Where is the SMS payment system equivalent? Have the courier bring the item, send the SMS payment, and when that is received the courier hands over the item.

[studentrob]

> Ok, so that seems like the next startup right?

Sure. Any country that doesn't have the supporting infrastructure can be considered the next startup.

Cambodia doesn't have any public postal delivery workers, for example, so I think couriers or a system like Taiwan's with trusted shops could work well there and get more of an e-commerce market going.

There are some other hurdles there but I don't think it's insurmountable.

> Where is the SMS payment system equivalent? Have the courier bring the item, send the SMS payment, and when that is received the courier hands over the item.

Was that rhetorical? You seem to have answered your own question. Anyway, yeah, SMS systems exist, and a little more legwork is required to make them successful. WING is one I remember seeing advertised there. I'm not sure how much it was used but I don't remember hearing about people buying things online too often. Technology doesn't do its own PR, unfortunately =)

One of the annoying things about Cambodia is delivery of packages from outside the country is so expensive. I think only DHL and UPS deliver there, and for a small box it can be $100+ from the US. If a more competitive local delivery system were implemented first within Cambodia, then I imagine that cost could come down, marking more wins for the purchasing power of locals there.

[ChuckMcM]

Every place is different, the GP was talking about Indonesia where the folks were in fact shopping online and the challenge was the payments system. In Cambodia with poor package delivery then that might be the place to start. What I was alluding too is that one of the things that makes startups successful is that they seem to be "right place, right time" but sometimes it is simply that they are designed to mesh well with an existing infrastructure.

The trick here is to take something which is is known to work and try to think about what changes would make that thing work where you are. In a country where everyone has a smartphone, you can look at things that you can do with a smartphone you couldn't do with a 'dumb' phone. In a country where there are extremely inefficient transport, mail, or payment systems, then working within what you can there can be a winner.

[studentrob]

> Every place is different

Totally.

> they seem to be "right place, right time" but sometimes it is simply that they are designed to mesh well with an existing infrastructure

Mmm there can be other elements such as "right person" and "right way to solve the problem". Sometimes the keys to success aren't easily condensed into soundbytes, so they aren't widely known. Air B&B wasn't the first home sharing website, but there were probably some ingredients in their secret sauce that fall under the HN definition of "execution". We don't know all of those ingredients, but they differentiated Air B&B from the pack.

So, I'd argue there is a right solution for Cambodia's e-commerce, and any problem really. It may not become a billion dollar company, but there is a way to make it profitable. There simply is not a model that's easily copyable from the US. Conditions are very different. There are definitely people working on this problem. Adoption rates appear slow to me. Time will tell when they're successful.

> The trick here is to take something which is is known to work and try to think about what changes would make that thing work where you are

Yeah we are in agreement.

[sysreader2016]

An SMS payment system doesn't seem possible. Just end-to-end encryption for SMS will be much be bigger than a Facebook app. Without encryption consumers will be conducting wire transfers over cleartext to the merchant.

[ChuckMcM]

Here is a good summary of SMS payments : http://www.mobiletransaction.org/what-are-sms-payments/

They are used a lot in countries with dysfunctional banking systems. They aren't encrypted, they use the fact that you're sending a text from your phone to validate that it's you.

[gexla]

Which brings up a caveat that I didn't mention. If you want to hit the Philippines market, you probably don't need to go much further than Manila and Cebu. Manila could be among the top 5 largest cities in the world soon. Couriers could work in this case, assuming they could get through the insane traffic. But with wages so low here, you could employ an army of them.

[hartpuff]

> Nobody has credit cards to buy anything online.

Credit cards may or may not be relatively hard to get for most people, but anyone who wants a debit card can simply open a bank account, with an ID and maybe a few hundred pesos.

If you don't want to open a bank account, you can get a Smart Money card: http://smart.com.ph/Money/

If you don't want a Smart Money card, you can use Gcash: http://www.globe.com.ph/gcash

If you don't want Gcash you can use Paypal.

If you don't want Paypal you can pay cash on delivery.

> Nobody surfs the web except at internet cafes.

Surfing the web in internet cafes is about as dated as the term surfing the web; your proverbial "nobody" does it. Internet cafes are for gaming or getting stuff printed or photocopied.

"Everyone" has at least one mobile phone, often a smartphone, and that is how they 'surf the web', or at home, with an overpriced internet connection or pocket WiFi, or at "PisoNet" cabinets.

> Nobody aimlessly browses when they are dishing out money every hour.

Who anywhere aimlessly browses in an internet cafe? And "money" in this case is about 30 US cents (per hour).

> Even those with smart phones only use FB, Instagram, games and a handful of other messaging apps.

Isn't this most people, everywhere?

> I don't even have a proper address.

Why not?

>I don't know how the postal system is able to deliver anything.

Don't most countries use courier services for delivering packages, rather than the standard postal service? So presumably products are delivered using the likes of LBC, Air21, DHL, UPS.

>And speaking of money. Nobody has that either.

And yet "everyone" has the usual brand name products and gadgets and packed shopping malls are everywhere.

[gexla]

You are right that prepaid debit cards are relatively easy to get. My region is still mostly cash though, so you don't use the cards much locally. Bank accounts are less common because of minimums to start one (though I haven't checked this lately.) Credit cards are even less common.

My earlier statement still stands. You would still probably be targeting people who could get a credit card or a card from a bank account. Most of the rest is a difficult market to run an e-commerce platform funded by outside investors.

[hartpuff]

Why would you specifically target a relatively low number of people who have credit cards, when you can accept credit cards, debit cards, Gcash, Smart Money, Paypal, cash on delivery, payment via ATM or bank deposit or online transfer, or even through pawn shops; methods that online stores are using already.

[worldadventurer]

Philippines has Cash-On-Delivery (COD) shippers like LBC. When I buy stuff from Lazada, I usually have to do COD and I get the package within 2-3 business days delivered to the office.

[skewart]

That's fascinating. Thanks for sharing.

FB and Microsoft's excitement about chatbots makes a lot more sense now.

[gexla]

Taking this further. If you do own a smart phone, FB is the one connection you can get free over the mobile networks.

When I walk into a bar here, I pay 45 pesos (approx $1 USD) and the waitress who hands me my beer might make 140 pesos for a 12 hour work day. She should make more in tips, but not always. Down the road, the major grocery store also pays its workers about the same. Minimum wage is supposed to be something like 350 pesos per day depending on industry (domestic helpers may not even make the 140 pesos because they are live-in and get food. But they work like slaves). Businesses get around minimum wage by employing for six month contracts, which is a probationary period.

Internet cafes charge around 15 - 20 pesos per hour. An all day mobile data connection (700MB cap) costs 50 pesos. The locals will get an SMS promo for around 20 pesos per day. Getting to work and back in my city costs 20 pesos minimum. We haven't got to rent and food yet. The math is grim.

You carry a cell phone as a shiny object to show off. You dress remarkably well with this small budget (probably a good reason to sell cheap but fashionable clothing). Somehow you may even be able to buy a scooter.

That's it. That's the economy.

NOTE: The big exception is the occasional splurge for those lucky enough to have relatives sending remittances.

[hartpuff]

> The math is grim.

The math is grim for the poorest people in any country.

> That's it. That's the economy.

The economy of one of the biggest consumer markets in Asia is people earning $3/day and blowing $2 of it on transport, SMS and internet?

[gexla]

Not far off if you throw lunch in there as well. It's growing fast though. The area I'm living in went from relatively quiet with few cars on the road to serious traffic problems in probably 5 years (pulling from memory). Some of that might be increased shopping options in the city pulling in regional shoppers who previously didn't have as much of a need to be in the city. It's hard to say without real numbers though.

Maybe I'm just hanging with the wrong crowd, but pretty much everyone (locals) I know has bare bones possessions. The head of the household has a T.V. and a fridge as an addition to my list. That's friends, family and neighborhood.

There is a lot of money coming in through remittances. Getting money coming in as a basic income (not work) doesn't seem to do much for the work ethic from my experience. Often these remittances are covering a large family with basic living expenses.

I don't have much more than anecdotal evidence, but the profile of a typical person here is way different than that of where I came from (US).

[hartpuff]

If you're living in an area where having a fridge and TV is rare or unusual, if I understand you correctly, then I'd say you're living in a very poor area, not a 'typical' or even average place.

[gexla]

I'm not saying it's rare or unusual. Just that it's on the short list of what people own. People here aren't big consumers. Not the typical household like in the US where people have houses overflowing with crap (and much of that crap being things you can't even get in the Philippines.)

[AznHisoka]

Just curious, what is consider a high-end monthly salary (in pesos or USD) in the Philippines?

[tonydiv]

Average monthly wage is around ~$200-$300 [2014].

http://www.dumblittleman.com/2014/05/what-is-the-average-sal...

[AznHisoka]

I know about these "stats" online, but would love to hear what someone living in the actual country says.

[throwaway_xx9]

My friend who lives in Manila says $1,000/month for call center manager, $2,000/month for programmer, $3,000/month for eng. manager. Any of those people can afford to buy an iPhone, car and house in a few years, and they use Uber and ecommerce like a digital native.

[gexla]

This seems about right. The tech industry is one of the few industries where you can break out of the ceiling of the local economy.

Otherwise, what might be (or once was) considered a solid middle wage job back in the U.S. is probably closer to what the call center manager is making.

[redrummr]

As somebody who previously was in charge of a large (tens of thousands of staff) finance company's Asia Pacific IT workforce, I looked at dozens of Filipino CVs for new remote hires (we were moving away from India).

The salary the worker was expecting was often written in the resume directly ("Expecting no less than 40,000 peso a month"). All of the figures were higher than what they would net, because of the overhead of the remote office in Manila that acted as local HR and a place to work).

Only one resume I looked at didn't have a photo insert on the front page. Only a few didn't mention religion and hobbies. These are asides. Salary was $400 US per month for programmers working full time (we paid $1200 including the "HR/seat/office fee" - we were to look at coworking spaces in the future).

All the staff travelled roughly 70-95 minutes each way - we offered remote (at-home) work if their conditions were ok, but most didn't have a decent computer, had no aircon, had noise issues and couldn't guarantee an unoccupied room for six hours per day at least, so the risk was too high, given that we were tipped off that any worker could eventually try to incorporate something else on the side [part-time remote job] and do both at once, appearing present on IM but half-assing two jobs). We decided that an office with a roaming/snooping manager was a necessity in our early testing stages.

From speaking with many people in that country, average wage is definitely lower than you might even think. Management is the way to earn better money over there in IT. Salaries, if they exist, for non-corporate staff are probably abysmal all over Manila. There will always be somebody willing to work for less, fresh out of university.

[gexla]

Right, as you might expect, programming salaries would be all over the map. Somebody rock solid could get up to $2K and probably more. For many others, there isn't a floor and not much in expectations. You could land someone to be an "ass in seat" for whatever you could get way with in negotiating. The difference might be that the guy making $2K might be creating more than that in value while the others might just be costing you.

I had a buddy who was trying to build a start-up here running on the .Net stack. He was willing to pay $2K for the right person, but couldn't find anyone. The devs he did find he was paying around $1K for and he ended up letting them go through turnover and not replacing them (something would always come up where they would shoot themselves in the foot or just had to quit for whatever reason).

Blue collar labor jobs which may pay decent in the U.S. don't pay anything here. People expect labor and services to be super cheap.

All anecdotal though.

[fapjacks]

Depends in which part of the country you live. Up in the north it's not as desperate. Down south, bro... I spent six months there fighting the secret war. Down there, it's the spittin' image of the third world.

[gexla]

In my region, call centers employ a lot of people and the pay is relatively decent. A good entry level call center job might pay USD $300 / month. A bit less for the fly-by-night types and a bit more for the best employer.

Otherwise, I don't know because I don't ask and I haven't been looking for a job.