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How to Start Online Business in the Philippines

Last updated: February 21, 2023
Written by: Mark Anthony | Reviewed by: Joshua Morales

Key takeaways:

  • An online business has less barrier-to-entry than a physical business 
  • You do not have to register your business if you are not earning yet
  • Digido is ready to provide you with a quick loan for your startup’s urgent needs.

How to Start Online Business in the Philippines

An online business is better than a physical one because there is not a lot of overhead. However, how do you even begin to put up an online business? Today, we will learn everything there is to know about how one can start an online business in the Philippines!

Experts project that the eCommerce revenue of the Philippine market will be at $22 billion at the end of 2023 (1)  As such, we can say that it is high time to get started!

Learn your Audience and Market

The first step to building a successful online business is to know what to want to sell and и your target market.

Here are some tips to be good at this:

  • Choose a product that is in demand
  • The product must be affordable, both in terms of capital cost and retail cost
  • It is important to know who to sell it to

In essence, you must choose a niche or specialization category. If you want to sell phone chargers and electronics, focus on that niche only. Do not build an online store where you are trying to sell everything—if you do, it can get overwhelming and can lead to failure.

How to Define your Product with Google keywords?
To understand the demand for your services or products on the Internet, we advise you to use the online tool Google Keyword Planner. You can enter any word you want, for example “buy jewelry”. Check how often people ask for it every month. You can experiment with different words. Just sign up and try it!

Many people make common mistakes and start looking for their products without prior market research. It is always better to start by learning your market and potential customers.

Research the online marketplace and online social networking sites. Find out what questions your potential customers usually ask about your service or product.
Determine a portrait of your target audience. 

Ask questions such as:

  1. Who are your target customers?
  2. What are their needs?
  3. What do they care about in this product?
  4. How can you close their needs?

Remember the main thing:  Selling to everyone is selling to no one!

Try to describe the profile of your customer as accurately as possible – gender, age, interests, income, etc.
Also, to begin with, we recommend conducting an online survey or survey your family and friends. This too can help you understand the interest in your product or service from those around you.

Once you’ve chosen a good business idea, it’s time to research your competitors

Learn about
Business Ideas in the Philippines 2023

Know Who the Competition Is

Understanding competitors is an essential practice in business. It helps us know what strategies to use when competing.

For example, you want to sell phone chargers for ₱250. So, you proceed to order a bulk number of chargers. Later on, one cannot help but wonder why no one is buying. Why? Because the competitors are selling the same product for only ₱100. So, how can one even compete against these people – it won’t be easy.

It is why it is necessary to know competitors. You must know what products they sell, for how much, and how they are marketing these products. One must find their weaknesses and do better service than them.

Find more information about how other online companies in the same field are trying to attract customers. Research all the websites and advertising channels of your potential competitors. We suggest starting with the Top 20 in the Google search.
You should find out more details about how they are meeting the needs of their customers.

If you learn about your competitors well, you will have a better understanding of your business. You will know:

  • Can i sell cheaper, faster, higher quality than my competitors?
  • What advantages does my product have?
  • How can i make my product better than the competition?
  • What will be my strong points?

Create a Business Plan or Feasibility Study

Do not be scared of a business plan. It is nothing more than a calculation and a list of things you must do.

Here is an example:

  • Set-up a website
  • Create marketing materials; take pictures of the products
  • Upload them on the website
  • Create a Facebook/Instagram account, post photos of the products

That list in itself is a business plan. Of course, you need a list of your suppliers, capital, sale price, and your profit.

Here is an example:

PRODUCT TYPE SUPPLIER CAPITAL SHIPPING COST RETAIL PRICE PROFIT
Slim Cases Casestry ₱150 ₱80 ₱368 ₱138
Tough Phone Cases Case Mate ₱200 ₱80 ₱448 ₱168
Mobile Display Stand for Smartphones Pic the Gift ₱75 ₱80 ₱248 ₱93

As you can see, this table shows you the details of your products and your expected profit from each of them. This way, you will know if it makes sense to sell the product. Of course, you must compare your retail price against the price of your competitors.

Learn Information
How to Start a Small Business in the Philippines

Find Reliable Suppliers

The next step to building a successful online business is to find suppliers. Your goal is to find suppliers who can sell products to you at a really cheap price.

Here are some of the best places online where you can find suppliers:

  • Alibaba
  • AliExpress
  • Dropship suppliers
  • Print-on-demand companies

Once you find a product you want, coordinate with the supplier. Ask for their minimum order requirements and other costs like shipping, customs fee, etc.

If you want to start your online business without inventory and capital, you should look into a retail business model called dropshipping. Dropshipping is when the goods are shipped immediately to the buyer from the warehouse manufacturer, dealer or wholesaler.

Register with the Government

It is easy to learn how to register an online business in the Philippines. The benefits of having a registered business are:

  • The business is legitimate
  • The business contributes to the economy
  • Customers trust you more
  • You can provide documents to work with Lazada or Shopee

Registering a business means that the business owners are contributors to society, and that they are compliant with the law. However, it is only a disable to register a business if the money it means is already taxable in its entire amount .

Do I have to register an e-commerce business in the Philippines?

Under Revenue Memorandum Circular No. 60-2020 (5), the BIR requires registration for “all persons doing business and earning income in any manner or form, specifically those who are into digital transactions through the use of any electronic platforms and media, and other digital means.”

However, the government has clarified that those who sell goods irregularly and those who sell homemade goods as a hobby are exempt from DTI and BIR registration

So you only need to register your business if you make money regularly

These steps for reistration are:

  • Get a DTI business permit; people can do this online now. First, search if you name is available (2) , then  fill out the DTI form online (3) . (first you should agree with terms and condition in the end of this page)
  • Apply for a business income tax identity in BIR (4)
  • Get a barangay business clearance
  • Pay your cedula
  • Go to the municipal hall and apply for a business permit

Learn about How to Get
a Business Permit in the Philippines

Follow the rest of the instructions from your municipal hall. You will be required to secure permits from the following: 

  • Fire department
  • Health department
  • City Engineer’s Office

Once you have all these documents, you will return to the municipal hall clerk and get your business permit. You must also apply for BIR. Only then will the city issue you a business permit.

FAQ

  • What is a marketing strategy?
    It is the process you use to market or sell your products. For example, will you use a model, an advertisement, or a post on Facebook and other social media? A marketing strategy refers to your selling tactic.
  • What should I sell?
    Sell a product you understand. Do not sell products you do not know about because you cannot answer customer inquiries. Learn more about best business Ideas in the Philippines 2023
  • What benefit of being an official online business in the Philippines
    Some e-commerce websites will require you to provide business registration documents from DTI and BIR (Lazada and Shopee). People are also more likely to trust and buy from legitimate registered online sellers
  • Can I sell online without a business license in the Philippines?
    The law in the Philippines is that all businesses need a permit. It doesn't matter if you are operating a physical business, an online business, or a freelancer. For as long as you are operating a business, you must have a permit.
  • How do I start an online business for beginners?
    You must read a step-by-step guide on starting a business. To be able to do this, you must decide what company you want to run. For example, do you want to do business on Lazada, or Shopee, or do dropshipping? Once you know, you can search for tutorials online.

Know How You Want to Get Paid

The next step is to identify how you will get paid. If you sell on your online store, like Shopify or WooCommerce, you need to get paid online or digitally.

Here are some of the best options in the Philippines to get paid online:

  • GCash
  • PayMaya
  • PayPal
  • 2Chekout
  • DragonPay

If you sell on an online marketplace like Lazada or Shopee, then you have no problem. All you need is a bank account. You will add that bank account to your store, and you should be good to go.  

Learn about How to Use
GCash in the Philippines

Know Where You Want to Sell

If you put up an online business, you must decide where you want to sell.

Here are some ideas:

  • Website – you can create your online store; the best ones to use are Shopify and WooCommerce. Between the two, Shopify is better. It is easy to learn how to use it. If you do not know how, you can always work with a Shopify store builder
  • Social Media – you can post your products on Facebook, Instagram, TikTok, etc.
  • E-commerce and marketplaces – in the Philippines, you can sell your products on Lazada and Shopee.

It is up to you to sell on different online channels. Our advice is to pick only one type and then expand later.
Take one social media platforms at a time. Once you have established your business on that platform, you can move on to the next.  Too many times, people want to be everywhere. They want to be on Instagram, Facebook, TikTok, YouTube, Snapshat, Wahtspp, etc.

The reality is that people can only handle and be effective one or two at a time. Social media marketing is not about posting. It is about understanding the demographics of that social media channel and building an audience for each.

Tips to Succeed

To help you further, we have a list of the most useful tips about starting an online business in the Philippines.

  • Choose a Niche

Do not attempt to sell everything. You must sell only in one category of specialization. This way, you will be the “expert” when it comes to this category. 

For example, if you want to sell top-of-the-line phone cases, you must not gear away from the phone case business. Do not sell pillows, shirts, etc. Just concentrate on the phone case and some related technologies or products.

  • Choose a Platform

You must decide where you want to sell and stick to it. Do not sell on Lazada and then build your Shopify store; then sell on Etsy and then sell on Shopee. Pick one. Just one. And then focus on that platform. Once you succeed, you can expand later.

  • Buy low, Sell high

Take the time to find suppliers who can sell cheap goods to you. It is important because you must be able to price your products close enough against your competition.

  • Calculate your Profit Margins

When calculating your profit margins, consider other expenses, not just the capital. Below is an example:

EXPENSE COST
Product cost ₱150
Shipping from supplier to you ₱100
Shipping from you to your customer ₱74
The gasoline you spend for going to the shipping carrier ₱80
Labor ₱50
TOTAL ₱454

As you can see, the capital for the product, overall, is ₱454. So, can you sell this for lesser than that? You can’t. Now, you need to find out if you can sell this for ₱500 and if your price is competitive enough in the market.

Why should you start an online business?

Is it Good to Start an Online Business? Here are some good reasons why you must start one:

  • Many buyers today prefer to buy online
  • You do not have to rent space – you are not tied to one location
  • You do not have to pay a lot of employees
  • Easy and quick setup for everyone – start your online store in a few days with even a small capital.
  • Your overhead costs are much smaller than a land-based business
  • You can build for yourself a flexible work schedule
  • You can increase income and shorten working hours through an effective business strategy
  • Your online business runs 24 hours a day, 7 days a week, even when you’re busy doing other things

Summary

An online business is the best way to make money today. It is easy to set up, and no substantial overhead cost is required. The only thing you have to worry about is your capital cost. Now we hope you have no doubts, you will do everything right and will succeed in the Philippines.

Learn about How to Get
a Business Loan

Authors

Mark Anthony
Author pages:
Mark Anthony is, the Finance and Accounting Manager. of Digido Finance Corp., monitoring and controlling the flow of cash that comes in and out of the company to meet the company’s business needs, preparing the financial reports and analysis of income and expenses, and monitoring tax compliance.
Joshua Morales
Author pages:
Joshua Morales is the head of Customer Care Dept. and Online Sales Dept. of Digido Finance Corp. creating articles, blogs, and other learning mediums that helps Filipinos struggling on their financial literacy. Joshua also loves Cycling, Photography, Cinematography, Online gaming, Fine Arts, and dreams of becoming a Doctor of Veterinary Medicine.

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