[Ask TBM] How to Start an E-commerce Business with Limited Capital

Want to start a business but have little capital to work with? E-commerce is the answer. To get you started, we ask Great Deals Founder Steve Sy for tips and advice.

E-commerce has quickly built traction over the course of the years—even moreso during the pandemic. In fact, data from the Department of Trade and Industry (DTI), showed that e-commerce increased the nation’s GDP by 3.4%, or around PHP 664 billion in 2020 alone! Moreover, having a vibrant economy and a large population that’s savvy in digital technology, has made the Philippines the fast-growing E-commerce market in Southeast Asia.

With that being said, many e-commerce websites and digital applications have entered the market. This means more opportunities to do business from anywhere—even in the comforts of your home, without the need for a physical store. And the best part? You don’t need a lot of capital to get started.

For those who want to explore the novel idea of e-commerce, we consulted Steve Sy, the Founder of Great Deals E-commerce—a one-stop-shop e-commerce enabler that is also one of the fastest-growing startup companies in the Philippines.

What are the advantages and opportunities of e-commerce?

Right now, e-commerce is not just a fad or a trend. It’s [a matter] of surviving in the future, so there’s a major shift already. If you’re not part of e-commerce, you’re not gonna be part of the future. So, each and everyone really needs to learn [about] e-commerce. 

Now, the question is how complex it is. It’s very complex that even, right now, the best practices are still being made. And that’s the beauty of being agile [and] being adaptive in terms of business. The beauty of e-commerce is [that] you will have all data of your consumers—of your customers. And [with that], you can decide on the business course of action with real-time data. 

Those are key things for you to be able to continue to grow in this digital space. It’s [not] gonna be easy. That’s why talents in e-commerce are expensive. They’re the main resource that’s really scarce. So we keep on developing and training people on how to do e-commerce so that there are more people that will benefit from digitalizing their businesses. 

What are some of the basic principles you need to know about e-commerce?

Typically people think that “Oh, I just have a photo taken, put it in Lazada or Shopee, and it will sell.”

No, it doesn’t happen that way. So, the first principle, as I always say, [is that] content is king. Having realistic photos, videos, and copywriting is [a] vital part of e-commerce. That’s because you want to turn users or viewers into customers. 

Number two, distribution is queen. What do I mean? The more point of sales, the better. So whether you’re using the platforms like Lazada, Shopee, Zalora, Grab, Foodpanda, or even social media [apps] like TikTok, Facebook, or Instagram, the more distribution, the better because you need to be where your customers are. 

And number three is building a community. A lot of Small and Medium Enterprises (SMEs) always share with us, “Sir, [we don’t have] budget for marketing.” But I always tell them, “You know, the number one thing that Filipinos have? We have the most number of Facebook groups in the whole world. And by joining these groups, you will find your niche market.”

So content and community are key in terms of growing your online business.

How can I start a business with limited capital?

If you have limited capital, limited resources selling—sales—is a very good way to gain new capital because [what’s important here] is cash flow. Let it go around. From there, you’ll be able to build something.

When I was starting my trading business after I sold my insurance agency during that time, I’d go to China [to] buy products. But because I have limited capital, instead of [going] once or twice a year, I have to go four or five times a year, so that whatever I bought, [I’d bring back] to the Philippines, sell it, then go back [to China]. So that [way, you let the business go around, along with the] cash flow.

One principle or lesson [you can learn is called] bootstrapping. I started Great Deals [in] 2014. For the first four years, it was bootstrap. Bootstrap means [that] you don’t get external funding. You don’t get an investor. You try to grow your business through the cash flow, through your profit, through your earnings. You bring it [in and] pour it back into the business.

Overall, I think you need to be hardworking in terms of turning [your money] around faster. 

What would you recommend to business owners and sellers? Should they do a combination of offline and online businesses or should they just completely sell online?

Well, for me, I want to be laser-focused because I have limited resources. That’s why I chose to go to the online—pure online play. So in terms of people’s choices, it’s gonna be up to them if they would like to have an omni-channel approach or a pure play.

There’s no right or wrong answer. It’s more of the business opportunity [and] strategy you want to have in terms of your business. 

This is the beauty behind it. I always say up to now, up to today, [that] e-commerce is still a sunrise industry. When I say sunrise, [it’s] because in the whole total retail sales of the Philippines, only less than 3% are in the e-commerce space. Compared to China’s 40%, we can still grow 10 times more and [even so], we’re still way, way smaller. 

If you go to some urban cities in the Philippines, the impact of e-commerce hasn’t been there yet. So there’s a lot of [opportunity for] market penetration, especially on the suburban side or outside the major mega-cities here in the Philippines. That’s why Great Deals is at the forefront of trying to penetrate those sub-urban cities in terms of our strategy. We do a lot of hyper-localization.

Typically, when a Cebu customer buys or orders from Lazada or Shopee, it takes five to seven days [to have the product delivered]. Now, we have cut it down to one to three days. We’ve set up fulfillment centers in Cebu and Davao so that we’ll be able to reach out to our [countrymen from] Visayas and Mindanao and they will be able to experience the full online shopping experience that we are experiencing here in Metro Manila. 

So, there’s a long, long way to go in terms of opportunity. Personally, for me, we have 10 times growth in terms of our industry.

Steve Sy is the Founder and CEO of Great Deals E-commerce. As the pioneer of e-commerce, it is currently the country’s largest provider of end-to-end ecommerce solutions to over 300 of the biggest manufacturers and country distributors in the Philippines.