If you are looking for ways to make a big splash in the Philippine business landscape, the e-commerce space offers a proven path – with plenty of room still to grow.
What is e-commerce?
Adopting the Organisation for Economic Co-operation and Development’s (OECD) definition of the term, e-commerce refers to any sale or purchase of goods and services conducted over “computer-mediated” networks.
This definition applies to transactions between businesses, households, and individuals, as well as government, private, and other public organizations.
E-commerce transactions include those where payment and delivery are arranged offline (e.g. cash-on-delivery payments and delivery by courier service), provided that the goods or services were ordered online.
How relevant is e-commerce in the Philippines?
The digital marketplace in the Philippines is on the road toward significant growth.
According to DataReportal.com’s September 2019 data on e-commerce activities in the Philippines, more than 75% of the country’s internet users (between 16 and 64 years old) have made an online purchase. More specifically:
- 92% have visited an online retail store or website
- 91% have searched online for a product or service to avail
- 62% have made an online purchase using a mobile phone
- 39% have made an online purchase using a desktop or laptop computer
Statista, describing overall e-commerce activities in the Philippines in 2018, reported that Filipinos spent approximately US$ 4.7 billion on online purchases last year. This figure is primarily driven by online travel transactions (US$3.5 billion), while consumer goods spending amounted to US$840 million.
Meanwhile, digital media products like video-on-demand or music streaming services, video games, and other content downloads totaled only US$286 million.
Where is e-commerce headed in the Philippines?
Compared to the Philippines’ neighbors in the Southeast Asian region, the above revenue numbers may be considered comparably low. But at the same time the modest numbers suggest that there is plenty of room to grow.
The aforementioned Statista figures also noted that e-commerce is on a growth trajectory. Online transactions in the “Food and Personal Care” category saw the fastest growth in 2018 at 29%, followed by “Toys, DIY, and Hobbies” (24%), “Electronics and Physical Media” (23%), and “Furniture and Appliances” (21%).
Overall online spending in the Philippines grew by 16% between 2017 and 2018. While this figure is behind the Southeast Asian average of 21%, it still outpaced the global average of 13% growth.
The top e-commerce platforms in the Philippines
The booming popularity of leading e-commerce platforms can give aspiring digital marketplace sellers the encouragement that they are looking for.
Major players like Lazada (estimated 25,000,000 users/month) and Shopee (14,400,000 users/month) are dominating the Philippine e-commerce space, perhaps even becoming de facto shopping destinations for many Filipino consumers.
These platforms give sellers significant mileage when they stage their highly marketable shopping festivals and super sales – an increasingly frequent occurrence especially around national and annual holidays.
Case in point: during Lazada’s most recent “Singles’ Day” annual sale (held on November 11, 2019), a million items sold within an hour after the clock struck midnight. By the end of the 24-hour event, Lazada’ “Millionaires Club” grew to a new total of 1,141 sellers. This distinction is made for sellers who surpass the PhP 1 million sales revenue milestone.
With constant promotional events and increasing consumer confidence in online retail platforms, opportunities abound for aspiring players in the Philippine e-commerce landscape.
Learn more about establishing an ecommerce business in the Philippines. Get in touch with a local expert from the FilePino team. Call +1.806.553.6552 (USA) or +63.917.892.2337 (Philippines) today.
