The State of Philippine eCommerceTime to read: 6 minutes
Despite the land size, the Philippine population is internet savvy. The Philippines has over 85.16 million internet users and is a rapidly expanding eCommerce region.
The Philippine eCommerce sector has experienced tremendous growth, particularly in the last five years. Its use exploded in 2020 as a result of the COVID-19 pandemic. By 2025, its burgeoning expansion is anticipated to increase by a factor of four, reaching $12 billion. Regarding all sources of GDP contribution, the digital economy grew by nearly 55% in 2020. In 2022, the Filipino eCommerce sector outperformed India, Argentina, and Australia for eCommerce retail growth.
The Philippines is a rapidly expanding E-commerce sector in Southeast Asia thanks to its thriving economy and a sizable population that are technologically adept. Several websites and digital applications are vying for market share with national, regional, and international competitors. More and more of the country’s population is now accessing the Internet thanks to the improved internet connection in the Philippines. Public and private sectors and investing in strengthening the internet infrastructure there. Connected Filipinos use computers and mobile devices to access the country’s eCommerce economy.
Philippine eCommerce had a rocky start. Early adopters of the eCommerce marketplace included local company Sulit.com.ph (now known as Carousell) and online forums. Still, these were hindered by issues, including the shipping of the items and the actual payment.
Common issues that affected early online shoppers included unfulfilled delivery, unpaid purchases, and even the sale of fake or damaged items.
However, firms eventually overcome those obstacles, especially tech businesses jumping on the eCommerce bandwagon. Local telecom companies began to introduce reliable and convenient digital wallet services and online payment portals. Major examples include Globe’s GCash e-wallet service and their rival Smart’s Smart Money, which was eventually superseded by PayMaya (now rebranded as Maya). Now Filipinos can pay for online purchases hassle-free without fear of unsuccessful transactions.
In addition to payment options, new online marketplaces such as Zalora, Lazada, and Shopee began to appear in the late 2010s. With its Marketplace, Facebook also made a foray into the eCommerce platform market. Although these businesses assisted in giving Filipinos choices to buy their goods, the early 2010s were marked by poor internet service and prohibitive costs.
Philippine eCommerce After the COVID-19 Pandemic
The COVID-19 pandemic drastically drove up demand for online shopping in the Philippines. The economy still depends on it to recover from the outbreak. Data from the Philippine Department of Trade and Industry (DTI) reports that in 2020, eCommerce raised the country’s GDP by 3.4%, or USD 12 billion. The DTI is also optimistic about the growth of local Commerce enterprises. New e-commerce companies rose from 500,000 in 2020 to 750,00 by 2021. In 2022, there were more than 1 million new businesses.
Philippine eCommerce is expanding due to the rapidly growing middle class, rising consumer expenditure, and a burgeoning technical populace.
In a survey, the Malaysian company iPrice Group found that the lockdown increased eCommerce in the Philippines. Here’s what the rest of the report said:
- Based on shopping apps, the country had the highest demand at 53%.
- Spending by Filipinos on online services increased by 57%.
- The proportion of internet companies engaged in retail increased to 80% in 2021.
The positive effects of eCommerce on Filipinos during the COVID pandemic were acknowledged by Ramon M. Lopez, secretary of the DTI. In a 2021 speech, he explained,
“We saw this, especially last year, with eCommerce coming to our rescue during the COVID-19 pandemic. Online retail, delivery services, online entertainment, digital services, telehealth, work-from-home arrangements, digital payments—all of these helped us in the past year and continue to do so until now.”
According to a survey published by GlobalData, the Philippine eCommerce sector was estimated to have grown by 31.3 percent in 2022 to reach PHP 500.9 billion (USD 9.8 billion). This reflects the consumer’s decision to switch from making purchases offline to online.
Following this trend, the Philippine eCommerce market is expected to expand by 22.9 percent in 2023 to reach PHP 615.7 billion.
Cards have quickly become the most favored payment method for online purchases in the Philippines. The report said credit and debit cards accounted for more than half of all transactions in 2022, the report said.
Opportunities in Philippine eCommerce
The e-commerce market in the Philippines offers numerous chances for development and expansion. Filipino customers, who lead digital lifestyles, are the primary driving force behind this.
Around 73% of Filipino consumers are likely to continue or grow their online buying activity even after the epidemic.
According to the Philippine eCommerce Roadmap 2022, the government favors accelerating eCommerce’s growth. It aims to address or modify issues and obstacles that prevent the nation from developing eCommerce to its full potential. Plans include more systematic government regulation for proper taxation, consumer protection, and infrastructure development.
Growing Middle Class with Spending Power
Oddly, the Philippine economy growth rate decreased by 3.8% in 2022. This year, it grew by 8.3% year over year in the first quarter of 2023. The government’s 7-9% growth this year was also met in the first quarter.
The World Bank also projects to grow into an upper-middle-class nation. They project the middle-income country in 2020 with a gross national income per capita of US$3,430 to grow to an upper middle-income country soon. This is due to forecasts seeing the per capita income increasing to US$4,096-US$12,695.
This means nearly 47 million Filipinos have greater spending power and the technology to access online shopping.
According to recent Department of Trade and Industry (DTI) research, 99.5% of businesses in the Philippines as of 2022 are categorized as micro, small, and medium enterprises (MSMEs). This is almost the same as a million businesses supporting the neighborhood economy. The Philippines steadily grew during the previous ten years thanks to this accomplishment. It was noted as one of the most promising economies globally, not just in Asia.
These changes have prompted the DTI to promote the “Basta e-commerce, madali” campaign. This government campaign aims to streamline eCommerce transactions nationwide to strengthen the domestic economy and support expanding MSMEs in the Philippines.
The Philippine eCommerce Association (PECA) was founded to foster unity among the nation’s eCom players. This move will provide them more authority to speak up and act as their representatives to the larger businesses and conglomerates in the local economic scene. In addition, PECA, as envisioned by the founders, is a non-profit organization that fosters eCommerce development by establishing regulated, well-implemented programs that actual practitioners accept.
High Interest in Foreign Goods
Before the pandemic, Filipino shoppers were frequent travelers, typically shopping for products unavailable from local stores. Before the fashion retailers Uniqlo and H&M opened shops in the Philippines in 2012 and 2014, many Filipinos traveled to Hong Kong and Singapore to shop at the locations. Many even placed online orders delivered to customers in the Philippines despite the high shipping fees.
The total value of imported products in 2022 was USD 137.22 billion, representing a growth rate of 17.4% per year. Philippine-based internet merchants can still differentiate themselves by providing goods that might not be available locally. The same is true for distinctive Filipino goods that could be hard or even impossible to find at nearby or local brick-and-mortar stores, especially in provincial areas.
Mobile Shopping Experience
The 110.3 million-strong population of the Philippines is predominantly made up of youthful, tech-savvy Millennial and Gen Z customers; the average age is 25.7 years. Unsurprisingly, these customers are frequent Internet users, spending an average of more than 10 hours online.
Like other nations in Southeast Asia, the rise in Internet usage among Filipinos is primarily due to the development of robust and reasonably priced mobile devices. According to Hootsuite and We Are Social, the Philippines has been a mobile-first country since 2014, and 98.5% of adult Filipinos own a mobile phone. In comparison, only 77.3% of people can access a laptop or desktop computer.
As a result, you must offer mobile-first customers an online purchasing experience optimized for smartphone screens. This entails easier navigation with fewer clicks required and clear call-to-action buttons. Your products should have vibrant but lean images that load quickly. You’ll want to provide a natural browsing experience. Consider online eCommerce marketing tailor-made for mobile devices.
Philippine eCommerce businesses that can find a unique niche and gain a foothold online benefit greatly. However, doing so requires an exceptional understanding of the local eCommerce scene. You should be able to adjust to the demands and tastes of eCommerce customers in the Philippines with careful preparation, focused marketing, and a capable shipping and logistics partner by your side.
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