The E-Commerce Boom in The Philippines

Discover the reasons behind the rise of eCommerce in the Philippines, as well as the opportunities that ecommerce presents for businesses.

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Do you have a business in the Philippines that sell goods and services online? Or are you looking to break into the eCommerce industry there? Either way, it pays to know the ins and outs of this rapidly growing sector. With one of Southeast Asia’s highest eCommerce growth rates, there’s no better time for businesses to capitalize on everything this market has to offer.

This article will help you get up-to-speed on the most unique insights within the fast-paced Philippine eCommerce industry.

Overview of the eCommerce Market in the Philippines

The Philippines’ eCommerce industry has seen massive growth, particularly in the last five years. This growth was exponentially accelerated in 2020 when shutdowns caused by the pandemic forced many to transact digitally. In fact, GlobalData has forecasted that the eCommerce value in the country is expected to rise at a substantial CAGR of 17% between 2021 and 2025. Additionally, it is expected to grow four times higher by 2025, amounting to $12 billion.

Let’s delve deeper into why eCommerce is booming in the Philippines and the opportunities present for SMEs and other businesses to reach their full potential through the digital world.

Why is eCommerce Booming in the Philippines?

The eCommerce industry in the Philippines has seen significant growth over the past few years. This is primarily attributed to eCommerce’s numerous advantages, such as around-the-clock availability, convenience, and a more comprehensive range of product options. eCommerce also eliminates geographical barriers by allowing customers to shop from any part of the country with a few clicks of their mouse or taps on their smartphones. This has resulted in an ever-increasing eCommerce market share in the Philippines, which is projected to grow further in the upcoming years.

eCommerce companies have already begun to attract investors, who are keenly aware of the rising demand for online shopping options in the country and its surrounding regions.

So what are the main reasons behind the growth of eCommerce in the Philippines?

Increasing Internet Usage

According to Standard Insights’ study which surveyed over 1,000 respondents living in the Philippines in February 2022, approximately 8 out of every 10 Filipinos stated that they felt like they had spent more time online recently. Specifically, younger respondents (ages 18-24) reported feeling like they have spent more time online recently than other age or gender groups.

Increasing Internet Usage: Philippines

The study also revealed that more than half of Filipinos (57.7%) spend 3 hours or more daily online. In general, the younger a person is, the more likely it is that they will spend more time online. In fact, 70.8% of those aged 18 to 24 spend 3 hours or more online, compared to 43.8% of those aged 45 and over.

Amount of Time Spent Online: Philippines

Online Shopping Preferences & Behavior

On the other hand, nearly half of the respondents (48.3%) have bought something they saw on social media at least once in the past 3 months. Older age groups are more likely to buy something they saw on social media than other groups.

Online Shopping Preferences & Behavior in The Philippines

A separate study, which Standard Insights conducted in November 2022, involving over 500 Filipino respondents, revealed that more Filipinos (24.8%) shop online once per month. Further, a combined 45.7% of them shop online more than once a month.

Particularly, female respondents (73.8%) shop online slightly more than male respondents (67.0%) in a given month.

Frequency of Shopping Online: Philippines

In the same study, we also discovered that among various product categories, fashion items such as clothes and footwear (68.7%) are the most shopped online products in the Philippines. Moreover, products for beauty and personal care (50.5%) are another product category that is frequently purchased online. More than half of the sampled Filipinos in the study identified both as product categories that they prefer to shop online.

Overall, females are more open to buying various types of products online than males. However, males are more likely to buy consumer electronics online compared to females. Meanwhile, when comparing different age groups, fashion is also observed to be the product category most purchased online.

Product Category Preferences: Philippines

From Brick-and-Mortar to Online Selling/Retail Revolution

The pandemic augmented the country’s eCommerce activities as wary consumers stayed home to avoid exposing themselves to disease vectors. This trend will continue with the rise of new online shoppers and the accumulation of online sellers in the country.

According to the Department of Trade and Industry (DTI) in the Philippines, online sellers grew from 1,700 in March 2020 to 93,318 in January 2021.

This boom has encouraged the government to take various initiatives to boost eCommerce sales in the country. In January 2021, it launched the ‘Philippine e-Commerce Roadmap 2022’ to promote eCommerce adoption among small and medium-sized enterprises (SMEs) and boost consumer confidence in online shopping. The government is looking to increase the eCommerce contribution to the nation’s GDP from 3.4% in 2020 to 5.5% in 2022.

Potential Risks Associated with eCommerce in the Philippines

As eCommerce becomes increasingly popular in the Philippines, businesses must be aware of the potential risks associated with an online business. Without measures to guard against identity theft, data breaches, and other online frauds, companies may suffer devastating losses of revenue and customer trust if their eCommerce platform falls victim to these threats.

For example, stolen credit card information may lead to hundreds or thousands of fraudulent purchases. E-Businesses should take comprehensive steps to minimize risk and ensure their eCommerce protection plans are secure.

This means performing rigorous security checks, investing in firewall protection services, and continuously monitoring eCommerce-related activities for signs of malicious activity. With such precautions in place, eCommerce platforms can bolster customer safety and reinforce company profits.

The survey conducted in November 2022 by Standard Insights revealed several key issues hamper online shopping for over 500 respondents. The primary issue, reported by 64.8% of respondents, is a lack of customer protection policies. Without the necessary safeguards in place to protect customers and guarantee product quality, many shoppers are hesitant to place orders online.

On the other hand, 55.3% of respondents indicated no assurance of product quality when ordering from an online store. This lack of trust means customers may be unable to determine if they are getting exactly what they paid for when it comes to items such as clothing or furniture until after the purchase has been made.

Another concern reported by 40.5% of those surveyed was the high delivery fees associated with some online stores. With rising costs for shipping, this additional fee can significantly drive up the cost of an item even without consumers having access to a physical store where they can inspect the product before making a purchase.

Meanwhile, 31.2% argued that safety and security issues remain a major challenge when considering buying something online. Since customers must input sensitive information into an unknown system, they could potentially be vulnerable to hackers and other malicious actors looking to take advantage of them financially or personally. All these factors make online shopping difficult and risky for many potential buyers leading them to seek alternatives such as physical stores where possible.

The main challenges when shopping online

Consequently, more sampled Filipinos (53.1%) are okay with sharing personal information to ensure the ease of item delivery. At the same time, many Filipinos also think that they should be informed of what information online shopping platforms keep.

Females are more likely to be more cautious about sharing personal information compared to males. Meanwhile, between age groups, those over 55 are also more cautious of sharing information compared to those aged between 35 and 54 and those aged between 18 and 34.

Pilipinos' thoughts on sharing their personal information when shopping online

Why Should Filipino Businesses Shift to eCommerce?

In today’s ever-evolving digital landscape, eCommerce offers an incredible range of possibilities for businesses of all sizes in the Philippines. From reducing costs and enhancing customer reach to offering more personalized experiences, eCommerce provides a standout opportunity for companies to capitalize on.

Additionally, eCommerce enables connectivity with global marketplaces, allowing Philippine businesses to extend their offerings to customers worldwide. With eCommerce providing these immense opportunities, companies should look into eCommerce and see what it can offer them.

1. eCommerce can help businesses reach a wider audience

eCommerce has become a powerful tool for businesses worldwide, and in many cases, it has provided startups and small-to-medium-sized enterprises access to a broader market.

eCommerce also helps businesses improve their product offerings and services and expand their operational reach.

In the Philippines specifically, eCommerce significantly contributes to economic growth and job creation by providing companies with opportunities to access nationwide or international markets. It effectively engages customers while promoting products, services, and brands, assisting in businesses’ financial growth and development across various industries.

2. eCommerce can be a great way to boost sales and grow your business

As mentioned, eCommerce has emerged as a powerful tool for businesses worldwide, especially in the Philippines. eCommerce can boost sales, grow your customer base, and offer customers flexible shopping experiences.

Even small-and-medium-sized businesses are leveraging eCommerce to reach a larger market and increase their reach, helping them become more competitive in their respective industries. With eCommerce, entrepreneurs can access faster, more efficient delivery services for faster product fulfillment.

Furthermore, eCommerce provides businesses with improved visibility, as customer reviews can help create better brand awareness and loyalty. It also helps facilitate cost savings by reducing overhead costs associated with physical stores.

As eCommerce continues to evolve in the Philippines, more companies are turning to digital platforms to grow their businesses and build better customer relationships.

Key Takeaways

In conclusion, the eCommerce industry in the Philippines is an exciting and ever-growing sector, providing multiple opportunities for businesses to expand their reach.

It is a great way to attract new customers, increase sales, and drive more business growth while also minimizing financial risk. However, the potential risks associated with eCommerce should not be overlooked. Businesses must ensure that they have strong security measures in place to protect against fraud or data breaches.

With the right strategy and awareness of pitfalls, eCommerce can be an incredibly effective tool for businesses looking to gain a competitive edge in today’s digital economy.

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