E-commerce sales to grow near P1 trillion mark by 2026

MANILA, Philippines — E-commerce sales in the Philippines are expected to continue to grow and hit P969 billion by 2026 amid increasing consumer preference for online channels, data and analytics firm GlobalData said.

“The Philippines will continue to witness high growth in e-commerce sales and increase at a compound annual growth rate (CAGR) of 17.9 percent between 2022 and 2026 to reach P968.9 billion ($19.0 billion) in 2026,” Shivani Gupta, senior banking and payments analyst at GlobalData said in a statement.

For this year, GlobalData expects the Philippine e-commerce market to grow by 22.9 percent to P615.7 billion after rising by an estimated 31.3 percent to P500.9 billion last year as an increasing number of consumers move from offline to online purchases.

“The Philippines is one of the fastest growing e-commerce markets in Southeast Asia, supported by high internet and smartphone penetration. Furthermore, the COVID-19 pandemic accelerated the shift in consumer preference from brick-and-mortar to online channels,” Gupta said.

She said the country’s e-commerce growth has also been boosted by the government’s initiatives to encourage e-commerce adoption among small and medium enterprises to harness its benefits for the economy.

Based on GlobalData’s 2022 Financial Services Consumer survey, close to 90 percent of Filipino consumers have reported shopping online in the past six months, while only six percent had never made online purchases.

The survey also revealed that card payments through debit, credit and charge cards remain the most preferred payment option for e-commerce purchases in the Philippines, accounting for 51 percent of the total transactions last year.

GlobalData attributed the dominance of card payments for e-commerce purchases to value-added benefits including interest-free installment payments, reward programs, cashback, and discounts.

Alternative payment tools like GCash, PayPal and PayMaya are the second most preferred payment tools for e-commerce purchases in the country with a 24.5 percent share of total transaction value last year.

“Emergence of new payment models such as buy now pay later (BNPL), which allows consumers to split total purchase amount into installments are some of the factors supporting alternative payments growth,” Gupta said.

Those offering BNPL services in the country include Atome, BillEase, Akulaku, Cashalo, UnaPay,  TendoPay, and e-commerce platform Lazada.

While electronic payments are on the rise, GlobalData said over 15 percent of e-commerce purchases in the Philippines are still being made through cash payments, reflecting the traditional preference for cash given the high unbanked population and limited financial awareness, especially among the rural population.