Improving the digital lifestyle

The e-commerce market in the Philippines is expected to grow at a compounded annual growth rate of 14.1 percent during the 2018 to 2028 period, according to a report from Mordor Intelligence.

It noted that the market has grown in recent years, boosted by evolving consumer preference for online shopping and increasing internet penetration in the regions.

The report explained that the COVID-19 pandemic further accelerated this trend, attracting more sellers to utilize the reach and other benefits offered by the e-commerce platforms in the Philippines.

It said that with a vibrant economy and a large population savvy in digital technology, the country is a fast-growing e-commerce market in Southeast Asia, with some websites and digital applications competing for market share with global, regional and domestic players.

Increasing connectivity in the Philippines and rapidly overcoming Filipino infrastructure problems, it added, has made more and more of the large population access the internet, with connected Filipinos accessing the country’s e-commerce market primarily through mobile devices and computers.

But despite the Philippines’ rapid development rate, the report stressed that the country has yet to make more efficient and usable technology and management available to a larger audience, even as it emphasized that the lack of action by government leaders and local organizations to improve the country’s technology and online industries through defining infrastructural projects has also hampered advances in e-commerce.

Despite this, the report said the e-commerce industry in the country has a high potential for growth and development, mainly driven by Filipino consumers adapting to a digital lifestyle, with the World Bank identifying the Philippines as one of the most dynamic economies in the East Asia Pacific region.

It also noted that the increasing use of mobile phones in the region has given a major push to e-commerce platforms, as mobile phones and apps provide one of the easiest access to these platforms. Citing data from GSMA Intelligence, at the beginning of 2022, the Philippines had around 156.5 million active mobile connections, indicating considerable potential in utilizing the reach offered by the mobile apps of the e-commerce platforms.

More importantly, e-commerce is expected to continue playing an important role in the country’s economic development.

Trade Secretary Alfredo Pascual pointed out that e-commerce is one of the most potent tools and fastest route in unlocking the country’s economic assets – in particular a young and digital native population, a growing middle class, available and affordable technologies, and significant surpluses in the financial sector – toward sustained accelerated economic development.

Based on Google, Temasek, Bain & Co.’s E-conomy SEA 2022 report, the Philippines’ digital economy is expected to reach a gross merchandise value of $35 billion by 2025, growing at a 20 percent CAGR from $20 billion last year. The main driver will be the e-commerce sector, which is seen to hit $22 billion by 2025 at a 17 percent CAGR.

Meanwhile, the country’s overall digital economy is projected to hit a gross merchandise value of $100 to $150 billion by 2030, according to the same report.

The country’s biggest e-commerce platforms are also sharing this optimism.

Lazada Philippine chief executive officer Carlos Barrera earlier said  although physical stores are back on track in the tail-end of the pandemic, e-commerce in the Philippines has not yet waned and in fact continues to propel upward.

Barrera noted that e-commerce in the country continues to grow and that the reality is that habit has already been built. However, there has been a change in consumer behavior post-pandemic, with people who used to buy more quantity now buy a little bit less, but more frequently, and buy different things instead.

He said while Filipinos used to shop online for health essentials like face masks and groceries at the height of the pandemic, nowadays, they shop for more non-essentials like fashion and beauty products.

Statista.com recently came out with a report on the most popular business to commerce e-commerce sites in the Philippines.

Shopee led the pack with monthly web visits of 71.95 million, followed by Lazada with 36.55 million, and Zalora with 1.77 million.

Meanwhile, the US Department of Commerce International Trade Administration reported that in 2021, the Philippines e-commerce market sales reached $17 billion, largely contributed by 73 million online active users and this is estimated to reach $24 billion, with a 17 percent growth through 2025.

However, it noted that the e-commerce growth is hindered by challenges including the Philippines’ continued low ranking for mobile and fixed broadband internet speeds, as well as the high percentage of Filipinos who are still unbanked.

It said that Filipinos are prolific social media users and actively use platforms for a whopping 10 hours per days, seven days a week. The best platforms to reach Filipino consumers are Facebook (67 million active users), YouTube (58.5 million), Instagram (14 million), Twitter (9.3 million), and LinkedIn (9.2 million users). It estimated Filipino social media users to have reached 78.5 million last year.

Both local and foreign businesses have recognized the fact that shopping online has become a habit for Filipinos, both young and old, even post-pandemic. There are very few businesses that do not have online presence these days. Even with mobility restrictions already lifted, businesses that used to have only brick-and-mortar stores now maintain online stores at the same time.

Our government just has to focus on the enabling environment – better protection for online consumers and sellers as well, faster internet speeds, cheaper smart phones and computers, improved regulation for delivery service providers – to allow the country to take advantage of this new way of conducting business and going about our daily lives.

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