The Rise of Ecommerce in the Philippines
People have been looking at the Philippines as yet another top contender in Southeast Asia. According to Google's e-Conomy Southeast Asia 2020, the Philippines' eCommerce market for consumer products increased from US$ 3 billion in 2019 to US$ 4 billion in 2020 and is expected to reach US$ 15 billion in 2025.
Malaysia, Indonesia, and the Philippines account for a substantial portion of the new digital customers. More than one-third of digital service users started using a new online service because of COVID-19, and 94 percent plan to keep using it when the epidemic is over.
The Philippines’ online economy has grown by 55 percent, more than offsetting reductions in travel, transportation, and food delivery. Overall, Gross Merchandise Value (GMV) is predicted to reach $7.5 billion in 2020, representing a 6% year-on-year increase. Looking ahead to 2025, the whole digital e-Conomy is expected to reach $28 billion in value, re-accelerating to a CAGR of 30%. (CAGR).
Meanwhile, the verticals contributing to the region’s digital economy have shifted dramatically. E-commerce has surpassed retail as the biggest vertical, expanding 63 percent to $62 billion in 2020, and is predicted to grow at a similar rate through 2025, reaching $172 billion. Travel, on the other hand, was perhaps the most negatively affected category, with a 58 percent drop to $14 billion.
Main Factors Driving the Growth in the E-commerce Sector In The Philippines
Whereas the Philippines has one of the highest rates of internet use in Southeast Asia, according to the Oxford Business Group, online shopping barely accounted for 2% of overall retail consumption before the epidemic. According to Oxford Business Group, the epidemic drove many people online, with nearly 4 in 5 Filipinos shopping online at least once in the previous 30 days by July 2020, with the majority of them utilizing a mobile device to do so.
Optimistic but Cautious Outlook
In the first half of 2020, deal activity in the region grew at a rapid pace. Investors are cautiously bullish, completing fewer deals at more attractive values in the hopes of stronger long-term profits. Whereas “blitzscaling” was the aim a few years ago, investors are now looking for long-term, profitable expansion.
From Investments to Strategic Partnerships
Investment for unicorns in established areas (e-commerce, transportation and food, tourism, and media) has declined since booming in 2018. Platforms are now focusing on their core business to establish a route to profitability, and they’re serving a wide range of customer requirements through partnerships. The developing Digital Financial Services (DFS) fight is one of the rare places where super-services intersect, and while the conclusion is still unknown, we expect continued investment and solid cash-generating core business to be critical.
Increase in Government Support
The Philippine Department of Trade and Industry (DTI) produced the Philippine eCommerce Roadmap 2016-202021 in recognition of the importance of eCommerce to the Philippine economy. Its main objective is to increase online commercial operations to 25% of the country’s GDP by 2020, up from 10% in 2015.
The administration is dedicated to seeing this plan through, and has achieved significant progress in the following areas:
- Improved Internet access, eGovernment systems, eBanking, ePayment, tax systems, consumer protection, and logistics
- Investments – encouraging and supporting possibilities like foreign direct investment and money flows.
- Helping digital entrepreneurs get into the commercial market via innovation
Improved Online Shopping Experience
Primarily focusing on convenience and ease of use, the Philippine population of 110.3 million people is dominated by young, tech-savvy Millennial and Gen Z consumers (the average age is 25.7 years).27 Unsurprisingly, these consumers are heavy Internet users, spending an average of 10 hours and 56 minutes2 every day online. Social media accounts for over half of that time—4 hours and 15 minutes.
The introduction of powerful and inexpensive mobile devices is at the core of this boom in Internet usage among Filipinos, as it is in other Southeast Asian nations.
You must create an online shopping experience that’s optimized for mobile-first consumers’ smartphone screens. Simple navigation with fewer clicks, clear call-to-action buttons, vibrant yet lean graphics that load fast, and intuitive browsing experience, and even eCommerce marketing optimized for mobile displays are all examples of this.
Interested in starting your eCommerce store for your business? Book a free discovery call with us to get started!
- ETI Article
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