Definition of Online Shopping
Online shopping refers to purchasing goods or services over the internet through an electronic device such as a computer, tablet, or smartphone. Online shopping lets customers purchase products from multiple retailers without visiting a store.
This method of shopping has become increasingly popular due to its convenience, availability, and ease of use. According to a report, the global online retail market is approximately $5.2 trillion, growing by 18.8% annually.
Online shopping typically involves –
- Searching for products using a search engine or browsing various online shopping platforms
- Selecting items to purchase
- Entering payment and shipping information
- Completing the transaction
Overview of the Philippines’ Online Shopping Market
The Philippines’ online shopping market has continued to grow over the years. In 2023, the revenue of the e-commerce industry is expected to reach $18.16 billion. The revenue is growing at 12.93% (CAGR 2023-2027) and will reach a market volume of $29.54 billion by 2027.
At the beginning of 2023, there were about 85.16 million internet users in the Philippines, with about 72.5% of the total population who were social media users. According to Globaldata, the growing number of smartphone users in the Philippines will drive the e-commerce market at a CAGR of 15.7% (from PHP205.5 billion in 2019 to PHP368.3 billion in 2023).
The top e-commerce players in the Philippines include Lazada, Shopee, and Zalora. They offer various products, from fashion and beauty to electronics and home appliances. The Philippines’ e-commerce market is set to hit $24 billion by 2025.
Who is Shopping Online in the Philippines?
In the Philippines, many demographics shop online, attracting young and old consumers from different income levels. There are currently 38.9 million e-commerce end users in the Philippines, which will reach 55.8 million by 2025.
One key demographic for online shopping in the Philippines is the younger generation, who are more comfortable with technology. As of 2018 (the most recent statistics), 52% of the shopper in the Philippines were in the 25-34 age range, with 18-24-year-olds making up 26% and 35-54-year-olds making up 13%.They will likely have access to smartphones and the internet, making online shopping more accessible.
Additionally, with the COVID-19 pandemic, online shopping has become more attractive to consumers of all ages looking to avoid physical stores and reduce the risk of infection. Overall, the online shopping market in the Philippines is diverse and attracts a range of consumers, with the potential for continued growth and innovation.
Demographic profile of Filipino online shoppers
Before you begin, you should know your competitors and your target market’s demographics. Your marketing and sales activities may be more precisely targeted using this information.
- The younger generation: According to a report, 52% of online buyers are between 25 and 34. They make up about 80% of all shoppers combined with those between 18 and 24.
- Female shoppers: Statista reports show Filipino women spend significantly more than men. They comparatively utilize social media more than men.
- Location: Sales in the provinces of the Philippines are growing. Cavite has the second-highest consumer base among the regions, with 9%; Cebu has 6%, while Pampanga, Davao, and Rizal each have 3%. However, most, i.e., 38% of all e-commerce transactions, happen in Metro Manila.
Primary motivations for shopping online
- Convenience: Online shopping allows people to shop from the comfort of their homes or anywhere with internet access, making it a convenient option.
- Time-saving: Online shopping saves time, as a shopper in the Philippines can quickly browse and compare products and make purchases with just a few clicks.
- Availability: Online shopping provides access to a wide range of products that may not be available in local stores, giving consumers more options.
- Cost-saving: Online shopping can often offer better deals, discounts, and lower prices than traditional brick-and-mortar stores. This makes it an attractive option for bargain hunters.
- Reviews and recommendations: Online shopping provides access to customer reviews and recommendations, which can help shoppers make informed decisions about products they are considering.
- Privacy: Online shopping provides privacy to shoppers who may not want to be seen or recognized when shopping in physical stores.
Preferred payment methods for Filipino shoppers
Real-time digital payments have gained popularity in the Philippines as one of the most practical and inclusive choices for personal, retail, commercial, and corporate use cases. By 2025, most users in the Philippines will convert shift to digital payment. Here are some popular payment choices –
- Credit Cards – Visa, Mastercard, and American Express: According to data from the Philippines Central Bank, just 8% of Filipinos use credit cards.
- Cash: Particularly in the Philippines, cash remains the preferred means of payment for online shoppers. 86% of online shoppers generally make cash payments on delivery.
- Digital Wallet: For Filipinos of all ages, smartphones are the most commonly utilized technology. This number will only rise as more people have access to phones. About 92% of online shoppers use digital wallets to make payments.
What are Filipino Consumers Buying?
In recent years, the most popular products among Filipino consumers have included personal care and beauty products, electronics, and household items. Let’s study some other latest trends.
Popular categories of purchases made by Filipino consumers
Shoppers in the Philippines buy various products and services across various categories. However, the most popular product categories are –
The largest e-commerce market sector in the nation is Electronics & Media, with a market size of US$270 million in 2019. The rise of an e-commerce platform, Argomall, also became popular in recent years, specializing in the sale of electronics.
In 2023, the consumer electronics industry is expected to generate $9,151 million in revenue. The market is anticipated to expand by 0.22% yearly (CAGR 2023-2028).
With a value of $5,033 million in 2023, Telephony is the market’s biggest segment. In the consumer electronics segment, total revenue of 41.3% will be generated in 2023.
In 2023, the Beauty & Personal Care industry in the Philippines is expected to generate US$5.79 billion in revenue. The market is anticipated to expand by 0.90% yearly (CAGR 2023-2027). With a market volume of US$2.69 billion in 2023, the category of personal care is the market’s largest.
In 2023, the fashion industry is anticipated to generate US$2,117.00m in revenue.
By 2027, the market volume is predicted to reach US$3,721.00 million, with revenue forecast to expand at a 15.14% annual rate (CAGR 2023–2027).
Preference for Brick-and-Mortar Stores vs. Online Marketplaces
What is the main reason a shopper in the Philippines chooses online marketplaces instead of traditional brick-and-mortar stores?
Over the last couple of years, the e-commerce industry has seen significant growth and is set to grow further in the upcoming years. Let’s understand the preference for brick-and-mortar stores vs. online stores.
Brick and Mortar Store
In the Philippines, there is still a preference for brick-and-mortar stores over online marketplaces, particularly for certain types of products. This is partly due to the country’s relatively low level of e-commerce adoption, concerns over security and trust, limited internet access and connectivity, and a preference for personal interaction and physical examination of products.
The Online Marketplace
The situation is gradually changing as more Filipinos become comfortable using digital platforms for shopping and e-commerce players continue improving their services and addressing consumer concerns. Online marketplaces such as Lazada, Shopee, and Zalora have been gaining popularity, particularly for electronics, gadgets, and fashion products.
Frequency of Online Shopping Among Filipinos
As per statistics, 54% of the shopper in the Philippines made their first Internet purchase during the epidemic, and 73% of these first-time buyers intend to keep doing so. The nation swiftly catches up to its neighbors in the SEA region, even given its inferior starting point.
- In 2025, the Philippine e-commerce sector is expected to generate $24 billion in sales.
- With around 75 million monthly visits, Shopee is the most well-known ecommerce platform.
- With $6.85 billion, electronics are the category with the most spending on the internet.
Delivery options preferred by Shoppers in the Philippines
Here is a list of the top delivery options for shoppers in the Philippines –
One of the top courier services in the Philippines is LBC Express. You may drop off or pick up your package at one of its more than a thousand locations countrywide.
- Provides nationwide service
- PHP 70 – PHP 1420 per delivery, depending on the package
- Delivery in 1-5 working days
- Cash on Delivery, Cash upon pickup, cash on branch pickup
- Air cargo, Remittance service, and international shipping
DHL offers nationwide courier and worldwide shipping services. The corporation serves more than two million consumers.
- Available in 220 countries
- Shipping price depends on the volume of the package
- Delivery in 2-20 working days
- Cash, bank transfers, credit cards
- On-demand delivery, export and import services
You may drop off or pick up your packages nationwide at one of the more than 400 JRS Express locations. The courier service provides door-to-door, same-day, and freight-forwarding delivery options.
- Shipping nationwide
- The price depends on the volume of the package
- Delivery in 1-15 working days
- Cash on branch drop off
- Freight forwarding, Lipat-Bahay, JRS Pera
What channels do Filipinos shop through?
Filipinos use a variety of channels for online shopping, which are as follows –
- E-commerce marketplace – 86% of Filipinos turn to e-commerce marketplaces like Lazada, Shopee, etc., for their shopping.
- Social commerce – 28% of Filipinos use social media sites like Facebook, Instagram, TikTok, etc., for online shopping.
- Shopping apps – About 23% of Filipinos use online shopping apps like Lazada and more for online shopping.
- Retailer/Brand websites – About 17% of shoppers in the Philippines directly complete their shopping via brand websites.
- C2C marketplaces – About 6% of Filipinos use Customer to Customer marketplaces like eBay and more for online shopping.
Use mobile devices to shop in the Philippines
With 77.1% of Filipinos predicted to own smartphones by 2025, the smartphone industry in the Philippines is expanding. With growing usage, mobile shopping is becoming easier.
- 3 out of 5 Filipinos think owning a smartphone has made shopping easier because it is more convenient than a brick-and-mortar store.
- 65% of shoppers in the Philippines use smartphones to shop online, connect on social media, and much more.
- Smartphone users use their devices to access and manage their funds using digital banking applications and buy products and services through various e-commerce websites and apps.
Comparison between Hong Kong and the Philippines with regard to online shopping platforms
Hong Kong online shopping trends
- According to a report, Hong Kong’s e-commerce market is $3.7 billion, with about 25% of the entire population using online payment methods.
- According to a survey, the value of beauty product retail sales on e-commerce in Hong Kong made up 6.5% of the overall retail sales of health and beauty products in 2019.
- Hong Kong’s high internet penetration, now at 89.4%, is one of the primary reasons of the country’s high demand for online shopping.
Philippines online shopping trends
- According to a report, the Philippines’ e-commerce market is $18.16 billion.
- In 2021, the Philippines’ overall retail sales value totaled 53.6 billion US dollars. This amount will reach a total of US 68.71 billion in 2026.
Opportunities for Businesses Operating in the Philippine Market
The Philippines has a growing economy with an estimated population of 100 million. Businesses operating in the Philippine market can reach this huge consumer market. Some of the opportunities for businesses in the Philippines include:
The Philippine government identifies infrastructure development as a priority area for investment. This includes projects in areas such as transportation, energy, and telecommunications. Businesses that can offer solutions in these areas have the potential to benefit from the government’s infrastructure push.
Agriculture and natural resources
The country is rich in natural resources and has a significant agricultural sector. Businesses that can offer solutions in areas such as agribusiness, mining, and renewable energy have the potential to benefit from these resources.
The Philippines is a popular tourist destination with beautiful beaches, historical sites, and cultural attractions. Businesses that can offer products and services to tourists, such as hotels, restaurants, and tour operators, have the potential to benefit from the growing tourism industry.
Challenges Faced by Businesses Selling Products to Filipino Consumers
There are several challenges businesses face when selling their products to shoppers in the Philippines. Let’s examine the main challenges –
Cash is still the preferred payment method in the Philippines, and businesses must offer cash-based payment options to appeal to Filipino consumers. However, with the growing usage of smartphones, online payment, like digital wallets, will soon become a trend.
The Philippines has complex regulations governing imports, exports, and business operations. Businesses need to navigate the regulatory environment to ensure compliance and avoid penalties.
Shoppers in the Philippines are price-sensitive and often seek the best value for their money. Businesses need to price their products competitively while maintaining quality standards.
The Philippines’ e-commerce market is a dynamic and fast-growing space, with many opportunities for businesses that can navigate unique challenges and capitalize on the latest trends. As e-commerce continues to evolve in the Philippines, businesses must stay agile and adapt to changing consumer preferences while maintaining a strong online presence and offering a seamless shopping experience.
With the right approach and a deep understanding of the local market, businesses can succeed in the Philippines’ e-commerce landscape. Businesses can leverage the latest trends, provide value to their customers, and stay ahead of the competition. They will be well-positioned to thrive in this exciting and rapidly evolving space.