The Philippines e-commerce market is continuously growing, and every entrepreneur is keen on starting or expanding their business in the Philippines. In 2021, it was estimated that the total e-commerce sales of the Philippines were US$17 billion and comprised 73 million online active users.
E-commerce typically deals with the transaction of commodities between buyers and sellers. But there are many more things to consider before starting an e-commerce business in the Philippines. In this guide, we explore the trends of e-commerce, some of the biggest marketplaces, and things you need to take care of before establishing your business in the country.
Trends That Will Dominate the Next Decade of Philippines E-commerce
The Philippines is the second most populated country in Southeast Asia. Although they have a low income, they still show significant growth as they have a digital population of more than 67 million, which is good news for businesses worldwide.
Looking back at 2021, about 50 million Filipinos were shopping online, meaning that a major portion of this bunch has access to e-commerce businesses in the Philippines.
Let’s look at the trends in shopping in the Philippines. We’ll observe that electronics and media gather the most number of people on e-commerce platforms, followed by toys & DIY, fashion & lifestyle, food, and personal care and furniture. This illustrates that most Filipinos invest their time and money toward buying electronic gadgets available in e-commerce.
To abide by public demand, the most extensive online marketplaces such as Lazada, Shopee, and 11Street have also put up a major portion of their platform on electronic gadgets. Not only these, but fashion brands have also been in public demand, and some e-commerce platforms solely cater to fashion and lifestyle.
Doorstep grocery delivery has become a striking business model in APAC regions. It is highly likely that this sector, apart from fashion, beauty, healthcare, and electronic items, will dominate in the next decade in the Philippines e-commerce.
Largest E-commerce Marketplaces in the Philippines
There are loads of e-commerce companies present in the Philippines, and it is quite easy to get confused about which platform you should choose. Well, there are hundreds of platforms available for Filipinos. Some of the biggest firms that are currently ruling over the Philipines are-
One of the biggest e-commerce platforms in entire SouthEast Asia is also ruling over the Philippines. Lazada was established in 2012 with the main aim of becoming South-East Asia’s biggest e-commerce platform. It is one of the foremost e-commerce platforms in the entire APAC region, with approximately 400,000 sellers with 3000 brands that serve millions of customers. It offers a bundle of different services such as electronic accessories, TV & home appliances, health & beauty, babies & toys, men’s & women’s fashion, sports & lifestyle, and so many more.
Some other features of this platform are:
- The products are displayed with a full description, pictures, and other necessary details
- It also has discounts and promotions on the platform
- Easy-to-use website and application
- Numerous third-party integrations
- Accurate delivery services
Lazada is now available in Indonesia, Thailand, Malaysia, Singapore, and Vietnam.
Shopee is a multinational Singaporean company that was established in 2015. It gathers a monthly visit of 11.5 million, and the mobile app is tailored specifically for Southeast Asian market and people. It also has almost all the items available on the website and app.
Some features of Shopee are:
- Powerful promotion campaigns
- Secure payment gateways
- Share the products on social media platforms
- Free shipping programms
At present, it caters to many Asian Pacific countries such as Singapore, Taiwan, Thailand, Malaysia, Indonesia, and Vietnam.
It is a mobile application that allows both buying and selling on a single platform. It caters to both B2B and C2C business models. One of the biggest and most famous e-commerce platforms all over APAC, it facilitates peer-to-peer transactions, and the application is easy to use.
Some major sections available on the website are cars, home services, property, computers & tech, mobile phones & gadgets, women’s fashion, men’s fashion, beauty & personal care, and other miscellaneous items.
Major features of the platform are:
- Free and unlimited posting
- Smart listing and pricing
- In-app chat feature
- Promotional features
Carousell is available in Malaysia, Indonesia, Singapore, Cambodia, Taiwan, Hong Kong, Macau, Australia, New Zealand, and Canada.
Another Singapore-based online platform, now prominent in the Philippines, primarily sells fashion and lifestyle products. It showcases boutiques’ latest designs in fashion and lifestyle garments. This, again, is one of the most intuitive websites or apps to use since it leads customers straight to their choices.
Major features of this e-commerce are:
- Multiple payment options
- Personalized customer experience
- Fast loading speed
- Virtual size guides
- Community engagement
Zalora is currently available in Indonesia, Malaysia, Hong Kong, Thailand, Singapore, Taiwan, Vietnam, and Brunei.
Understand How People in the Philippines Are Shopping Online
In 2021, it was observed that smartphone household penetration reached 71.4%, which is a 2% increase from 2020. Let’s understand how the people of the Philippines react toward online business.
- Digital Marketing and Social Media: The citizens of the Philippines are actively using social media platforms. They spend about 10 hours per day online. Some of the most used social media in the Philippines are Facebook (67 million active users), YouTube (58.5 million active users), Instagram (14 million active users), Twitter (9.3 million users), and LinkedIn (9.2 million users). It is estimated in 2022, social media users will reach 78.5 million.
- Holiday shopping: There is a specialty in the e-commerce platforms of the APAC region. They promote festivals and holiday seasons on their website and application and roll out mega festive campaigns. These campaigns offer discount offers and vouchers to their customers, attracting customers’ attention.
- E-commerce mobile app: In 2022, 159 million subscribers were recorded by the telecommunications company in the Philippines, making it the fastest-growing mobile app market in Southeast Asia.
- Online Payment: The Philippines Central Bank recorded digital payments of $46.8 billion in 2020, which increased by 6% in 2019. It is expected to reach 70% by 2023.
Things to Know Before You Take the Plunge and Sell to People of the Philippines
Before you get started with your business in the Philippines, it is important to know a few things about the working mechanism of the e-commerce market and how the customers react to it-
- Cash over online transactions– Since 41 million people in the Philippines are unbanked (as of 2021), doing an online transaction is pretty hard for the general public. There are a good number of people dependent on cash for any e-commerce transaction. Therefore, entrepreneurs starting their businesses in the Philippines must look for payment methods.
- Unique geography and logistics– Because of the peculiar geography of the Philippines, the challenges in logistics always come in handy since it becomes difficult for e-commerce businesses to promise the same-day or even one-day delivery payment. You have to be sure that the 3PL logistics partner cater to even restricted areas. Some e-commerce brands have mentioned the restrictions in their business for their customers.
- Slow internet speed– Right now, one of the biggest concerns for all e-commerce businesses is the slowest yet the most expensive internet available in the Philippines. Online merchants, thus, have to pay attention to mobile optimization. Facebook, one of the biggest social media platforms in the world, has a free version for mobile phones in the country.
- Building Trust– The Philippines have shallow credit card penetration because of the inability of Filipinos to trust the credit card system as they fear overspending and coming into debt. Merchants can turn this challenge into an opportunity of building trust and give them multiple payment gateways to purchase from.
Largest Carriers and 3rd Party Logistics Companies in the Philippines
Over hundreds of 3PL logistic companies are present in the Philippines due to the increase in e-commerce business. Some of the largest 3rd party logistics companies present in the country are-
- Abest Express
This courier company started in 1990 and has become the biggest 3PL logistics company in the Philippines. They provide some of the best logistics services at an affordable price. Abest is considered one of the best for SMEs all over the country.
- Black Arrow Express
Black Arrow started its business in 2016. The company is currently under the ‘AII’ group and handles services like cargo handling, air, and sea freight, domestic movement, and many more. Black Arrow is continuously moving with improvements for both sellers and buyers.
- Ninja Van
It facilitates last-mile delivery service and cross-border transportation. It provides technology-based solutions for its partners. It is currently available in Indonesia and Thailand, along with the Philippines. Some of the offers of Ninja Van are-
– Standard delivery
– Next-day delivery
– Return, and
– SME and Enterprise Custom Services
This logistics company allows businesses to manage and transport their goods and supplies. Transportify has its own app that allows you to manage your delivery on your cell phone. It provides you with plenty of options to choose from that ease the process. Transportify is best known for its business program, 24/7 customer support, live tracking, and many other services.
- Ernest Logistics
Ernest logistics is a well-known logistics company for freight management and domestic forwarding. It focuses on solutions that are apt for transporting commodities all over the country. Their primary services are-
– Full and Less Container load
– Rolling Cargoes
– Loose Cargoes
– Domestic Air Freight
How to Succeed in the Philippines E-commerce Market?
You may have noticed that there is still plenty of room for e-commerce entrepreneurs to make their way toward Filipinos. There are a few things you could focus on to establish your business on the ground successfully.
Keep your core strong at all times. Three things to prioritize for your business are- product selection, reasonable rates, and first-class customer service. Focusing on these three pillars will give you exceptional results.
Choose the perfect e-commerce platform based on your objectives. If you want to start your business by putting up your products on an e-commerce platform, go for the best for you and your customers. Some specialized e-commerce platforms such as Lazada, Zalora, Shopify, and many others provide different services for different customers.
If you want to make your own website, be absolutely sure of the SEO. For this, there are numerous tools available for sellers to build their websites. Bring on the maximum number of organic traffic on your website. Make it accessible and comprehensive for people all over the country. It should be operated well on all devices; mobile phones, tablets, and desktops.
Look out for multiple payment gateways to ensure flexibility in payment for Filipinos so that the customers can make payments from whichever option they want. These could be Cash on Delivery (COD), PayPal, Debit card, PayMaya (wallet), or Payoneer.
Filipinos are obviously invested in the e-commerce business due to the availability of multiple options. In addition, several countries across the SEA are running rapidly toward the flow of this business. This makes a perfect opportunity for entrepreneurs worldwide who want to expand their business or start a brand new one. Entrepreneurs must focus on the challenges that come along the way, apart from the core business.