The retail market in the Philippines is one of the most robust in Southeast Asia. Just about every international consumer has a presence in the country. This makes the Philippines a substantially high-value retail target.
But in the last two years since the start of the COVID-19 pandemic, e-commerce platforms became the go-to location to fulfill Filipinos’ retail habits and lifestyles.
E-commerce was already on the rise in the Philippines. Before the pandemic, it was estimated to be worth around US$2.4 billion in 2019. But as of 2021, it had reached US$5.5 billion. With over 76.2 million of the roughly 110 million people living in the Philippines having at least one social media account, one can correlate the growth of e-commerce can be attributed to the growth of social media.
According to Shivani Gupta, Banking and Payments Senior Analyst at GlobalData, “rising consumer preferences for online shopping, an increasing number of online merchants, the proliferation of alternative payment solutions, and government support will support e-commerce sales in the Philippines.”
Thus, Gupta said e-commerce is forecasted to grow at a CAGR (compound annual growth rate) of 17.0% over the next five years to reach US$10.3 billion by 2025.
Here are some of the reasons why social media has an effect on e-commerce growth in the Philippines:
Filipinos are always on social media
In the mid-2000s, the Philippines began getting the moniker “Social Media Country” due to its comparable number of users versus its total population.
There are 72.5 million Filipinos on Facebook and 8.9 million on Twitter. Instagram users total around 10.6 million. TikTok is also gaining popularity with over 40.4 million active users in the country. The average Filipino spends about 10 to 12 hours on the Internet, of which 4 to 5 hours are spent using social media.
Filipinos tend to access their social media accounts on mobile phones, which they do wherever they are and during whatever they are doing. You wouldn’t find a place where Filipinos have not found a way to check their phones to look for the latest 5-second TikTok dance craze or post something on Facebook or Instagram.
Phone ownership is easy and cheap
Speaking of phones, the country has at least 152.4 million mobile phone connections — a strange number considering the Philippine population is just hovering over 110 million. This means that many Filipinos own more than just one Internet-enabled device. A user can have at least one smartphone and a personal computer, or maybe two mobile devices like two smartphones or a phone and tablet.
Smartphones have also outpaced the number of brick-type phones — devices that have very limited Internet connectivity, if at all. The cost of these smartphones has also significantly gone down over the years as a result of the introduction of China-branded devices such as Huawei, Xiaomi, RealMe, Oppo, Vivo, and Poco.
With phone models that have starting prices of a little less than US$100, these devices compete directly with more established brands like Samsung and Apple that ironically are also introducing budget-friendly models.
One would wonder why Filipinos would have more than one Internet-connected device. In reality, Filipinos love to multitask their online habits: while watching the latest video on TikTok, Facebook, or YouTube, or maybe listening to streaming music, they’ll be shopping online on the other device.
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Data cost is low
The lifeblood of any Internet-enabled society is access to mobile data. Less than 10 years ago in the Philippines, mobile Internet use was hampered by the high cost of data. Only recently have Internet service providers started increasing the amount of data allocation both for prepaid and postpaid subscribers.
Currently, the vast majority of mobile Internet users are still on prepaid. Based on a report by Statista, 69.2 million are on prepaid, while 2 million are on postpaid. According to a 2021 report by research firm Cable.co.uk, the average price of 1 gigabyte (GB) of mobile data in the Philippines is US$1.77. This puts the country at the 97th rank among 230 countries. While this is still relatively high, it was still cheaper than it was a few years prior, when mobile data was priced nearly double what it was now.
The mobile communications duopoly of Globe and Smart has been offering several types of mobile data buckets for prepaid users. Some of these offers cost about US$1 for 2GB of data for 3 days. Other offers include unlimited social media use for more than 3 days for about the same cost. As a result, prepaid users have even more access to social media accounts that are well within their budget.
Filipinos love influencers—content creators on social media who have hundreds of thousands to millions of followers, and who, as their collective noun implies, can tip the needle towards a certain perspective.
Just about every social media platform has several dozen Filipino influencers followed by millions of Filipino fans. And almost no topic is without an influencer, that is why many brands are tapping into these influencers for a serious marketing boost.
There was a boost in influencer utility in the pandemic when Filipinos were stuck at home due to lockdowns to prevent COVID-19 from spreading. That being said, it helped drive users to follow a certain trend based on what their influencer “idols” would do or say.
A report by marketing and advertising research firm The Huddle Room showed that about 90 percent of all social media posts by influencers during the pandemic were “unbranded,” meaning they were not paid to post. The majority of these unbranded posts were related to the personal experiences shaped by the pandemic. That enabled more of their followers to relate to the ongoing events.
Many brands started taking notice and have since changed their marketing strategies to incorporate influencers as part of their unbranded marketing strategies — that is, having a third-party content provider talk about their products and services.
Love for red tag sales
Filipinos have a penchant for trying to wait for red tag sales at malls or groceries in the hopes of saving more. While they do get to buy more in terms of items, however, they spend more in cash during sales. Regardless, this technique of coming up with payday sales or anniversary sales has worked well in the traditional retail business, especially in malls.
The same tactic is being applied by online sellers in the Philippines. E-commerce platforms such as Lazada, Shopee, and Zalora have all done red tag sales either monthly or even twice a month. This has generated a lot of spending from online users, some of which could amount to tens of thousands of pesos.
Aside from the regular “reduced price” offers, some of these sales include free shipping, cashback, and even buy-one-take-one offers. Some cost-saving sales are also initiated by the merchants within these e-commerce platforms. Merchants can offer free items for a minimum single purchase within their items, while some offer free deliveries as well.
Social media plays a role in driving traffic towards red tag sales, both on traditional retail and online platforms. Brands and retail shops market on social media platforms primarily to drive buyers to their stores.
It comes as no surprise that Filipinos will be driven or will be influenced by what they see on social media. Marketers and retailers, both online and offline, know this and will continue to tap into this behavior.
These habits do change over time and so those involved in e-commerce have to be in constant communication with their target audience to find out what makes them buy the way they do. Not being able to read market sentiments on social media fast enough to make proper adjustments to their strategies when selling online can make or break a company’s selling performance.
The good thing is that all these can be done comfortably at home or work, without having to leave the desk. They can do this by coming up with surveys to get more buyer insights, or even scanning through their competitors’ channels. Doing so not only keeps a business competitive but also provides better service to the target audience, which can affect the brand’s reputation on social media.