Despite recent road bumps in 2020, eCommerce in the Philippines is still going strong. Our updated article on the Philippines’ eCommerce drivers covered that this country’s eCommerce market for consumer goods value grew from US$ 3 billion in 2019 to US$ 4 billion in 2020, poised to grow to US$ 15 billion in 2025.1 Here’s a summary of the factors we covered in that article:
Rapid urbanisation,2 steps to reduce poverty,3 and strong domestic consumption4 at least up until 2019 formed a strong base for eCommerce adoption in the country
The Philippines is home to a young, mobile-first, and tech-savvy population
The average age in the Philippines is 25.7 years5 with an average of 4 hours and 15 minutes spent on social media on average in 20206
COVID-19 accelerated eCommerce adoption, likely to continue in the coming months with lockdown measures announced as recently as August 2021.7
eCommerce’s importance to the Philippine economy has been recognised by the government and they are taking steps to support the industry.8
If you’re an eCommerce seller seeking cross-border retail opportunities in the Philippines, this is all obviously exciting news. But the question is: who exactly will you be selling to?
eCommerce consumers in the Philippines at a glance
Research by We Are Social and Hootsuite reveals that 67 per cent (73.91 million) of the country’s total population of 107.3 million people are active Internet users. 38.88 million people in the Philippines have purchased a product or service online based on the same report.9*
*The data sources used by Digital 2021 Philippines changed their bases, which makes this data not comparable with previous reports.
Some key factors include:
25 to 34 year olds, followed by 16 to 24 year olds shop at least 3 to 6 times a week. These groups are more likely to shop online every day out of all the age groups10
Cash On Delivery is still the preferred payment method in the Philippines,12 with 71 per cent of the Philippines’ population being unbanked.13
The increase in eCommerce adoption was nationwide, and not limited to just urban areas.14
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Why Filipinos shop online
An eCommerce study by Visa found that Filipino consumers shopped online for the following reasons:15
Convenience of not having to go to and line up at brick-and-mortar stores (58 per cent)
Better prices compared to brick-and-mortar shops (47 per cent)
Exclusive/better deals (46 per cent)
With measures to control the spread of COVID-19 in the Philippines still ongoing as of the time of writing (August 2021),16 another strong reason for people in the Philippines to shop online is to stay safe from the pandemic.
Colliers’ research found that brick and mortar stores are facing reduced incomes while online shopping usage in the Philippines jumped. They also reported that 67 per cent of shoppers who previously shopped online plan on continuing even after the removal of quarantine measures.17 COVID-19’s impact on the economy is likely to increase Filipino shoppers’ price-sensitivity further as well.
This focus on pricing might make it difficult for you to compete with local, more affordable products, but if you can improve the efficiency and reduce the cost of your cross-border or international shipping, it may be possible to offer competitive deals on international products thanks to the savings generated.
Finally, a separate Nielsen report found that another reason eCommerce consumers in the Philippines shop online is to get access to products not found locally.18 For example, if you are selling beauty and personal care products, take note of the rising demand for Korean beauty products in the Philippines, with 71% of Filipino respondents to a Statista survey reporting that at least 25% of their cosmetic products used are South Korean brands.19 The main reasons they cited for the popularity of Korean cosmetics were that they were more effective and produced better results over competing products.20
What are Filipino online shoppers buying?
iPrice reported that fashion was one of the most bought consumer goods categories online in the Philippines in 2020.21 Children’s and baby clothing along with men’s and women’s underwear still saw steady demand in 2020.22
In terms of consumer electronics, smartphones were increasingly seen as essentials during the pandemic,23 with some of the leading brands in 2021 being Realme, Vivo, and Oppo.24 The new requirement for distance learning pushed up demand for laptops so that children could continue their studies.25
Demand for skincare purchases was driven by the closure of brick and mortar stores where people purchased their premium health and beauty products among other factors.26 If you’d like to get more insights on this, check out our article on Philippines’ popular eCommerce product categories.
If you’d like to find out more about how we can solve your SEA e-commerce cross-border delivery needs,come and have a conversation with us!
What influences Filipino shoppers?
As mentioned earlier, young Filipinos make up the majority of online shoppers in the Philippines. Research by DAN Philippines and eConsultancy, cited by the Philippine Star newspaper, shows that these consumers demand value for money and great shopping experiences.27
While Filipinos are price conscious it doesn’t mean they’re conservative spenders. During the lockdown period last year, Filipino shoppers increased their basket size by 57 per cent in the first half of 2020 compared to the previous year, the biggest of such growth in Southeast Asia.28
However, Filipinos also take their time when arriving at purchase decisions. Filipinos perform six to seven searches before arriving at a purchase decision, Marketing Interactive reports, citing data from Google and Kantar TNS.32 In fact, 90 per cent Internet users in the Philippines searched for a product or service online to buy. Most of these research activities take place on social media, where the average Filipino spends around four hours each day.
This has several implications. For one, this means Filipinos likely have a longer buyer’s journey. For the end of year holiday shopping season, consider marketing your products on social media as early as September—this is when most consumers in the Philippines are already thinking about Christmas, and with it, their shopping lists.33
For product categories like beauty, fashion, and personal care, Filipinos look to style mavens and social media influencers for cues on what products are effective, safe to use, and in style. Consider running an audit of social media influencers in the country to put yourself in the shoes of these consumers and understand why styles and products they are likely to purchase from you.
Another factor that influences the online shopping habits of Filipinos is the desire to pay in cash, which makes up 67 per cent of all transactions.34 You need to consider offering cash on delivery as an option if you want to reach out to this market. To do this, look for a logistics service provider who offers last mile delivery and cash on delivery services.
Where Filipinos shop online in the Philippines
iPrice’s Map of eCommerce shows that the top online shopping sites in the country are dominated by major online marketplaces that are open to cross-border sellers.35 As of Q1 2021, these are Shopee, Lazada, Zalora, Ebay, and Beauty MNL, all of which manage transactions between shoppers and third-party sellers.
In fact, Shopee and Lazada are both in the top 5 Google shopping queries in 2020 according to We are Social and Hootsuite’s Digital 2021 Philippines. Back in 2018’s 11.11 sale, Lazada was also the most talked about eCommerce site on Philippine social media, accounting for 61.2 per cent of mentions vs. Shopee’s 35.4 per cent share.36
The sheer amount of chatter generated by these shopping festivals and other eCommerce shopping events on social media, particularly Facebook and Twitter, should encourage you to ride on these trending conversations by promoting your own discounted eCommerce offerings on social media.
The popularity of shopping festivals on both eCommerce platforms opens doors for different promotions you can try, from “buy one take one” offers to freebies and free shipping.
Tap into the motivations and needs of Filipino online shoppers
The pattern of price, convenience, and bargains is something that comes up in report after report on the habits and motivations of online shoppers in the Philippines. If you’re looking to capture a slice of the Philippine eCommerce market, consider the following strategies.
Explore your options for suppliers to reduce your prices without hurting margins. It’s also important to do research on local pricing for certain products. Compare brick-and-mortar and eCommerce prices on goods to find out where your pricing strategy can be most effective.
Keep in mind that Filipinos tend to gravitate towards fashion trends, led by bloggers and influencers.37 If you aren’t sure which styles will click in the country, pay attention to what lifestyle and fashion bloggers are saying. Take a look at the comments section, too, to understand the audiences’ responses.
Even though products like Korean cosmetics are popular, customs duties and taxes can drive up their prices in the Philippines. Try to research similar products from ASEAN member-nations, as tariffs may be lower.
Consider offering free shipping on purchases above a certain peso value to sweeten the pot for the Philippines’ predominantly young eCommerce shoppers. When Lazada ceased offering free shipping for deliveries within Metro Manila in late 2018—a move for which it was heavily criticized—it decided instead to allow sellers to set a minimum spending amount in order to offer reduced shipping rates.
Breaking into a new market can be difficult. But with research, strategic marketing, and the right suppliers and shipping partners, you can make sure that you satisfy the needs and preferences of eCommerce consumers in the Philippines.
If you’d like to find out more about how we can solve your SEA eCommerce cross-border delivery needs,come and have a conversation with us!