E-commerce Potential in the Philippines: Tapping into a Growing Market
E-commerce growth in the Philippines might not match that of Malaysia and Indonesia, but its untapped potential holds promise. Currently, online purchases account for only a fraction of total sales, with estimates ranging from one to two percent. However, projections by Google indicate that the Philippines’ Internet economy will surge from US$5 billion in 2018 to a staggering US$21 billion by 2025.
At the heart of this growth is the booming e-commerce revenue, set to expand annually by 9.5 percent, culminating in a market volume of US$1.394 billion by 2023. This momentum is bolstered by the country’s substantial population of 104.9 million, making it the second-largest within ASEAN after Indonesia.
Of this populace, approximately 71 percent are active Internet users, progressively embracing online shopping. A survey conducted in Q2 and Q3 of 2018 by Global Web Index, cited within Hootsuite’s We Are Social 2019 report, revealed that 70 percent of Filipino respondents had made online purchases in the preceding month.
E-commerce entrepreneurs have a golden opportunity within the Philippines’ burgeoning market. However, comprehending the commercial and cultural factors that motivate Filipino online consumers is paramount.
Key E-commerce Seasons in the Philippines
The final quarter, especially November and December, constitutes the peak shopping period in the Philippines, supported by extensive data on household consumption expenditure. During this time, employees typically receive their 13th-month pay, equivalent to a month’s salary.
Apart from the festive year-end season, Filipinos also exhibit heightened purchasing activity during the summer months of March, April, and May.
Lazada, a prominent e-commerce platform, garners significant traffic, with 32.82 million monthly web visits in the Philippines, twice that of its closest competitor, Shopee. Notably, Shopee leads in app downloads for both Android and iOS devices.
The primary product category for online shopping, as per Hootsuite’s findings, is Travel, contributing a substantial US$3.542 billion to e-commerce spending in 2018. Expenditure on Electronics and physical Media reached US$234 million, whereas Fashion and beauty products registered $203 million in
Leveraging E-commerce Events
The Online Revolution campaign, an extension of Lazada’s 11.11 sale, encompasses the period up to 12.12. While the most significant deals are unveiled on 11.11 and 12.12, this campaign extends throughout the month.
In the previous year, Lazada featured 20 million discounted products on 11.11, accounting for a quarter of all listed items on the platform. These deals included products priced at only ₱1. On 12.12, a Christmas-focused deal event took place, spotlighting gift items and baskets.
A Picodi survey in December 2018 disclosed that 91 percent of respondents aimed to participate in the 12.12 sale. Notably, 65 percent of these shoppers sought gifts for themselves or others. Top product categories encompassed clothing, electronics, cosmetics, groceries, and footwear.
Philippines’ Prolonged Shopping Seasons
Christmas constitutes a monumental event in the Philippines and stands as the country’s most significant holiday. According to a Facebook Holiday Study, Filipinos typically spend an average of ₱17,000 during Christmas, with 40 percent of mobile-first shoppers surpassing this amount.
The Philippines boasts one of the world’s lengthiest Christmas seasons, featuring malls playing Christmas tunes and advertisers like Shopee and Lazada teasing promotions as early as September. The bulk of shopping activity, however, transpires in November and December. A survey by Rappler found that 55 percent of respondents considered December the prime shopping month, while 24 percent favored November.
For e-commerce vendors, this implies that initiating promotions in November remains viable. However, it’s prudent to consider competitors’ actions and potentially capitalize on early entry to the market.
Vehicle traffic during the Christmas season further fuels e-commerce engagement, a factor amplified in recent years.
Summer also constitutes a peak shopping period, encompassing March, April, and May. These months coincide with most schools’ summer break and experience elevated domestic travel, particularly during Holy Week.
Given that over 86 percent of the population identifies as Catholic, Holy Week, observed in March or April, entails fasting, solemn processions, and religious rituals. Additionally, it presents an opportunity for travel to beaches and countryside locations.
During Holy Week and the broader summer season, Filipino online shoppers gravitate towards apparel and home appliances, as per iPrice Group’s data. E-commerce vendors specializing in summer clothing, swimwear, sunglasses, and accessories can optimize marketing during this period.
Summer shopping peaks around Labor Day, as parents finalize tuition fee payments during the school enrollment season. May 1’s Labor Day, a public holiday, sees Lazada and partner banks coordinating a sale.
Other E-commerce Milestones
Although Thanksgiving isn’t a widely observed event, e-commerce giants like Lazada have introduced Black Friday and Cyber Monday sales to Philippine consumers. Occurring immediately after Thanksgiving, these events offer substantial discounts and attract considerable traction, situated between the Online Revolution and Christmas.
The 9.9 Shopee Super Shopping Day achieved remarkable success globally in 2018, accumulating 5.8 million orders. In the Philippines, top-selling items included health and personal care products, mobile accessories, and home and living items.
Lazada’s Birthday Sale, taking place from April 25 to April 27, coincides with the Filipino concept of ‘petsa de peligro,’ translating to ‘day of danger,’ signifying the period just before payday. Despite this challenge, Lazada’s stature and the event’s alignment with summer’s peak shopping season ensure its significance.
Strategic E-commerce Approaches
Merchants can explore diverse promotional strategies:
Cashback: Partnering with cashback and rewards platforms like ShopBack and Zap offers shoppers added value, even with modest cashback amounts that accumulate with multiple purchases.
Product bundles: Bundling less popular items with bestsellers enhances product discoverability and customer value.
Coupon/voucher codes: Selling coupon codes or vouchers in advance of sales aids demand prediction and streamlines order fulfillment.
Payday promos: Align promotions with salary receipt dates, typically around the 15th and end of the month.
Social media promos: Given the widespread social media usage among the Philippines’ 76 million Internet users, leveraging platforms like Facebook and YouTube for promotions can yield substantial reach.
Understanding the Market
The Philippines shares cultural ties with Southeast Asian neighbors, along with distinct nuances shaped by its history of Spanish and American influences. Research and experimentation are key to navigating this market effectively. Flexible logistics, like cross-border shipping, enable entry without committing to local warehousing.
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