Mobile phone penetration in Southeast Asia has soared in the last decade with 90% of the region’s 360 million internet users are connecting to the internet via mobile phone, according to a 2019 report from Google and Temasek. This is highly advantageous for its eCommerce market, which surpassed $100 billion USD last year.
The same report shows that $3 billion USD of the Philippines internet economy, valued at $7 billion USD in 2019, results from consumer goods sales. The Philippines’ eCommerce market is largely untapped, and its population is connecting to the internet and social media like never before. According to research by Hootsuite and We Are Social, there are 76 million active internet and social media users in the country. This is proving to be a massive opportunity for e-tailers to engage with consumers.
Key players in the Philippines eCommerce market
According to the Year-end Report on Southeast Asia’s Map of E-commerce, Lazada, Shopee, and ZALORA were the most visited sites in the Philippines in 2019. The report put together by iPrice Group, SimlarWeb and App Annie, also stated that Lazada holds the lion’s share of the Filipino market, with 59%, followed by Shopee with 33%. Lazada and Shopee both offer a wide range of consumer goods for the internet shopper, while ZALORA, which sees a monthly average of 1.8 million visitors, is a fashion retailer.
Since the outbreak of COVID-19, many consumers have turned to online retailers for essential supplies, such as food and medicine. Lazada’s online grocery store, RedMart saw an upturn in sales in Singapore — a further boost to the company’s already significant market share in the region. With its strong regional position, Lazada looks poised to maintain its sizable percentage of the Philippines’ as yet fully untapped market. The success of eCommerce retailers, such as Lazada and Shopee, last year is a key indicator for brands wishing to place products best to reach their target consumers.
One to watch in the Philippines eCommerce market is Kimstore — a homegrown electronics eCommerce platform, which achieved an 86% growth in 2019 across desktop and mobile web traffic.
Having a robust app is vital in customer retention for any retailer. The top 3 eCommerce apps in the Philippines — Lazada, Shopee and ZALORA, unsurprisingly have the highest monthly active users.
Lazada’s app receives positive online reviews, and according to one reviewer, its clean colours and minimalism make it easy to navigate. But, that same reviewer sees many similarities between it and Shopee. Zalora’s app also receives favourable reviews and boasts features such as visual searches, exclusive offers, and a magazine integrated into the app.
Shoppertainment: A key customer loyalty driver
“Shoppertainment” now plays a crucial role in the online retail business. Shoppertainment is not a new concept; however, eCommerce companies have recently been adopting it on their apps to keep customers coming back.
In 2019, Lazada’s Super Party was streamed live across six countries, and they introduced a quiz game, ‘Guess it!’ on their app. Meanwhile, Shopee hosted the Shopee Live Festival and Shopee Super Show.
A strong brand is invaluable for web traffic acquisition in the Southeast Asian region, as almost half of web page visits are typed directly into the browser. Hence, the considerable efforts eCommerce companies are making to engage consumers are not in vain.
Drivers of eCommerce in the Philippines
Aside from the rise in mobile phone adoption and internet usage, there are other critical drivers of eCommerce in the Philippines. A tech-savvy middle class is emerging, and many are assuming managerial positions in organisations, giving them more spending power.
The Filipino government also recognises the importance of supporting the eCommerce sector and has put plans in motion to improve infrastructure, promote investment, and innovation.
Furthermore, Filipinos have a penchant for foreign goods, and eCommerce has only fuelled this shopping need, teamed with the higher availability of affordable mobile devices, eCommerce has inevitably risen.
The future of the Philippines eCommerce market
The Philippines’ untapped eCommerce market still has some bumps in the road to overcome, before online shopping becomes the way to shop. Cash payments are still the primary way to pay, and adoption of digital payments and wallets has been slow. However, the COVID-19 pandemic may have a hand in ushering in the cashless era, with e-payments becoming increasingly popular.
Logistics is another challenge for eCommerce in the country; as an archipelago, online retailers must be realistic about delivery limitations and timescales. The country also has notoriously slow and unreliable internet connectivity, and eCommerce retailers should remain aware of this fact when designing apps and online stores.
Despite these challenges, and in light of a concerted effort to move the business online in recent months due to the pandemic, it is likely that we will see a shift in consumer behaviour in the Philippines. Will Singapore-based Lazada hold on to the top spot, or will we see some homegrown Filipino platforms emerge? In the current global economic uncertainty, everything could change very quickly.