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Updated 25th August 2021
The Philippines offers tremendous potential for eCommerce and omnichannel merchants, boasting one of the fastest-growing consumer markets in all of Asia and one of the world’s highest Internet usage rates.1 According to an analysis by Santander Trade, the combination of rapid urbanization and an emerging market of young shoppers (the country’s median age is 24.1 years) pointed to long-term economic growth and increased consumption prior to 2020’s events.2
The bullish economy up until 2019 was a driving factor of growing eCommerce revenue. Between 2009 and 2018, retail sales grew by 1.8 times to P1.22 trillion in 2018 compared to 2009’s P686.3 billion.3
A Google, Temasek and Bain’s e-conomy SEA 2020 report shows that the Philippines’ consumer goods eCommerce economy in 2020 grew to US$ 4 billion – a 31 per cent increase from 2019. Google and Temasek estimate that the Philippines’ eCommerce consumer goods market will hit US$ 15 billion by 2025.4
One reason to be excited about the Philippines eCommerce market lies in the market share of eCommerce players. Data by iPrice shows that a majority of eCommerce traffic in the Philippines goes to Lazada, Shopee, and Zalora—foreign online marketplaces where merchants can sell goods cross-border.5
eBay held the fourth spot on iPrice’s list of most visited eCommerce sites per month in Q1 2021, a spot it’s maintained since 2018. Still, eBay received 927,800 monthly web visits in Q1 2021 and is open to both C2C and B2C cross-border sellers.
If you’re one of the many online merchants looking to enter the Philippine eCommerce market, it’s a good idea to start with the most popular product categories among Filipino online shoppers:
Filipinos are expected to spend US$ 987 million on consumer electronics online in 2021, estimates Statista. This would represent just 9 per cent of total consumer electronics spending in the Philippines according to Statista, but it’s a hefty sum nonetheless.7
In the Philippines Consumer electronics can be found on most general online marketplaces like Shopee, Lazada and Ubuy, but there’s also Kimstore, which specialises in selling consumer electronics there. Kimstore is particularly well known for selling mobile phones.
As of Q1 2021, Kimstore ranks eighth in terms of monthly web visits to eCommerce players as reported by iPrice.8 Shopee ranks first with 54,600,000 monthly visits followed by Lazada with 32,286,700 monthly visits back in Q1 2021.
Given how Filipinos spend an average of 4 hours and 15 minutes per day on social media—according to Hootsuite and We Are Social’s Digital in 2021 report—it should come as no surprise that they’re also prolific users of tech, specifically, mobile gadgets.9
Digital 2021 also shares that 96.5 per cent of Filipino internet users access the internet via their mobile phones. Smartphone usage is also being seen as an essential item with the advent of the pandemic,10 with time spent online increasing thanks to needing to socially distance during lockdowns.11
Filipino tech website Revu reported in Q1 2021 that the top smartphone brands of the period were:12
All 5 smartphone brands appeared in Digital 2021 Philippines’ top Google shopping queries too. These findings match the trends reported by Euromonitor, that Filipino shoppers who were already price conscious before the outbreak continued to shift towards more affordable smartphone options as their spending power was impacted by the years’ recent events. The majority of the Philippine population are in the lower- to middle-income brackets.13
Samsung is 4th on the list despite launching multiple models this year, being the Samsung Galaxy A02s, Galaxy A12, Galaxy S21, Galaxy 21 Plus, Galaxy S21 Ultra, Galaxy A52 5G and 4G units, Galaxy A72, and Galaxy A32.14 On the other hand, having more budget models available could explain why Samsung made the list while its major competitor Apple did not. Samsung was also one of the first two brands to hit over US$ 10 million in sales during Lazada’s 11.11 sales in Southeast Asia in 2020.15
Outside of smartphones, computers saw increased demand in 2020 as distance and online schooling was implemented for that year. Considering that as of the time of writing, lockdowns were still going on in the Philippines, demand for computers could continue to be driven by this new need for online schooling even in 2021. In August 2021, the Metro Manila region was placed under a new enhanced community quarantine (ECQ).16 You can find the areas under restrictions during August 1st 2021 here.17
If consumer electronics is your primary vertical, it’s a good idea to pay attention to the devices that aren’t widely available in the Philippines. While mid-range devices offering value for money are driving smartphone growth in the Philippines, people are turning online to shop for these devices due to the lack of official retailers in the Philippines.
For example, Xiaomi opened their first physical store in the Philippines only in 2018 to cater to those who want to touch and try out higher value electronic purchases before committing to them.18 But this store is located in the capital, leaving consumers outside of Metro Manila with no choice but to purchase products on platforms like Lazada and Shopee.
Even on these sites, the demand for devices is so high that hyped-up midrange devices like the Pocophone F1 sold out in five minutes back in 2018.19 Influencers who review gadgets in the Philippines are also increasingly mentioning that they bought the items in question from Lazada and Shopee as well. This presents a window of opportunity for you to cater to underserved consumers hungry for gadgets.
Want to find out more about how your eCommerce products can clear customs in the Philippines and in other SEA countries? Find out in our downloadable Customs Clearance guide!
Fashion is another huge market in the Philippines, with a projected revenue of US$788 million in 2021 Statista posits.20 Apparel is the fashion category that people are expected to spend the most on at US$657 million,21 followed by bags & accessories US$ 71 million and footwear at US$ 60 million.22 The top marketplaces for online fashion sales are as follows:
Last year, Zalora published its Southeast Asia Trender Report 2020 which also featured data about fashion shoppers in the Philippines. In that report, Zalora mentioned that more than half of their shoppers (57 per cent) were in the the central part of the Philippines, with 31 per cent in the outskirts and the remaining 12 per cent in the remote parts of the country.24 What this means for eCommerce players is that while the majority of your money can be made in urban areas, it pays not to ignore the outskirts too.
Meanwhile, Shopee’s analysis of its shopper data ahead of its 2019 5.5 sale reveals that Filipino shopping preferences tend to differ in different parts of the country, particularly for fashion. For example, in the southern regions of the Visayas and Mindanao, Korean-inspired clothes and footwear tend to be more popular.25
The pandemic radically changed demand for different types of clothing. In addition to decreasing the spending power of many, the closure of schools dented demand for boys’ and girls’ apparel. Gyms were required to close during the lockdowns, which affected demand for sportswear, although the athleisure trend helped drive demand for sports-inspired clothing and footwear.26
On the other hand, childrenswear, baby and toddler wear as well as men’s and women’s underwear performed better than other categories. For childrenswear, baby and toddler wear, their lifestyle wasn’t affected as much as other categories, which led to its demand staying relatively resilient. Men’s and women’s underwear are considered essential purchases and is the likely reason for its better performance relative to other fashion categories.27
Surprisingly, search volume for certain luxury brands increased during the early periods of the pandemic last year. A report by iPrice indicated that across Southeast Asia, big French brands gained increased search volumes such as Yves Saint Laurent, Louis Vuitton and the like. Nike and Adidas also gained increased search traffic during this period.28
The Digital 2021 Philippines report also showed that searches for Nike were in the top searched queries in the Philippines back in 2020.29 This implies that there is still some interest in luxury fashion brands in the Philippines from shoppers who now need to go online to buy them due to the closure of brick and mortar sales channels.
Based on Zalora’s data, shoppers in the Philippines have shown increased interest in sustainable and environmentally-friendly fashion. In a survey among Zalora’s customers, 61 per cent of respondents from the Philippines said they were willing to pay at least 5 per cent more for sustainable fashion products. When Zalora launched a fashion line made with biodegradable material, the Philippines was among the countries which contributed to its high sales numbers. This line was snapped up twice as fast compared to their non-sustainable selections.30
Like many markets, Filipinos take their fashion cues from trends and influencers they see on social media. It would also be wise for you to pay attention to publications like Metro Style, Preview, and Mega—magazines that cover the hottest fashion trends worn by celebrities in the Philippines.
Philippine Google Search interest for skin care and cosmetics topics the past 5 years ending 25th August 202150
The pandemic impacted different segments of the health and beauty market differently. With most needing to shelter at home, demand for cosmetics and makeup fell while demand for skincare rose.32 The increased demand for skincare likely came from the closure of spas and other wellness centers which led to people purchasing these products to continue the regimen at home and also increased attention being given to self-care. This increased self-care awareness led to them adopting healthier habits and even spending more time on self-care routines like long baths and skincare routines.33
Popular product types for skin care include facial care and hand care as many Filipinos look to keep themselves safe amid rising case numbers.34 Some of the best performing brands are from Unilever, such as Pond’s, Eskinol and Master.35 In terms of skin issues that people in the Philippines could be facing, try looking into blemishes, excess shine, and uneven skin tone.36
The closure of traditional brick and mortar sales channels for most health and beauty products led to lower overall sales for this product category particularly for premium health and beauty products in 2020 according to Euromonitor.37 On the other hand, the self-care trend likely contributed to premium skincare’s resilience with general body care, firming/ anti-cellulite body care, face masks, cleansers, toners and hand care being bought by more affluent consumers. Popular brands for this category include Clinique and Estee Lauder which both saw growth in 2020.
You should also keep an eye on the demand for Korean beauty products. A report by the United Nations International Trade Statistics Database, cited by Entrepreneur, showed that South Korean exports of cosmetics to the Philippines have grown by an average of 35 per cent per year since 2010, reaching US$26.58 million in 2017.38 This trend might have taken hold in the Philippines, as there are local brands that are Korean-inspired such as local Filipino-brand ‘Seoul White Korea’.39
BeautyMNL, the fifth leading eCommerce site in the country and a locally owned company, stands out for specialising in makeup, haircare, and skincare. It boasts of more monthly visits than larger rival Sephora (495,300 vs. 85,000 in Q1 2021) and is a favourite online destination of beauty enthusiasts in the country due to its low shipping fees and quick turnaround time.40 Entrepreneur’s comparison of shipping times saw BeautyMNL having one of the fastest turnaround times compared to other eCommerce merchants.41
For international merchants hoping to keep up, a flexible logistics program relying on international shipping may be necessary to keep up with demand and maintain high levels of satisfaction over the speed of online delivery.
Based on Statista’s estimates, the Philippines’ toys, hobby and DIY online sales revenue is expected to hit US$ 952 million this year.42 For this article, we’ll be using the Statista market definition, which includes the online trade of toys, babyware (including baby food and clothing), sports, outdoor, DIY and garden products, and hobby and stationery items.
The online sales of toys and baby category is estimated to be worth US$ 189 million in 2021.43 While the pandemic negatively impacted sales of the category as a whole (both online and offline channel sales values), this hastened toy retailers’ and consumers’ shifts to eCommerce.
In terms of baby products, the initial lockdown saw panic buying for essential items including baby products. This led to a supply shortage for some retailers but ongoing restrictions are likely to reduce overall demand for baby products moving forward. Baby and child-specific skin care was a notable category in 2020. Other products that are worth noting are baby wipes which Euromonitor expects to perform well in light of an anticipated baby boom in 2021.44
Euromonitor reports that toys and games that spur creativity performed the best as parents likely wanted to encourage their children to be more creative during their isolation. The report also added that video games are likely to gain more popularity in the Philippines thanks to the wide availability of mobile devices as well as improvements to their internet connections.45
Statista estimates the the DIY, Garden & Pets category will be worth US$ 403 million in 2021.46 Consumers increasingly visit eCommerce sites in 2020 to make price and product comparisons for home improvement (DIY) items but prefer brick and mortar channels.47 Home improvement in general is expected to decline as Filipinos tighten their belt due to the economic impact of the pandemic.48 As for pet items, many pet owners took to eCommerce channels quickly thanks to its safe and contact-free nature of the purchases and deliveries which drove online purchases of pet products.49
If there’s one thing we can surmise from the popularity of these eCommerce product categories in the Philippines, it’s that Filipinos shop online because of price, discounts, brand, and convenience.
For international merchants, this could mean that lower-priced and medium-range items offer the best returns in the Philippines, particularly now that many need to tighten their belts. This may be an emerging eCommerce market, but all signs point towards sustained growth in the future. If you play your cards right, you may be able to secure a favourable position in the country before other merchants rush in.
As mentioned earlier, Filipinos are voracious social media users, so be sure to invest in social media marketing and advertising, particularly on Facebook, to stay top of mind in this market. For electronics, discounts and sales are a surefire way to grab attention, as seen in Lazada and Shopee’s shopping festivals. For fashion, consider partnering with local influencers on Instagram—the de facto haven for Filipino fashionistas.
Keeping in mind Filipino online shoppers’ focus on price, try to see if you can offer vouchers and promo codes for your store. If you have a strong following on your store’s social media pages, you can run simple contests or polls there, too, to reward your customers with prizes. And keep an eye out for the hottest sales periods in the Philippines so you can plan your product offerings and marketing campaigns ahead of time.
As an archipelago of more than 7,600 islands, the Philippines presents eCommerce merchants with logistics issues. However, suburban and rural areas with fewer shopping malls comprise a potential market for online sellers, who can deliver items that are otherwise unavailable in brick-and-mortar stores.
Therefore, it’s important to find a reliable eCommerce logistics partner and last-mile delivery service provider that can deliver packages nationwide, without drastically increasing the shipping fees. If you can offer Filipino online shoppers the products they’re looking for plus an excellent delivery experience, you’ll be on your way to success in the Philippines’ eCommerce market in no time.
Looking for reliable B2B or B2C logistics solutions to the Philippines? Talk to us below to find out how Janio’s wide logistics network has you covered:
Interested in eCommerce in the Philippines? Find out more about Philippine eCommerce scene here:
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