The Philippine retail industry continues to expand with each passing year, growing by 5.9 per cent in 20181, buoyed by rising spending power. Focus Economics2 also mentioned that the Philippines’ economy gained ground in Q4 2019 after revving up in Q3, driven by robust government expenditure. Unsurprisingly, increasing consumer spending has also impacted the world of online retail.
The Philippine Internet economy is expected to quadruple from US$5 billion in 2018 to US$21 billion by 2025. A few factors driving this growth include:
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?
Research by We Are Social and Hootsuite9 reveals that 71 per cent (76 million) of the country’s total population of 107.3 million people are active Internet users. Of that number, 70 per cent have purchased a product or service online in the past month.
Some key factors include:
Meanwhile, a report by PayPal, reported by the Manila Times10, predicts that the Philippines’ eCommerce market will grow to US3.5 billion by 2020, fueled by mobile shopping and growing awareness in online shopping.
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In 2015, an eCommerce study by Visa13 found that Filipino consumers shopped online for the following reasons:
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 report14 found that another reason eCommerce consumers in the Philippines shop online is to get access to products not found locally. 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 survey15 reporting that at least 25% of their cosmetic products used are South Korean brands.
Nielsen’s Bricks to Clicks report14 shows that online shoppers in the Philippines tend to gravitate towards consumer electronics and gadgets, clothing and footwear, as well as beauty and personal care products. If you’d like to get more insights on this, check out our article on Philippines’ popular eCommerce product categories.
This is consistent with We Are Social and Hootsuite’s findings of the top product categories among Filipino online shoppers. A closer look at the shopping queries Filipinos use shows that five out of the top 10 keywords were electronics brands Samsung, iPhone, Oppo, Vivo, and Huawei.
Shopee’s analysis of its shopping data16 also found that smartphones from Chinese brands like Xiaomi, Realme, and Honor are the most popular on the site due to being affordable yet feature-rich. Unlike larger brands like Samsung and Apple that have concept stores and distributors in the country’s major cities, these smaller brands have only recently officially launched in the Philippines. Honor17 and Xiaomi18, for example, only opened official stores in 2018. This is as good a sign as any for you to address this unmet need and provide direct cross-border shipping to Filipino consumers.
Fashion is another huge market in the Philippines. Research by Nielsen shows that shoes and apparel are the second leading product category in the country14, with a market share of 28 per cent.
Shopee’s findings offer a more specific insight that you may find useful: Filipinos are eager to buy Korean-styled clothing and footwear, especially in cities and towns outside the country’s capital. Given that the growth of hallyu, or Korean Wave, in the Philippines is among the biggest in Southeast Asia (according to a Manila Bulletin report19, citing data from the Korea Foundation’s global hallyu status report), this should come as no surprise. If you want to hedge your risk with a low-risk product vertical, betting on the demand for Korean-influenced fashion products in the Philippines is a safe move.
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!
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 newspaper20, shows that these consumers demand value for money and great shopping experiences.
But while Filipinos are price conscious, this doesn’t mean they’re conservative spenders. In fact, the average basket value in online shopping in the Philippines is the second highest21 (US$56) in Southeast Asia. Sales and promotions are a particularly huge draw for Filipino online shoppers, with shopping festivals like Singles Day generating record profits for the two major marketplaces in the country, Lazada22 and Shopee.23
However, Filipinos also take their time when arriving at purchase decisions. In fact, Filipinos perform six to seven searches before arriving at a purchase decision, Entrepreneur reports24, citing data from Google and Kantar TNS. 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 may 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 Christmas25, and with it, their shopping lists.
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. According to the Philippine Central Bank, 99 per cent of all transactions are cash- and paper-based, hence why it’s on a campaign to increase cashless transactions to 20 per cent over the next few years. You need to consider offering COD as an option if you want to reach out to this market. To do this, look for an eCommerce logistics service provider who offers last mile delivery and COD services.
iPrice’s Map of eCommerce26 shows that the top online shopping sites in the country are dominated by foreign online marketplaces that are open to cross-border sellers. As of Q3 2019, these are Lazada, Shopee, Zalora, Argomall, and eBay, all of which manage transactions between shoppers and third-party sellers.
We Are Social and Hootsuite found that “Lazada” was the only keyword referring to a specific site in the top 10 list of online shopping search queries. During the 2018 11.11 sale, Lazada was also the most talked about eCommerce site on Philippine social media27, accounting for 61.2 per cent of mentions vs. Shopee’s 35.4 per cent share. 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.
Lazada and Shopee are kings in the Philippines, so if you’re looking to break into this market, consider setting up shop on both sites. Overall top-selling product categories during Lazada’s 11.11 sale28 were mobile phones from brands like Xiaomi, Huawei, and Samsung; fast moving consumer goods like diapers and milk powder; as well as beauty products. This was consistent with Shopee’s 11.11 bestsellers.23
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.
Looking for more insights like these on eCommerce in the Philippines? Find out more in our latest eCommerce Guide to the Philippines!
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.
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!
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