Overview

Market Overview

In 2021, the Philippines eCommerce market sales reached $17 billion, largely contributed by 73 million online active users.  This is estimated to reach $24 billion, with 17% growth through 2025.  The COVID-19 pandemic increased the eCommerce demand, with Filipinos working and studying from home.

The top Philippine eCommerce platforms are Shopee, Lazada, Zalora, and BeautyMNL.  Products from Asia-Pacific markets with free trade agreements with the Philippines are sold on these platforms and the top product categories include beauty, electronics, fashion, furniture, health, and household care.  The working population (25-44) actively access these platforms from their desktop and mobile phones.  In 2021, smartphone household penetration reached 74.1%, a 2% increase from 2020.

The eCommerce growth is hindered by challenges including the Philippines continued low rankings for mobile and fixed broadband internet speeds.  In OOKLA’s April 2022 Speedtest Global Index, the Philippines fixed broadband internet speed was 55.21 Mbps and ranked 59th out of 182 countries, while mobile internet speed was 19.45 Mbps and ranked 95th out of 141 countries.  The Philippines only has 22,405 cellular towers compared to other ASEAN countries like Vietnam with 90,000 and Thailand with 60,000. The Philippines geographical setup requires more than 70,000 towers to cover the entire country.  

In 2019, the Philippines Central Bank reported that 51% of Filipinos are unbanked and only 8% use credit cards.  Filipinos prefer cash-on-delivery payments and often use partner payment centers such as large convenience stores and e-wallets such as GCash and PayMaya.  Philippine credit card users are wary of online transactions due to hacking incidents and weak cybersecurity protection in the country.

Legal and Regulatory

In 2000, the Philippine Government issued the Electronic Commerce Act (RA 8792) and a 2022 E-Commerce Philippines Roadmap to support eCommerce growth.  The link to the roadmaps: https://ecommerce.dti.gov.ph/madali/.  

Foreign retailers can work with the top Philippine eCommerce platforms to sell in the Philippines.  A foreign retail company can open a Philippine office with $200,000 equity for 100% ownership.  A business permit is required, and companies should register with the Philippine Tax Bureau and Securities and Exchange Commission for incorporation.  Additional product licenses and registration may be required by the Philippine Food and Drug Administration and interrelated entities.

eCommerce Intellectual Property Rights

The Philippines Cybercrime and Data Privacy Laws support the eCommerce industry.  However, a system is not yet in place to handle electronic transaction cases with agencies such as the Department of Justice, the Philippine National Police, and the local courts.

The National Privacy Commission (NPC) leads the Philippines Data Privacy Law and encourages locally registered companies to designate data privacy officers.  NPC leads the Philippines’ compliance with international privacy agreements such as the European General Data Protection Regulation and APEC Cross Border Privacy Rules.

Consumer Behavior

• Digital Marketing and Social Media:  Filipinos are prolific social media users and actively use platforms for a whopping 10 hours per day, seven days a week.  The best platforms to reach Filipino consumers are Facebook (67 million active users), YouTube (58.5 million active users), Instagram (14 million active users), Twitter (9.3 million users), and LinkedIn (9.2 million users).  It is estimated that Filipino social media users will reach 78.5 million in 2022.

• Major Buying Holidays:  The top eCommerce platforms organize double-digit monthly promotions and mega campaigns such as platform birthday, midyear, 9.9, 11.11, and 12.12 events.  eCommerce platforms also offer campaign packages for participating retail companies.

• Mobile eCommerce:  In 2022, Philippine telecommunication companies recorded 159 million mobile subscribers.  The Philippines is the fastest-growing app market in Southeast Asia.

• Online Payment:  In 2020, the Philpines Central Bank recorded 20.1% digital payments from financial transactions ($46.8 billion), a 61% increase from 2019.  The Central Bank aims to bank 70% of Filipino adults by 2023. 

Industry Associations:

Digital Commerce Association in the Philippines

Website: https://www.dcom.ph/

Philippine Retailers Association

Website: https://www.philretailers.com/