Philippines - Commercial Guide
ECommerce

Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.

Last published date: 2020-07-22

Overview

COVID-19 has increased demand for eCommerce in the Philippines. While the younger population was already open to online shopping, the need for social distancing has pushed the cash centric and face to face shopping culture towards a more digital one, and this is expected to continue. What is lacking is proper digital and logistics infrastructure to truly enable a digital economy. There needs to be higher bandwidth capacity to service the retail market.

Current Market Trends

Filipinos are prolific users of social media. Estimates this year show that there are 76 million active social media users from the Philippines. Of this number, 75 million are on Facebook; 12 million on Twitter, and 4 million are LinkedIn users [1].

There is good reason to be optimistic about eCommerce growth in the Philippines. However, the country also faces the following challenges:

Infrastructure gap: Need for further improvement in internet speed. According to OOKLA's Speedtest Global Index, the Philippines' fixed broadband internet speed is 22.74 Mbps in July 2020 and ranked 108th of 174th. Mobile broadband speed is 16.17 Mbps in June 2020 and ranked 121st of 114th of 138th countries[2].  The Philippines also ranked 63rd out of the 100 economies and 26th in the 2020 Inclusive Internet Index conducted by the Economist intelligence unit. [3] Logistics and distribution also pose significant challenges in product delivery. A lack of cold chain storage limits food products that can be transported for long distances. Traffic and an inefficient delivery network also make delivery extremely unreliable in many areas.

Most internet users gain access through smartphones. Smartphone penetration is now at 48.4 percent of households[4]4.

•         Low Broadband Penetration: Many Filipinos access the web from mobile, home, internet cafés and their workplace.

•         Low digital payment penetration: Bangko Sentral ng Pilipinas (BSP) in a 2018 report shows that an estimated 66 percent of Filipinos do not use banks, and about eight percent use credit cards. Hence, online stores in the Philippines provide cash on delivery payment options or payment centers (i.e., 7/11 branches). Different companies such as telcos, banks, and fintech start-ups have rolled out e-wallets for unbanked populations. Significant players include PayMaya (PLDT), GCash (Globe). The BSP also launched PESONet, a new electronic funds transfer service that enables customers of participating banks, e-money issuers, or mobile money operators to transfer funds in Philippine Peso currency to another customer of other participating banks, e-money issuers or mobile money operators in the Philippines.

•         The Philippines is a fast-growing retail e-commerce market and the most popular retail e-commerce platforms include Lazada, Shopee, Zalora, Ebay, and Kimstore.[5]

•         Security concerns: Those who have credit cards are wary of transacting online, given the numerous incidents of hacking and weak cybersecurity efforts that still plague the country. Therefore, e-commerce platforms have established a cash payment mechanism using large convenience store chains (i.e., 7/11 and Mini Stop) and local express delivery service (i.e., LBC). Filipino consumers require further education on security measures that can protect their online transactions. This will establish increased levels of confidence in online banking, purchasing, and selling.

eCommerce Intellectual Property Rights

The Philippines has passed adequate legislation to promote eCommerce, the eCommerce Law, Cybercrime, and Data Privacy Laws. However, enforcement agencies like the Department of Justice and Philippine National Police and the local courts are not yet adept at handling cases involving electronic transactions. The system is not, however, in place. The National Privacy Commission (NPC) is tasked with implementing the Data Privacy Law, and they have had significant achievement through Philippine-based companies designating “Data Privacy Officers” or DPOs. The NPC is also leading the Philippines to be compliant with international privacy agreements such as the European General Data Protection Regulation (GDPR) and APEC Cross Border Privacy Rules (CBPR).

Popular eCommerce Sites:

•         www.b2bpricenow.com– A trading portal with close to 8,000 members that are mostly from cooperatives. The Philippine Congress officially endorses it as the Philippine e-Marketplace for Agriculture and Fisheries. This site is a trading portal that provides up to the minute price update on market information for agriculture, consumer goods, and industrial manufactures.

•         https://e-order.asiarx.com/– Caters primarily to the pharmaceutical and medical supply industry have a regional scope, multilingual capabilities, tight real-time integration with supplier systems, and focus on the customer’s perspective and business processes. AsiaRx takes control of the entire procurement process from finding the product to availability check, to order status verification.

http://philippines.tradekey.com – A B2B marketplace connecting Filipino exporters with overseas buyers. It connects traders with global wholesalers, buyers, importers and exporters, manufacturers, and distributors in over 240 countries.

www.philippinecompanies.com – A Philippine business directory with 413,282 registered companies. This website builds its database from publicly accessible directories such as Business Registrations from various municipalities.

http://philippines.tradeford.com – Provides global importers with information on products, exporters, suppliers, manufacturers, and wholesalers. TradeFord's buyers and suppliers' database covers major industries such as apparel, fashion, chemicals, construction, electronics, furniture, food and beverage, health and beauty, machinery, transportation, and more.

•    https://www.kenresearch.com – Global industry research and information service company. Provides industry intelligence, equity research reports and business consulting services covering several sectors.

•           https://www.carousell.ph/ - Global online marketplace open in 45 countries in world used for buying and selling of goods and services.

Online Payment

The increase in online shopping and access to online bank transactions is increasing payment in the Philippines. Vendors are turning to online payment as a convenient buying method. However, the security concerns over platforms and a cash-based society's culture limits its effectiveness.

Mobile eCommerce

Data from Globe Telecom and the Philippine Long-Distance Telephone Company shows that there are 163.7 million mobile subscribers in the Philippines[6] [7]. Most Filipinos access the internet through their mobile phones, providing cost-effective and consistent access. Philippine and international businesses sell products and services through mobile that has direct access to online consumers. The Philippines is the fastest growing app market in Southeast Asia.

Digital Marketing

The proliferation of social media and online platforms directly contributed to the growth of digital marketing. An estimate of 76 million Filipino are online users and steady growth trends continue. Traditional marketing companies emerged with new marketing techniques that include social media. Businesses are continuing to transition to digital marketing to reach an even broader market for potential customers, and this is becoming a reliable and growing trend[8].

Major Buying Holidays

Consumers in the Philippines traditionally make purchases during March, April, May, November, and December. These are the peak months that employees receive salary bonuses. Businesses offer sales and discounts during these months.

Social Media

Filipinos are prolific users of social media. Estimates this year show that there are 76 million active social media users in the Philippines. Of this number, 75 million use Facebook; 12 million use Twitter, and 6.7 million are LinkedIn users. The Philippines is recognized as one of the top countries for internet users worldwide in terms of time spent on social media; 4 hours on mobile and 5.2 hours on desktop and tablet.[9]

 

 

[1] Gonzales G. (2019, February 18), Filipinos spend most time online, on social media worldwide – report: https://www.rappler.com/technology/news/222407-philippines-online-use-2019-hootsuite-we-are-social-report

[2] OOKLA’s Speedtest Global Index, Philippine ranking: https://www.speedtest.net/global-index

[3] The Economist Intelligence Unit, Philippine ranking https://theinclusiveinternet.eiu.com/explore/countries/performance

[4] Statista (2019), Share of mobile phone users that use a smartphone in the Philippines from 2014 to 2020: https://www.statista.com/statistics/570387/philippines-smartphone-penetration/

[5] Subido, L. K. (2018, January 20). What Are the Most Popular E-Commerce Platforms in the Philippines? Retrieved from Entrepreneur Philippines: https://www.entrepreneur.com.ph/news-and-events/what-are-the-most-popular-e-commerce-platforms-in-the-philippines-a00200-20180120

[6] 2019 Globe Integrated Report https://www.globe.com.ph/content/dam/globe/brie/About-us/sustainability/documents/GLO-Integrated-Report-2019.pdf

[7] PLDT Smart 2019 Full Year Results, http://www.pldt.com/docs/default-source/presentations/2019/fy2019-presentation-with-appendix.pdf?sfvrsn=0

[8] CNN Philippines, (2019, February 1), PH takes top spot as heaviest internet users worldwide — report:http://nine.cnnphilippines.com/lifestyle/2019/02/01/2019-digital-hootsuite-we-are-social-internet-philippines-facebook.html

[9] Gonzales G. (2019, February 18), Filipinos spend most time online, on social media worldwide – report: https://www.rappler.com/technology/news/222407-philippines-online-use-2019-hootsuite-we-are-social-report