The Philippine Internet economy is expected to quadruple from $5 billion in 2018 to $21 billion by 2025. A few factors driving this growth include:
The Philippines is geared for brisk economic expansion, with the International Monetary Fund projecting a 6.6-percent economic growth outlook in 2019. The country’s GDP also rose by 5.6 percent in Q1 2019.
The country has a growing middle class that’s predicted to outspend Italy’s middle class by 2030.
Remittances from overseas Filipinos continue to break records year after year, reaching $32.21 billion in 2018.
The country has a young, tech-savvy population (the average age is 24.3 years) that’s hungry for products and services.
Filipinos are among the world’s heaviest Internet users, spending an average of 10 hours and two minutes every day.
Research by We Are Social and Hootsuite reveals that 71 percent (76 million) of the country’s total population of 107.3 million people are active Internet users. Of that number, 70 percent have purchased a product or service online in the past month.
Some key factors include:
- The majority of Filipinos who shop online are between the ages of 18 to 31—members of Gen Z and millennials who are tech-savvy and prolific social media users.
- More women (12 percent) shop online than men (8 percent), even if fewer women have credit cards.
- Most Filipino online shoppers have middle-range incomes.
- Meanwhile, a report by PayPal, predicts that the Philippines’s eCommerce market will grow to US$3.5 billion by 2020, fueled by mobile shopping and growing awareness in online shopping.
Why Filipinos shop online?
In 2015, an eCommerce study by Visa found that Filipino consumers shopped online for the following reasons:
- Convenience of not having to go to and line up at brick-and-mortar stores (58 per cent);
- Better prices compared to brick-and-mortar shops (47 per cent); and,
- Exclusive/better deals (46 per cent).
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.
A separate Nielsen report 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 imports of South Korean cosmetics growing by $26.58 million in 2017.
What are Filipino online shoppers buying?
Nielsen’s Bricks to Clicks report shows that online shoppers in the Philippines tend to gravitate toward consumer electronics and gadgets, clothing and footwear, as well as beauty and personal-care products.
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 data 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.
Honor and Xiaomi, 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 country, with a market share of 28 percent.
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 report, 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.
What influences Filipino shoppers?
As mentioned earlier, young Filipinos make up the majority of online shoppers in the Philippines. Research by DAN Philippines and eConsultancy, 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 highest ($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, Lazada and Shopee.
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, based on data from Google and Kantar TNS. In fact, 90 percent of 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 Christmas, 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 what 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 percent of all transactions are cash- and paper-based, hence why it’s on a campaign to increase cashless transactions to 20 percent 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 a logistics service provider who offers last mile delivery and COD services.
Where Filipinos shop online in the Philippines
iPrice’s Map of eCommerce 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 Q1 2019, these are Lazada, Shopee, Zalora, Argomall, and eBay, all of which manage transactions between shoppers and third-party sellers.