The world is getting more ablaze with e-commerce. Various factors, including ease of doing business, are the forces behind the popularity of this mode of business. Such factors enable one to target the regional and global audience.
Notably, different e-commerce markets are growing differently. For this reason, what is the fastest-growing e-commerce in the world? Why does it perform better than others? Here is what we found out:
The Philippines is the E-commerce Leader!
According to one of the latest e-commerce studies, the Philippines is the global e-commerce leader. In 2022, this market experienced a 25% growth in e-commerce sales. This level rivaled that of Brazil and Argentina, which experienced a sales growth of 22%. However, the Filipino e-commerce growth rate matches that of India.
Given that India and the Philippines had similar 2022 e-commerce growth rates, we found it interesting to find out why a small country can run at par with India. Don’t you find it intriguing too?
Let us explore some factors that make the Philippines’ e-commerce market grow exponentially.
One of the reasons why the Philippines’ e-commerce market continues to grow rapidly is the Filipinos’ appetite for online shopping. Also, there is an increased penetration of internet usage in the country.
Notably, the Philippines was not an exemption when other countries were reeling in the effects of the COVID-19 pandemic. The country also suffered detrimental effects of the pandemic. However, the pandemic also accelerated online shopping and internet penetration in the country.
Experts forecast that the country’s annual compound growth rate (CAGR) will be 11.4% between 2022 and 2027. This forecast denotes that the country will continue to pose stiff competition to other aspiring leaders in the e-commerce market.
The Philippines economy is vibrant. It features a high level of digitally-savvy population that continues to make the country one of the fastest-growing e-commerce markets in Southeast Asia. Also, the country has some digital applications and websites that compete at a domestic, regional, and global level.
Notably, over 100 million people in the Philippines have access to the internet. In 2020, the country had a population of around 109.6 million people. If 100 million people connect to the internet, 91% of the country’s population is internet-connected. These statistics depict that the Philippines is an internet hub. Notably, most Filipinos access the internet via computers and mobile devices.
In recent years, the Philippines has experienced fast-paced urbanization. Also, the country features a growing middle-class population. Lastly, the country has a high level of young population.
With the increased availability of affordable and powerful mobile devices in the country, Filipinos are on a quest to take the world by a storm in terms of e-commerce transactions.
Another notable factor in the Philippines’ economy is its government support. The country’s Ministry of Commerce and Industry began developing e-commerce roadmaps, with a recent one running from 2016 to 2020/21. The roadmap aimed to achieve 25% of the country’s GDP from e-commerce.
Some of the areas that the roadmap addressed are e-banking, e-government processes, and internet access. Such recognition of the importance of e-commerce within the country is an ultimate ingredient for e-commerce’s rapid growth in the country.
Notably, the e-commerce growth within the Philippines has not come without a share of challenges. The country still experiences hiccups in management and technology. Also, the local organizations and the government are inactive when it comes to acting on strategies that can increase the growth of the e-commerce market within the country.
The other challenge that country faces entails issues with the internet carriers and speeds.
So, the country is still far from achieving optimal e-commerce growth. For this reason, the e-commerce stakeholders within the country need to commit and mobilize more resources toward achieving the highest level of e-commerce market growth. If the stakeholders fail to act, other markets will outwit the Philippines and become global e-commerce leaders.
Philippines E-commerce Market Segmentation
The Philippines e-commerce market features business-to-customer (B2C) and business-to-business (B2B) models. Regarding the B2C e-commerce model, the country has the following market segments:
- Furniture and home
- Food and beverage
- Fashion and apparel
- Consumer and electronics
- Beauty and personal care
- Others, including media, toys, and do-it-yourself (DIY)
Regarding the B2B e-commerce model, the market features thousands of companies that sell to and buy from each other using various e-commerce platforms.
In 2021, the e-commerce expenditure was as follows:
- Electronics: $7.3 billion
- Furniture: $2.68 billion
- Personal & household care: $2.56 billion
- Fashion: $1.64 billion
- Food: $1.04 billion
Notable E-commerce Market Trends
The Impact of COVID-19
Before the COVID-19 global pandemic, the Filipinos had not embraced e-commerce. In other words, they trusted the brick-and-mortar business model more than the internet-based business model. However, the Filipino government’s lockdowns imposed in the country because of the pandemic compelled Filipinos to make online purchases.
It took the pandemic to bring a transformation in the Filipinos’ e-commerce market. The Filipinos realized that it was more convenient to buy things online than to make a physical visit to the market. For this reason, the Filipino entrepreneurs had to catch up fast with the new trend. The entrepreneurs had to install the necessary systems to become relevant in the market.
Notably, small- and large-scale entrepreneurs had to align their business operations with adopting the e-commerce business model. So, Filipinos can buy small things, such as face masks, to large things over the internet.
Another prevailing trend that has supported e-commerce in the Philippines entails the rowing and evolving neighborhood in terms of embracing e-commerce. This trend facilitates cross-border e-commerce sales, making the Philippines grow its e-commerce market further.
Also, one of the contributing factors to this regional collaboration is the engagement of the providers of marketing translation services. Such stakeholders ensure that there is a seamless communication between the said regional neighbors.
Countries around the Philippines are also embracing e-commerce. For this reason, they are shifting from investing in large malls to selling products and services online. Also, the presence of global e-commerce platforms is making e-commerce transactions easier in the Philippines.
Ease of the Market Entry
The Philippine government continues to attract e-commerce traders to the market. The fashion industry is one of the beneficiaries of government support. This government’s move has enabled several new brands to enter the country and trade using online platforms.
The Philippines is a mobile-first country. Almost everyone owns a smartphone. Also, most Filipinos with smartphones access several social media sites. In January 2021, the country had around 89 million social media users. For this reason, most companies across multiple industries within the country leverage social media as a preferred e-commerce platform.
How do various social media platforms perform in the Philippines? The list of their active users is as follows:
- Facebook: Around 67 million active users
- YouTube: Around 58.5 million
- Instagram: Around 14 million
- Twitter: Around 9.3 million users
- LinkedIn Around 9.2 million users
From the statistics, it seems that some social media users spend their time on more than one platform. Also, if companies leverage the listed platforms, they can manage to target millions of potential customers.
Some brands coming on board the Filipino e-commerce market are opting to partner with other e-commerce traders. So, they are joining hands to share a single e-commerce platform. However, others are opting for private online platforms.
Notably, the number of Philippine online traders continues to grow daily. In 2021, online vendors that registered with the DTI’s Business Name Registration System (BNRS) were around 1,700 in the first quarter. However, the number rose to around 88,000 when the year was coming to a close. Such statistics prove that e-commerce is a booming venture in the Philippines.
An Example of e-commerce Market Growth in the Philippines
As proof, we explore the traffic that the Lazada website experienced in 2021. This e-commerce website experienced 38.29 million visits in the first quarter of 2021. In the second 2021 quarter, the website had 37.77 million visits. Lastly, the website had 39.43 visits in the third quarter of the same year.
Notably, Lazada is a company that seeks to empower young people and women. It supports the digital economy by providing growth opportunities and digital scholarships. In return, the company continues to minimize the digital divide. As a result, the company continues to expose people to the digital economy, especially in the Philippines, Thailand, Malaysia, and Singapore.
A closer look at Lazada’s traffic growth shows an upward trend. If these statistics materialize in the country’s e-commerce market, the realizable growth will increase at an increased rate over the years.
The Competitive Landscape
The Philippines’ e-commerce is moderately-fragmented. It features several key players. However, things will change gradually because of the continued entry of several new domestic and international players. The following are some of the major players in the Philippines e-commerce market:
- Lazada Group
- Globe Telecom Inc.
The Bottom Line
From the discussed information about the Philippines, it is absolutely one of the fastest-growing e-commerce markets in the world. According to Contentech, a language service provider (LSP), the ever-growing global technological advancements are constantly increasing the global e-commerce competitiveness.
So, one wonders whether the Philippines will continue ranking at the top or drop to a low level.
Only time will tell whether the Philippines will cling to its position in the global e-commerce industry. Let’s keep on watching the trends in this interesting trading field.