Market Trends of Philippines E-commerce Industry
This section covers the major market trends shaping the Philippines E-commerce Market according to our research experts:
Fashion Industry to Dominate the Market Significantly
- Filipinos were skeptical about spending money on the internet, which changed during the COVID-19 pandemic. The blockage forced Filipinos to buy groceries and other necessities online, causing an explosive increase in E-commerce transactions. Filipino entrepreneurs quickly caught up, with thousands of entrepreneurs setting up E-commerce stores selling everything from face masks to Adobe. This also included large companies doubling their E-commerce efforts in the fashion and beauty industry.
- The E-commerce landscape of the Philippines is constantly growing and evolving with its neighbors in Southeast Asia. In fashion retail, physical stores in malls have been a major business model for decades, but pandemics have changed it all. The people in the country are choosing a specific business model that is scalable, fits their product, and fits the target audience.
- The Philippines has encouraged new companies in the fashion industry to enter their country for the past few years. This has led to the market's continued growth and has been observed in the wholesale and retail sectors, leveraging the e-commerce market with new brands in the country.
- Several international brands expand in the Philippines to explore the increasing demands for fashion commodities, leveraging the reach through existing E-commerce platforms. In January 2022, Zalora partnered with minimalist fashion brand COS to enter the Philippines fashion market after targeting Singapore and Malaysia through the Zalora E-commerce platform, with Zalora featuring exclusive availability of COS products.
- The fashion E-commerce in the Philippines witnesses considerable investments for upscaling the platforms. According to Forbes, in May 2022, the Lazada E-commerce platform received an investment of USD 378.5 million from the parent investor, Alibaba.com, since its initial investment of around USD 1.3 billion in June 2020. Fashion E-commerce sites have been hit in the region as clothing and apparel have made life easier for online shoppers staying home.
Understand The Key Trends Shaping This Market
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Increased Internet Use, Online Payments, and Mobile Phones Bolstered the Market Growth
- The E-commerce industry in the Philippines has a high potential for growth and development. This is mainly driven by Filipino consumers adapting to a digital lifestyle. According to the World Bank, the Philippines is one of the most dynamic economies in the East Asia Pacific region. The E-commerce platforms and the evolving fintech sector leverage the same.
- Coupled with the accelerated growth of GDP, the Philippines is a significant destination for digital transformation. Other industries also benefit from the development of E-commerce. These industries include telecommunications (data boom), logistics and warehousing (supply chain), and social media. Shopping malls, retail chains, and lifestyle brands can also benefit from increased domestic internet usage by trying to innovate their businesses through the e-commerce industry.
- The increasing use of mobile phones in the region has given a major push to E-commerce platforms, as mobile phones and Apps provider one of the easiest access to these platforms. According to data from GSMA Intelligence, at the beginning of 2022, the Philippines had around 156.5 million active mobile connections, indicating considerable potential in utilizing the reach offered by the mobile apps of the E-commerce platforms.
- One of the major issues the E-commerce platforms from flourishing in the Philippines is slow internet speed. According to the global ranking by Speedtest Global Index for July 2022, the Philippines ranked 84 with a median mobile internet download speed of 22.56 Mbps and 46 with a median fixed broadband internet downloading speed of 75.62 Mbps.
- Many companies are planning to enter the market to improve the internet. According to Bloomberg, in May 2022, the Philippines national Telecommunications Commission approved Starlink's registration as a value-added service provider. The company plans to deploy direct access through satellite systems and build and operate broadband facilities in the Philippines.
