Digital Life and eCommerce in the Philippines

Thomas Price

This article continues our recent focus on the Philippines, from general insights and analysis to a look at the most popular eCommerce platforms in the country.

Filipino Consumers

The Philippines is home to a young and tech-savvy population with a cultural identity all their own. The Philippine melting pot infuses the local population with a range of influences that span the globe, perhaps more so than any other nation in the region. These diverse consumers are enthusiastic about modern mobile-enhanced lifestyles, eager to take part in the growing eCommerce industry, and keen shoppers in general. The audience is also fairly evenly distributed across gender lines – online shopping enjoys a 51:49 demographic ratio.

As the middle class grows in the Philippines, more people than ever are able to afford premium overseas brands. Local sentiment towards foreign brands has always been fairly positive – in fact, 72% of the top 50 brands in the country hail from overseas. This is due to both an acceptance of foreign products as a result of their history of cultural exchange, as well as a perception that foreign brands tend to be more reliably high-quality than local competitors.

Growth is picking up in eCommerce, but started only fairly recently. At the moment, estimates peg it at around 2% of total retail spending, or just under 1 billion USD each year. This is project to grow to around 5% by the mid-2020s. Once leaders in the sector are able to bridge the consumer trust gap that does still exist to some extent in the Philippines, growth could be explosive, due to strong numbers for mobile, smartphone, and social media penetration.

Mobile and Social Media

Mobile penetration is high in the Philippines, as with much of Southeast Asia. Penetration sits at 89% for all mobile devices, and 65% for smartphones. Personal computer ownership is much lower, at only 38%, and Filipino interactions with eCommerce reflect this. 57% of online sales are made on mobile devices, while desktop purchases make up 38%. Another caveat is that not all mobile users are Internet users. Experts peg mobile internet penetration at around 40% (37% of the population). This means that the majority of mobile users simply use their phones for calls and texts rather than online-enabled functions. But this is likely to change.

Social media is experiencing a boom in the Philippines, jumping 13% from 2018 to a penetration rate of 71%. The most popular platforms are Facebook (97% of social media users being on the platform), YouTube (96%), Facebook Messenger (89%), and Instagram (64%). Most users are between the ages of 18 and 34, as is normal around the world. This is important to note, however, as that’s also the demographic range that is most tapped into eCommerce. Therefore the social media boom in the Philippines has potential for leveraging into social media-enabled eCommerce. Sellers can realize this through advertisements or more direct social media selling.

Digital Marketing

Traditional channels such as TV and print advertisements still dominate advertising in the Philippines. However, online marketing is on the rise. Advertisers now devote a fairly respectable 21% of national advertising spending to internet ads. By 2021, experts believe digital ad spending will reach just under $500 million USD.

The country’s biggest online sales platforms, Lazada and Shopee, use buying holidays to promote their eCommerce marketplaces and boost sales. Additionally, these events spread word of mouth that may lead to further adoption of eCommerce among those on the fence. Each even has its own buying holiday, Lazada’s Birthday Sale in late April and Shopee’s Super Shopping Day in early September. This is in addition to a mix of local and international celebrations. These include Labor Day in May, the “Online Revolution” sale connecting the Chinese shopping holidays of 11.11 and 12.12, and the American sales holidays Black Friday and Cyber Monday.

Key opinion leaders (KOLs) or ‘influencers’ are becoming an essential tool for marketing in the digital space. These social media content producers grow from small fanbases to larger followings on platforms such as Facebook, YouTube, and Instagram. Fans generally trust them as more genuine in their recommendations than typical celebrity endorsements. These KOLs have a closer personal connection with their fans and so a greater sway over their opinions. As such, marketing experts in the Philippines are latching onto KOLs as parts of their strategies for targeting younger consumers.

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