The Philippine E-Commerce Industry

It is forecasted that by 2018, the sales of e-commerce in Southeast Asia will reach $6 billion, with 65% of transactions beginning and ending online. The e-commerce industry in Southeast Asia is booming, and the Philippines is a prime market for e-commerce.

Strengths

The e-commerce industry in the Philippines holds much potential for growth and development. This is mostly driven by Filipino consumers who are immersed in a very digital lifestyle. In the ASEAN region, the Philippines has the highest e-commerce growth in the region, along with Thailand. A 41% internet penetration has been recorded by the Philippines, a strong figure. Almost half of the entire Philippine population is online (38 million out of 100 million) and 2/3rds are under the age of 30. The Philippines has a young demographic of internet users whose ages usually range from 15-34 years old. Aside from that, more and more Filipinos own mobile devices, a popular e-commerce tool. In 2012, there was a three-fold increase in smartphone usage. 25% of the population are smartphone users. Social media networking is very popular in the Philippines, with the country being on top when it comes to most time spent in social media.  The Philippines is also the fifth largest English speaking country in the world, making them more intuitively familiar with new products. Amazon is one of the top visited sites in the Philippines despite having no local presence. Filipinos are also consumption-driven, and this comprises a large part of the GDP. In the 2012 State of the Internet Report by Klein Perkins, the Philippines was listed as one of the world’s fastest growing internet markets.

Opportunities

The lifestyle of Filipinos is becoming more and more digital. Combining this with an increasing GDP growth makes the Philippines a premier destination for a digital storm. With the development of e-Commerce in the Philippines, other industries will also benefit. These industries include telecommunications (data boom), logistics & warehousing (supply chain) and social media. Malls, retail chains and lifestyle brands can also gain from the surge of internet usage in the country by looking into innovating their businesses through the e-commerce industry. It is seen that a move from major players of these industries (one being SM Investments who has expressed interest in targeting web shoppers) can help push e-commerce in the country. According to Paul Srivorakul, CEO of ACommerce, “there’s a lot of demand, but not enough entrepreneurs” for e-commerce in the Southeast Asian region.

Challenges

Some factors hamper the growth and development of the e-commerce industry, such as low credit card penetration, supply chain inefficiency, slow internet speed as well as certain customs and taxes. However, an improvement in delivery services will most likely drive the e-commerce industry further. In order to combat low credit card penetration, e-commerce companies have begun making use of cash on delivery and a wide array of payment methods.

There is also a need for laws that will secure the internet to help the e-commerce industry. Improving consumer trust is also an important step for the industry, as many are still afraid of being victimized by fraud and scams. There are various other factors that can further boost the e-commerce industry, such as developments in infrastructure and consumer literacy.