FEATURE
Ecommerce in 2020 and beyond in the Philippines
BY : DEEPIKA CHANDRASEKAR , EUROMONITOR INTERNATIONAL
Covid-19 drives e-commerce acceleration in the Philippines
In an otherwise less penetrated e-commerce landscape in the Philippines , the Covid-19 pandemic caused consumers to turn towards online channels as the country suffered one of the worst lockdowns globally . Euromonitor projects the annual sales growth of products bought online to be a solid 53 % in the Philippines in 2020 . Not only did pureplay internet players like Shopee and Lazada benefit from the boost in online shopping , but even legacy retailers like Uniqlo Philippines and Robinsons Supermarket pivoted to their own omnichannel platforms to stay afloat , resulting in Philippines ’ overall e-commerce contribution to double to 6 % in 2020 . Although e-commerce is gradually taking off in the Philippines , there is much room to grow when compared to countries with a smaller population but higher e-commerce contribution like Malaysia ( 7 % e-commerce share in 2020 ) and Thailand ( 8 % e-commerce share in 2020 ).
Small businesses expand online presence to stay relevant
In an effort to boost competitiveness , not only are more small businesses onboarding online marketplaces , but even the government is actively promoting the digitalization of micro , small medium enterprises ( MSMEs ) and facilitating end-to-end online business registrations and retail transactions . According to the Philippines Department of Trade and Industry ( DTI ), the number of business registrations at the DTI rose by 12 % in the first eight months of 2020 . Shopee Philippines for example helped over 300,000 MSMEs in their online transition and provided support through the Seller Masterclass , Seller Support Package , etc . Even on-demand delivery service company Lalamove noted a big uptick in MSMEs demanding delivery for their products in the country in 2020 . As more independent businesses embrace e-commerce going forward , more needs to be done to expand the coverage of sari-sari stores on marketplaces and equip them with the tools needed to virtually build trust with consumers , similar to Warung Pintar ’ s digitization of kiosks in neighbouring Indonesia
M-commerce gets a boost
With the increasing smartphone penetration in the Philippines , retailers and e-commerce players are continuing to strengthen their mobile app offerings and partnerships with brands . Puregold for instance , launched an efficient , time-saving mobile app boasting barcode scanning , in-app payment , and a Sally chatbot for customers to conveniently buy groceries . Similarly , in addition to Ayala Malls ’ one-stop Zing app providing a virtual mall of numerous brands , it also features a loyalty and rewards program . Going forward , as more internet retailers encourage mobile app usage for customers to earn discounts and special perks , Philippines ’ agenda to improve mobile internet connectivity and Smart Communications ’ nationwide 5g rollout from 2020 onwards can all be expected to drive m-commerce .
Social commerce and the rise of personal shopper programs
2020 saw an unprecedented shift towards personal shopper programs in the Philippines , a trend expected to continue strong momentum into the future . With e-commerce still in the nascent stages in the Philippines before the pandemic , retailers leveraged the country ’ s massive social media penetration to accelerate social commerce . Retail giants like SM Retail , Rustan ’ s and Vista Mall all introduced their own personal shopper programs where users can connect with the retailers ’ personal shoppers via social media platforms like Viber , convey their orders , enjoy personalized shopping from their homes , and opt for home delivery or self-pick-up . This trend is predicted to continue gaining huge popularity as it presents a convenient solution to the less e-commerce savvy Filipino market while offering a human element . It also serves as a reliable , secure option among working adults who struggle to find the time to physically shop themselves .
The future of online and dark grocery
Online grocery was one of the winning categories in the Philippines in 2020 as prolonged lockdowns forced consumers to try this service for their own safety . Leading ride hailing player Grab successfully launched its on-demand grocery delivery service GrabMart in the Philippines , while Robinsons supermarket introduced its online arm GoRobinsons , offering same-day delivery . Even as brick and mortar stores gradually open in 2021 , online grocery is still growing and is expected to integrate into consumers ’ lifestyles going forward . The real game changer however , is the dark grocery service piloted by grocery operator MerryMart in partnership with Foodpanda – serving online-only orders , these dark grocery stores show good prospects in terms of offering a variety of fast-moving products , delivering items to customers within 15 minutes , and achieving scale . MerryMart targets to open 1,200 such dark grocery outlets in the Philippines by 2030 .
E-commerce beyond 2020
Euromonitor predicts e-commerce sales in the Philippines to record a strong 26 % CAGR over the 2020-2025 forecast period , higher than all the other five Southeast Asian markets . As Filipinos have gotten more comfortable purchasing products online , the habit is likely to persist in the future , especially as e-commerce has proven to fulfil consumers ’ desire for convenience , timesaving , and product variety . With digital presence being imperative after Covid-19 transformed shopping , retailers are likely to continue strengthening their own e-commerce platforms or partner with the likes of Lazada , while last mile players look to improve their logistical efficiencies . Finally , the Philippines government ’ s “ We Recover As One ” recovery plan which specifies targets for e-commerce including the focus on internet speed , security , infrastructure , payments and awareness campaigns , will be critical in driving the country towards digitalization .
ABOUT THE AUTHOR :
Deepika Chandrasekar is a Senior Research Analyst at Euromonitor International , focusing on Services & Payments industries ranging from Retailing to Digital Consumer in Southeast Asia , particularly Indonesia and the Philippines . Her specialisation lies in the Consumer Foodservice industry , and she has a keen research interest on new foodservice trends rippling throughout the region . `
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