Digital 2019 Spotlight: Ecommerce in The Philippines
Our latest research shows that the Philippines is home to more than 69 million internet users, while GlobalWebIndex reports that three-quarters of these users aged between 16 and 64 already shop online.
Despite these high penetration figures, however, the Philippines’ ecommerce market is still relatively small, with Statista finding that the country delivers the lowest average revenue per ecommerce user of any country in its Digital Market Outlook (DMO) survey.
The average Filipino ecommerce shopper spent just US$18 on online consumer goods purchases in 2018, although it’s worth stressing that this figure doesn’t include travel-related purchases or spend on digital media.
However, the good news is that the Philippines’ online economy saw double-digit growth in 2018, and eMarketer predicts that the country will see some of the fastest growth in the world during 2019.
You can explore the country’s broader digital landscape in our complete Digital 2019 Philippines report below, but read on for a closer look at all the latest ecommerce data and insights.
Note: this article contains a number of updates to statistics featured in the report above. Also note that some of our data providers have recently changed their reporting methodologies, so some of the figures we reference in this article will not be directly comparable to figures published in the report embedded above, especially for internet and social media users.
Ecommerce in the Philippines
The Philippines has the smallest internet economy of the six primary markets in Southeast Asia, despite being home to the region’s second-largest population.
Statista reports that Filipinos spent a total of US$4.7 billion on online purchases in 2018, with more than three-quarters of this amount – US$3.5 billion – going to online travel purchases.
Online consumer goods purchases totalled just US$840 million in 2018, with electronics and physical media accounting for the greatest share within this total.
The market for digital media products in the Philippines is particularly small, with the country’s internet users spending just US$286 million across video games, video-on-demand services like Netflix, digital music streaming and downloads, and subscriptions to digital news and magazines.
Digital music is one of the most challenging sectors in the Philippines’ online economy, with just 11 percent of the country’s population paying for downloads or streaming services in 2018, compared to a regional average of 17 percent.
Statista reports that ecommerce spending in the Philippines grew more slowly than the rest of Southeast Asia in 2018, although growth still outpaced the global average.
The country’s overall online spending grew by 16 percent last year, compared to a regional average of 21 percent, but a global average of 13 percent.
The Philippines’ online travel sector saw the slowest growth across the various ecommerce categories in Statista’s DMO study, although the category still grew by 15 percent during 2018.
However, the consumer goods sector grew much faster. Overall, online spend on consumer goods purchases grew by 22 percent year-on-year, with all sectors except Fashion & Beauty enjoying annual growth in excess of 20 percent.
As we’ve seen throughout this series of studies on ecommerce in Southeast Asia, the Food & Personal Care category saw the fastest growth in the Philippines last year, with spending on online groceries up by 29 percent compared to 2017 spending.
It’s worth noting that eMarketer takes a different perspective on ecommerce in the Philippines though, with the company predicting annual growth in retail ecommerce sales of 31 percent in 2019.
That puts the Philippines in third place in the company’s ranking of the world’s fastest-growing ecommerce markets this year, significantly ahead of the 21 percent that the company predicts for global growth as a whole.
Retail experts IGD Asia takes an even more bullish view, reporting that the Philippines should experience the fastest online grocery growth of any country in Asia-Pacific between 2017 and 2022.
Given the consistency of impressive figures for the country’s online grocery prospects, we’ll take a closer look at the category in a dedicated section later in this article.
Top ecommerce players in the Philippines
The latest data from SimilarWeb and App Annie show that Lazada and Shopee dominate the ecommerce landscape in the Philippines, although these figures are based on website visits and mobile app users, not actual revenues.
SimilarWeb’s data show that Lazada’s local Philippines website attracted an average of 26.5 million visits per month between May and July, compared to 16 million visits per month for Shopee’s Philippines website during the same period.
Amazon also performs well in the Philippines, with the company’s global / US app placing fourth in the country’s mobile shopping app rankings, and third in the country’s ranking of transactional websites.
However, Filipinos’ shopping habits appear to differ meaningfully depending on which device they’re using.
App Annie’s ranking of the country’s leading shopping apps shows that fashion is a top choice for mobile shoppers, with regional fashion platform Zalora ranking as the third most-used app in the Philippines during the first three months of 2019.
SimilarWeb’s ranking of the country’s top transactional websites tells a slightly different story though, with none of these fashion or beauty brands making the country’s top ten.
Instead, electronics seem to dominate when it comes to web-based ecommerce in the Philippines, with both Microsoft and Samsung’s sites appearing in the top transactional websites.
It’s also worth noting that Scribd.com appears in SimilarWeb’s ranking of top websites with transactional functionality.
As we saw above, the market for paid digital content remains relatively small in in the Philippines, but the presence of an e-book platform in the country’s top sites suggests that there is no shortage of appetite for digital content.
Online grocery in the Philippines
Mirroring a trend we’ve seen across other Southeast Asian countries in this series, food and personal care products account for the lowest share of online consumer goods spend in the Philippines, with the value of the country’s online grocery market totalling just US$127 million in 2018.
That figure would mean online grocery accounted for just 0.2 percent of the country’s total grocery market (online and offline) in 2018, which IGD Asia puts at US$53 billion.
However, online food shopping gaining momentum in the Philippines, and Statista reports that the country’s online grocery market is amongst the fastest-growing in the world.
Figures reported by IGD Asia paint an even more optimistic picture. The company forecasts that the Philippines will see APAC’s fastest growth in online grocery spend over the next few years, forecasting a compound annual growth rate (CAGR) of roughly 150 percent between 2017 and 2022.
Despite these impressive trends, however, IGD predicts that online shopping will still only account for 1 percent of total grocery spend in the Philippines by 2022.
As we saw above, Lazada and Shopee dominate the Philippines’ ecommerce landscape, and with both platforms offering grocery items, it’s likely that both company’s enjoy a sizeable share of the country’s online grocery spend.
However, SimilarWeb’s data suggest that online grocery specialists have struggled to gain traction in the Philippines.
The latest numbers suggest that only one grocery-focused website – Honestbee – attracted more than 100,000 monthly visits in the Philippines between May and July 2019, with some of the country’s biggest names still struggling to attract 50,000 website visits per month.
Barriers to ecommerce growth in the Philippines
The Philippines faces many of the same infrastructural challenges as Indonesia, and it’s likely that these issues have played an important role in hampering the country’s ecommerce growth to date, especially in the grocery sector.
Geography is a particular challenge. The Philippines comprises roughly 2,000 inhabited islands, which makes it very difficult for any online grocery brand to offer a nationwide service.
What’s more, delivering fresh produce across the country’s varied and often difficult terrain is no easy task, especially in the tropical climate.
Payments may be an important barrier to ecommerce growth in the Philippines too, with the World Bank reporting that fewer than 1 in 50 Filipinos owns a credit card.
Credit card penetration is even lower amongst women too – just 1.4 percent, or 1 woman in 70 – which has particular significance in the grocery sector.
The Philippines also suffers from some of the lowest levels of bank account ownership across the world’s top economies, with barely 1 in 3 Filipinos owning a bank account in 2017.
Mobile payments enjoy greater success in the Philippines though, with GlobalWebIndex reporting that 4 in 10 internet users in the country already use some kind of mobile wallet service.
Ecommerce outlook: the Philippines
With data from GlobalWebIndex showing that Filipinos are increasingly comfortable making purchases online, the Philippines should see solid growth in ecommerce spend over the coming years.
However, logistical challenges will continue to dampen growth, and given the small scale of the Philippines’ internet industry today, it may take a number of years before ecommerce accounts for a meaningful share of the country’s overall retail spend.
If you’re curious to see how that compares to other countries in Southeast Asia, check out the full collection of articles in this series.
Looking for more data on the Philippines? Check out all of our previous country reports by clicking here.