BUSINESS TO CONSUMER MARKETING

By: ystats.com

A new publication released by Germany-based secondary market research

company yStats.com “Philippines B2C E-Commerce Market 2019” is the title of
a new publication predicted that online retail sales in the Philippines will grow,
as spurred by increasing Internet connectivity, soaring M-Commerce
penetration rates and the government’s support for the segment.

The report says that B2C-Commerce in the Philippines is still in its early stages
of development, with the country ranking behind other top Southeast Asian
markets in terms of online retail sales. Despite having the second largest
population size in the region, the Philippines E-Commerce accounted for just
mid one-digit value of the total online retail sales of the region’s top six markets
in 2018. However, strong economic growth, a rising middle class and young
population, paired with a growing number of Internet and smartphone users as
well as government’s initiatives, are driving E-Commerce in the country. B2C E-
Commerce sales in the Philippines are expected to show annual double-digit
growth and outrank some of the currently more developed markets in the
region, such as Malaysia and Singapore, by 2025.

The Philippine Internet audience is one of the fastest growing in the world. In
2018, Internet penetration was projected at almost 7 out of 10 individuals,
according to yStats. Also, M-Commerce is on the rise with four out of seven
Filipino Internet users opting for online shopping via a mobile device in 2018,
according to a survey referenced in the yStats.com report. Furthermore, social
commerce is an emerging trend in the Philippines. According to sources cited in
the yStats report, Facebook was ranked the most popular social media site in
the Philippines in 2018 and the third most popular shopping platform for
purchasing certain categories of products online.
The principal online shopping destination for Filipino online shoppers as of Q1
2019 was Lazada, a Southeast Asian online retailer and marketplace, majority
stake-owned by the Alibaba Group. Second-ranked Singapore–based Shopee
Philippines also lists second by mobile app visits, after Lazada app. The
remaining players of the top five on the Filipino online retail scene include
Zalora Philippines, Argomall and eBay. The two market leaders, Lazada and
Shopee, are predicted to experience further growth and distance themselves
even further from the other market players. Both Lazada and Zalora are
focusing on overcoming the challenges of the poor logistics infrastructure in the
Philippines by establishing new fulfillment centers.

PROBLEMS FACING E-COMMERCE IN THE PHILIPPINES

 slow internet speed, high costs of broadband connection, weak infrastructure and lack of
necessary technical skills crucial in operationalizing online business platforms.
 absence of a robust digital ecosystem, the presence of counterfeit good
 s, and the prevalence of cyber-security crimes and attacks on individuals, businesses,
and the government.

 Among the three industry groups, Services sector reported the highest sales
through e-commerce amounting to PHP60.17 billion or 76.2 percent share to the
total e-commerce sales in 2012. Eighty-
nine percent of these were contributed by Transport
and Storage registering PHP53.42 billion sales from e-
commerce. Administrative and Support Service Activities recorded PHP2.63
billion or 4.4 percent share and Wholesale and retail
trade with PHP2.00 billion or 3.3 percent share to the total e-commerce sales
of the Services sector.

No e-commerce sales were reported for Real Estate Activities, Professional,

Scientific and Technical Activities, Human Health and Social Work Activities as well
as for Agriculture sector in 2012.

Among Industry sector, only Manufacturing reported e-commerce sales amounting

to PHP18.8 billion. This accounts for 0.3 percent of the total income of the Industry
sector in 2012.

The top three regions in terms of e-commerce sales were NCR with PHP62.31
billion (78.9%) or 0.9 percent of the total income of the region, Central Visayas with
PHP11.09 billion (14.0%) and Western Visayas with PHP2.44 billion
(3.1%). However, no e-commerce sales were reported for Eastern Visayas and
ARMM.”
 As more countries measure the impact of their Internet economy in relation to their
GDP, the action agenda listed in the Philippine E-Commerce Roadmap views E-
Commerce as an economic growth enabler and the Philippines’ competitive
advantage

Metro Manila (CNN Philippines, January 4) — The e-commerce industry

is gaining ground as digital marketplaces end 2018 with record highs to
reflect the growing number of Filipinos doing their shopping online.

The Internet World Stats reported that around 67 million Filipinos were
active online in January 2018. This was a 12% increase year-on-year.

The country also ranked first in the world in terms of social media use and
amount of time spent online. Businesses believe this makes the country an
ideal place for e-commerce to thrive.

A report by Statista said that the Philippine e-commerce market revenue

grew to $840 million or about P44 trillion in 2018 from $688 million or about
P36 trillion in 2017. Revenue is expected to grow about 10.5% annually
leading to a market volume of $996 million dollars or about P53 trillion
pesos by 2019.

Co-founder and CEO of Zalora Philippines Paulo Campos III said their
company has seen accelerated growth in the last 2 to 3 years, particularly
in the 4th quarter of the year where most transactions happened. He said
he expects more growth in 2019 and the years ahead.

According to Campos, about 2% of the overall retail market is done online.

E-commerce penetration is about 2% and he fully expects that to go up to
5-7% in the next few years, which means the market is growing extremely
fast.

Southeast Asia's leading e-commerce firm Lazada also reported record

breaking sales during the 11-11 and 12-12 online shopping festivals.

The Lazada group saw 1.3 billion visits during their 11-11 and 12-12 sale
days. 12-12 sales reached more than 30 times their normal day gross
merchandise value in various locations, including the Philippines.
The consistent growth of e-commerce in the country can be attributed to
the convenience sought by digital-savvy shoppers.

The government also sees a big potential for e-commerce. The Trade
department launched its e-commerce roadmap up to 2020. It targets to
have e-commerce contribute 25% to the gross domestic product by 2020
from 10 percent in 2015. The agency believes going digital will also help
micro, small and medium enterprises compete globally.

Campos said he believes the Philippines can be number 1 in terms of

online shopping given the amount of time Filipinos spend online and the
ecosystem converging to make e-commerce thrive in the country.

According to Campos, the beautiful thing about e-commerce is somehow

it's a very democratizing force that anyone can really sell online and that
you no longer need big investment to put up a store or offline presence to
be able to sell.

He added that there's something about the power of unleashing the digital
Filipino into the global economy that is quite exciting and that any type of
business that emerges online, whether it be e-commerce or even some of
the other digital businesses like ride-hailing, will be particularly strong here
in the Philippines than in other countries.

While Campos believes internet access and the payments space can be
improved, he said the country has crossed over to a point where e-
commerce can only grow and become a major contributor to the retail
sector.

This prospect encourages entrepreneurs to take their businesses online as

they enter 2019.