Driven by growing consumers’ preferences for online shopping and increasing internet penetration, the Philippines e-commerce market has been registering growth during the last few years.
The COVID-19 pandemic has further accelerated this trend.
Consequently, e-commerce value is expected to grow at a strong CAGR of 17 percent between 2021 and 2025, forecasts GlobalData, a leading data and analytics company.
“The rising internet penetration leads Philippines e-commerce to grow 11 percent and 15 percent in 2020 and 2021. With the pandemic on its tail end it is forecast to stabilize at a 17 percent growth through 2025, says GlobalData”
According to GlobalData’s E-Commerce Analytics, e-commerce transaction value in Philippines grew by 11.8 percent from 2019 to be valued at P229.8bn ($4.8bn) in 2020. It increased to by 15.1 percent in 2021 to reach P264.5bn ($5.5bn).
“While sectors such as travel and accommodation were affected due to lockdown and travel restrictions, a strong growth was seen in online purchases of retail goods such as grocery and electronics. This helped drive the growth in e-commerce sales,” Shivani Gupta, Banking and Payments Senior Analyst at GlobalData, comments.
The pandemic augmented the e-commerce activities in the country as wary consumers are staying home to avoid exposing themselves to disease vectors. This trend will continue with rise in new online shoppers and proliferation of online sellers in the country. According to the Department of Trade and Industry (DTI) in Philippines, the number of online sellers increased from 1,700 in March 2020 to 93,318 in January 2021.
The government is also taking various initiatives to boost the e-commerce sales. In January 2021, it launched the ‘Philippine e-Commerce Roadmap 2022’ to promote e-commerce adoption among SMEs and boost consumer confidence in online shopping. The government is looking to increase ecommerce contribution of GDP from 3.4 percent in 2020 to 5.5 percent in 2022.
As Filipino consumers continue to embrace online shopping, it will support the growth of electronic payments. According to GlobalData’s 2021 Financial Services Consumer Survey for online purchases, alternative payment solutions such as Gcash, PayMaya, and PayPal are the most preferred payment method in Philippines, collectively accounting for 30.6 percent of total e-commerce payments in 2021. They are closely followed by cash which has 29.8 percent share while payment cards account for 23.5 percent.
“Rising consumers’ preferences for online shopping, increasing number of online merchants, proliferation of alternative payment solutions and government support will support e-commerce sales in the Philippines. It is forecasted to grow at a CAGR of 17.0 percent over the next five years to reach P495.0bn (US$10.3bn) by 2025,” Gupta concludes.
In the meantime, local delivery companies J&T Express and LBC reported growths of between 35 to 68 percent from 2019 to 2021. Foodpanda increased about 56 percent while Grab deliveries bested its 2019 performance by 32 and 56 percent in 2020 and 2021.
