The Future of E-commerce Industry in the Philippines

by PRIME Philippines Research and Advisory Group  March 28, 2018

The multi-billion worth industry of e-commerce is set to boost the ASEAN economy further as entrepreneurs with small to large enterprises are empowered to start maximizing business opportunities through this major digital breakthrough. As Inanc Balci, CEO of Lazada, once said in an interview: “E-commerce is the biggest opportunity for Southeast Asia this decade.” In this fast pace of digital trends and innovations, investors are now into this gold mine of digital commerce because given a small starting capital, greater returns are exceedingly conceivable. What are these opportunities, you say? Here is a brief illustration of what’s in store for everyone in the e-commerce industry.

 

Expansion of E-commerce Industry

Among the Southeast Asian countries, Philippines is expected to benefit the most in this e-commerce expansion. The industry is expected to grow up to $10 billion by 2025 from the estimated $0.5 billion in 2015. The expectations are based on the growing user penetration which is currently at 35.2%. This shows that most Filipinos are rapidly gaining internet access, which is mainly used for social media. By 2022, it is expected that 53.8 million Filipinos are already well-served in this growing digital market.

Currently, the top online platforms in the Philippines, namely, Lazada, Zalora, Shopee, Ebay and Beauty MNL, gathers approximately 73 million monthly average visitors. Wherein, Lazada receives the most website traffic with more than 60 million monthly average visitors which makes it the leading online retailing in the country.

Other than electronics, fashion and beauty products, marketing properties online is currently a trend as well. Given that the real estate industry in the Philippines is expected to further grow in the upcoming years, the industry demand for real estate properties grows as the industry remains as a leading source of investment inflows. Property brokers utilizes social media and different online selling platforms such as, Lamudi, OLX and Property Asia to gain more qualified buyers.

The mobile internet penetration in the Philippines, mostly concentrated on social media usage and online shopping, constantly multiplies annually. This apparently encourages the different social media websites to improve their services to accommodate online sellers. Instagram, a photo-sharing application, provided Business Tools which makes it easier for businesses to know more about their followers and to promote attention-catching posts. Another one is Facebook, which now provides the Marketplace. Before, selling through Facebook occurs within pages or groups, but the new Marketplace provides an easier access to the items sold within one’s vicinity. This feature also categorizes the items together under specific categories, such as housing for property listings, vehicles for new or used automobiles, to name a few. These are some of the major improvements in the e-commerce industry.

Convenience of Online Retailing

            The growth of the Philippine e-commerce industry is driven by the consumers, wherein, the main reasons for online shopping are convenience and price. These reasons also became motives for online sellers to start their own businesses. Convenience for sellers means that a smartphone, internet, and unused items or properties will suffice and the price that sellers set would mean income.

Launching an online presence provides countless opportunities as almost any business idea can flourish with the right execution. From the classic specialized jewelry to quirky-printed apparels, online selling helps in reaching the right customers for every available item. For popular brick-and-mortar retailers, online presence provides a cheaper alternative to traditional marketing methods.  Facebook provides customizable ads where the seller may specifically choose the target market based on age, location, previously liked pages, etc. which helps the business to reach its target buyers while gaining promotion.

            The simplicity of starting an online shop attracts all kinds of businesses. There are premade layouts for shops, who are incapable of creating their own domain, offered by Shopify. Another way is to simply create an account for buy-and-sell websites such as Lazada, eBay, and Lamudi, where simply posting any picture of the property or items for sale and providing the appropriate details marks the start of a business milestone. With this idea, websites offering minimal costs for making a selling account becomes most cost-efficient for business enthusiasts. This also means that anyone from anywhere can access these shops at any time of the day, thus achieving wider customer reach.

Great Avenue to Start and Expand Business

            All kinds of businesses are attracted to the benefits online platforms offer. The success in the e-commerce pushed established brick-and-mortar retailers to explore its potential as an online store. For new entrepreneurs, it is the easiest and most cost-efficient way to start a business.

            As the revenue from online businesses increases, the traditional retail shops treats this as an opportunity to expand and to adapt to the trend. Even established retails can expand through online selling because it reaches more consumers, regardless of location, and further promotes the business through social media as well. Lazada offers a shop-in-shop, wherein, the brand receives its own official online shop through Lazada. SM, Robinsons Appliances and Samsung are some of the companies who have utilized this to test market catchment potential.

Several shops started out as an online shop through social media or an account in selling platforms but have successfully established their place in the business industry, such as, Kimstore, The Lifestyle Store, and Beauty Magnet Store. Currently, these shops have their own actual stores but are still operating online.

Beyond the Online Site

Surely, success does not stop in the digital market. Most online shops have explored ways to expand their business, such as: participating in events and bazaars and renting space either in concept stores and/or own individual store. Despite gaining recognition as an online retail, most of these shops aim to have their own actual spot or store.

There are bazaars which are constantly having week-long offerings such as the Trendsetter’s Bazaar, wherein, online fashion stores are given an opportunity to sell and market their items. For small businesses, participating in bazaars or events i.e. school fairs gives them an opportunity to be publicized while selling. The Lifestyle Store, previously known as The BagMaster Phils., offers various branded bags through Facebook and Instagram. They utilized their opportunity by constantly joining bazaars which boosted their audience leading for it to be an accredited seller in Zalora.

In expanding the physical presence of the shop, owners may either rent space of a store or individually rent own store. Nowadays, there are several stores that caters to different online shops such as, Pop-culture in Trinoma, Empire Fashion Café in Maginhawa, Style Metro in España, and Concepts in Taft. Concept stores or lifestyle boutiques offers small spaces to micro-medium online businesses where they can sell their items. But, the shop can always rent its own individual space. The previously mentioned successful online shops, Beauty Magnet and Kimstore, both expanded by having their own physical branches.

 

Looking for spaces to rent for successful online shops is not as easy as setting up online but could reward the owner with great success if done properly. Certainly, the world goes beyond the online site. PRIME Philippines, the leading commercial real estate consultancy firm, could help you with just that and lead you to where successful business are right now. For more details, visit us at http://www.primephilippines.com.

 

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