E-commerce, a business model facilitating online buying and selling, has gained widespread popularity in the Philippines. Online shopping, accessible through various devices such as desktops, laptops, smartphones, tablets, and smartwatches, is a prominent transaction within this model.

There are two predominant e-commerce models: business-to-consumer (B2C) and business-to-business (B2B). In B2C, businesses directly sell to end-users, while in B2B, enterprises transact with other businesses. Many platforms now integrate both models to adapt to evolving demands in the e-commerce landscape.

Over the last five years, the e-commerce industry in the Philippines has experienced substantial growth, with a significant surge in 2020 due to the COVID-19 pandemic. Projections indicate that this sector's development will quadruple by 2025, reaching a value of $12 billion. In 2020, the digital economy contributed approximately 55% to the country's GDP, and it is anticipated to constitute half of the GDP by 2022.

Exploring the reasons behind the booming e-commerce scene in the Philippines reveals opportunities for small and medium enterprises (SMEs) and other businesses to maximize their potential in the digital realm.

Statistics reveal an overall optimistic surge

According to the most recent statistics from January 2021, derived from 2020 data reported by Hootsuite and We Are Social, a total of 38.88 million Filipinos engaged in online shopping, contributing to a substantial $3.55 billion in transactions, showcasing an annual growth rate of +42.5%.

Remarkably, the Philippines secured the top spot globally for social media usage and time spent online. Businesses unanimously agree that this positions the country as an ideal environment for the expansion of e-commerce. The nation boasts a total of 73.91 million internet users, witnessing a 23% surge in online shopping activity, with an average daily usage of 10 hours and 56 minutes, predominantly accessed through mobile devices (96.5%).

In the 16-64 age group, approximately 80.2% of consumers made online purchases across various devices, while around 89.3% actively searched for products or services to buy. All e-commerce product categories, including fashion, appliances, electronics, and food, experienced a collective positive growth averaging 42%. Notably, the travel, mobility, and accommodation category witnessed a significant decline, a consequence of the travel restrictions imposed during the COVID-19 pandemic.

E-commerce platforms, particularly Lazada and Shopee, emerged as top mobile app downloads, with approximately 30.9 million and 21.9 million visits, respectively. These trends indicate a positive trajectory for the overall growth of e-commerce in the Philippines in the upcoming years, positioning it as a prime avenue for businesses to thrive.

The Significant Move of Filipino Consumers and Entrepreneurs Towards E-commerce

The rapid growth of e-commerce in the country unfolded during the peak of the Covid-19 pandemic, as numerous traditional retail stores faced mandated closures, and individuals were compelled to observe home quarantine. Filipinos are progressively adopting digital lifestyles, with market behaviors undergoing significant shifts, influenced not only by movement restrictions but also by the convenience they've discovered in online shopping.

Numerous consumers opt for online shopping due to various reasons, including:

• Multitude of payment options
• Access to discounts, vouchers, and reward programs
• Opportunity to research and review products and services before making a purchase
• Capability to make multiple transactions in one session, at any time of the day
• Ability to purchase items not available in physical stores across different platforms
• Personalized shopping experience with tailored recommendations
• Real-time customer service

Similar to consumers, entrepreneurs have significantly altered their approach to doing business, increasingly opting to establish and expand their ventures digitally. Convenience plays a pivotal role in the decision of vendors to sell online. Transitioning to a digital platform offers numerous advantages for entrepreneurs compared to traditional brick-and-mortar stores. Some of these benefits include:

• Reduced costs for startup businesses due to the absence of construction requirements and a smaller staffing footprint.
• Access to millions of customers anytime, anywhere.
• Acquisition of valuable customer and business operation data through built-in analytics.
• Convenient communication channels with customers.

Online Buy and Sell in Philippines Shows No Sign of Slowing Down

The momentum of Philippine e-commerce continues unabated, presenting ample opportunities for advancement and expansion. This trend is primarily driven by the digital lifestyles embraced by Filipino consumers. Even post-pandemic, approximately 73% of Filipino consumers are expected to maintain or increase their engagement in online shopping activities.

"Online shopping and marketing platforms will play a bigger role in the new normal as businesses and consumers increase the use of electronic transactions, including cashless payment systems and other financial technology platforms. Businesses need to innovate and make full use of technology to resume operations and cater to consumer needs and preferences while still managing risks of Covid-19 infection. "Online transactions will now become the new standard for engaging with clients, buyers, and suppliers. Therefore, both public and private sectors need to invest in digital technology."

-Acting NEDA Secretary Karl Kendrick Chua

The government actively promotes the acceleration of e-commerce growth, as highlighted in the Philippine E-Commerce Roadmap 2016-2020. This initiative seeks to tackle challenges and barriers that impede the country's full potential for e-commerce development. Anticipated future developments include more systematic government regulations addressing taxation, consumer protection, and infrastructure enhancements.

Given the generally optimistic outlook and the current flourishing state of the e-commerce industry in the Philippines, individuals aspiring to start a business are encouraged to seize the opportunities it presents.