Market Overview

In 2021, the Philippines’ eCommerce market sales reached $17 billion, largely contributed by 73 million online active users.  This is estimated to reach $24 billion, with 17% growth, through 2025.  The COVID-19 pandemic increased the eCommerce demand, with Filipinos working and studying from home. 

The top Philippine eCommerce platforms are Shopee, Lazada, Zalora, and BeautyMNL.  Products from Asia-Pacific markets with free trade agreements with the Philippines are sold on these platforms and the top product categories include beauty, electronics, fashion, furniture, health, and household care.  The working population (25-44) actively access these platforms from their desktop and mobile phones.  In 2021, smartphone household penetration reached 74.1%, a 2% increase from 2020.  Based on a 2021 PPRO Ecommerce and Payments report, 50 percent of Filipino online shoppers have made cross-border transactions, mostly from China, the United States, and South Korea.  Current logistics bottlenecks still hinder cross-border online shopping.

The eCommerce growth is hindered by challenges including the Philippines’ continued low rankings for mobile and fixed broadband internet speeds.  The Philippines only has 22,405 cellular towers compared to other ASEAN countries like Vietnam with 90,000 and Thailand with 60,000.  The Philippines’ geographical setup requires more than 70,000 towers to cover the entire country.  

In 2021, the Philippines Central Bank reported that the number of unbanked Filipinos has decreased from 51% of the adult population to 44% (34.3 million).  E-money users increased more than four times from just 8% in 2019 to 36% in 2021.  Generally, Filipinos prefer cash-on-delivery payments and often use partner payment centers such as large convenience stores and e-wallets such as GCash and PayMaya.  Philippine credit card users are wary of online transactions due to hacking incidents and weak cybersecurity protection in the country.

Legal and Regulatory

The Philippine Government issued the Electronic Commerce Act (RA 8792) in 2000 and an E-Commerce Philippines Roadmap in 2022 to support eCommerce growth.  The link to the roadmap: https://ecommerce.dti.gov.ph/madali/.  

Foreign retailers can work with the top Philippine eCommerce platforms to sell in the Philippines. A foreign retail company can open a Philippine office with $200,000 equity for 100% ownership.  A business permit is required, and companies should register with the Philippine Tax Bureau, Department and Trade and Industry, and Securities and Exchange Commission for incorporation. Additional product licenses and registration may be required by the Philippine Food and Drug Administration and interrelated entities.

With the rise of eCommerce activities during the COVID-19 pandemic, in 2022, the Philippine government issued Joint Administrative Order 22-01 to reiterate all existing regulations that online businesses must comply with and to further protect consumers against fraudulent online transactions and hazardous products. Though still in the development stage, the Department of Trade and Industry also established the web-based Philippine Online Dispute Resolution System (PODRS) to automate and streamline the government’s services in resolving consumer complaints.

eCommerce Intellectual Property Rights

The Philippines Cybercrime and Data Privacy Laws support the eCommerce industry.  However, a system is not yet in place to handle electronic transaction cases with agencies such as the Department of Justice, the Philippine National Police, and the local courts.

The National Privacy Commission (NPC) leads the Philippines Data Privacy Law and encourages locally registered companies to designate data privacy officers. NPC leads the Philippines’ compliance with international privacy agreements such as the European General Data Protection Regulation and APEC Cross Border Privacy Rules.

Although the Philippines is not listed on the United States Trade Representative’s (USTR) Special 301 Watch List, Philippine eCommerce platforms remain to be the leading source of intellectual property (IP) violations. The Intellectual Property Code and Special Law on Counterfeit Products mandates eCommerce platforms to enforce the rights of IP holders and take down counterfeit products or contents.  The Intellectual Property Office of the Philippines (IPOPHIL) is the implementing agency of the IP Code, including regulations on eCommerce.

Consumer Behavior

· Digital Marketing and Social Media:  Filipinos are prolific social media users and actively use platforms for a whopping 10 hours per day, seven days a week.  The best platforms to reach Filipino consumers are Facebook (80.3 million users), YouTube (61 million users), Instagram (17.6 million users), Twitter (11.8 million users), and LinkedIn (13 million users).  The 2023 Global Digital Report by Meltwater and We Are Social showed that there were 84.45 million social media users in the country in January 2023 and that 46% of Filipino social media users aged 16 to 64 follow influencers. It should be noted that the total number of social media users in the Philippines are not necessarily unique individuals.

· Major Buying Holidays:  The top eCommerce platforms organize double-digit monthly promotions and mega campaigns such as platform birthday, midyear, 9.9, 11.11, and 12.12 events.  eCommerce platforms also offer campaign packages for participating retail companies.

· Mobile eCommerce:  In 2022, Philippine telecommunication companies recorded 159 million mobile subscribers.  The Philippines is the fastest-growing app market in Southeast Asia.

· Online Payment:  According to the Philippines Central Bank, the country’s use of digital payments has gained significant momentum.  In 2022, the share of digital payments vis-à-vis total retail payments in terms of volume reached 42.1% from 30.3% the previous year. In terms of value, the share of digital payments over total retail payments is 40.1% ($78 billion).  High-frequency, low-value transactions through merchant payments and person-to-person fund transfers boosted the adoption of digital payments in the country.

Industry Associations:

Digital Commerce Association in the Philippines

Website: https://www.dcom.ph/

Philippine Retailers Association

Website: https://www.philretailers.com/