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Business to consumer e-marketplaces in the Philippines have wide room for growth and much of it will depend on higher internet penetration, according to a UNESCAP policy brief
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The country has a low internet penetration rate of 56%
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A moderate 41% of the population purchases goods online
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Traffic on the 163 B2C marketplaces grew significantly during the 2019 to 2022 period
There is still room much growth in the business-to-consumer (B2C) market in the Philippines, and much of it will depend on higher internet penetration.
The Philippines shows a relatively low internet penetration rate of 56%, making it a “moderately connected country,” according to a recent paper from the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP).
A moderate proportion of its population bought goods online at 41%, but this figure is steadily growing, from 35% in 2020 to 38% in 2021, and 41% in 2022, which is the latest available figure.
The Philippines’ density of B2C marketplaces is considered as particularly low. As of last count, there were only 163 marketplaces nationwide serving a population of 115.6 million, from 7.5% of the total traffic in the region studied.
But traffic grew substantially on the 163 B2C marketplaces for the period 2019 to 2022. For the period covered, the total rose from 960 million to 1.7 billion visits.
Classified sites accounted for a slight majority of 51.5% of marketplaces visited, but online shopping malls captured the bulk of the traffic, at an impressive 85.2%.
Filipino consumers remain enamored with the US, with 47 out of the 163 e-commerce marketplaces being American companies, or 29% of the total. Philippine companies came in second with 38 websites or 23%.
A wide range of marketplaces were held by other Asian countries such as Singapore (with 5%), China (also 5%) and India (3%).
High diversity in geographic terms accounted for the remaining 25% with 23 countries from all over the world represented.
That there is room for a lot of growth can be gleaned from the fact that the Philippine e-commerce market is dominated by a handful of companies.
The top 10 websites own 92.8% of the total traffic, and these are led by online shopping malls. There are five in total, with two being Singaporean companies.
The two companies are known to just about all Filipino shoppers, with Lazada and Shopee accounting for 75.4% of total traffic.
Only one Filipino company is in the top 10, landing at 6th spot with 1.7% of total traffic.
Top player Shopee grabbed close to half of total market share, with an impressive 48% with Lazada a distant second at 27.4%.
From third to 10th place are Amazon (4.7%), Carousel (3.8%), Foodpanda (1.7%), Autodeal/Motodeal (1.7%), Grabmart (1.6%), iPrice (1.3%), eBay (1.3%), and Zalora (1.3%).
The Philippines has a bigger proportion of generic B2C marketplaces at 62%, while specialized marketplaces account for the remaining 38%.
Of the 62 specialized marketplaces, 29% specialize in fashion, accessories and shoes (with 18% of the traffic) and auto parts at 51.5% of the traffic.
The figures further indicate that Filipino consumer preferences lean towards groceries, at 23% of traffic.
The ESCAP paper notes that in the Philippines “foreign sellers are allowed to carry out business only on 43% of all B2C marketplaces.”
It concludes by saying that even though the Philippines contains a substantial proportion of foreign-owned marketplaces at 77%, only a part of them are open to domestic sellers.
READ: PH SMEs have yet to optimize power of ecommerce, says study
