Opinion: Philippine ecommerce left behind by SEA peers, but there’s hope

Photo credit: Adam Cohn.

The internet has changed the business landscape all over the world, and the Philippines is no exception. According to statistics, the Philippines ranked 15th in 2016—up one rank since 2014—in the number of internet users. While this is normally associated with the proliferation of call centers and BPOs, ecommerce is also a very viable industry in the country. Many entrepreneurs have expressed interested in it this year.

Here’s why I think the ecommerce industry in the Philippines is not doomed.

A glance back at 2016

Before looking at the current space, you have to understand the events of the previous year.

Lazada, the go-to site for many Filipinos to check prices for popular items, was owned by German company Rocket Internet, which has country versions in the Philippines, Thailand, Malaysia, Vietnam, and Singapore. That is until ecommerce giant Alibaba Group acquired a controlling interest in April 2016 in a US$1 billion deal.

Zalora, another Rocket Internet asset in the Philippines, was sold to Thailand’s business conglomerate Central Group. Together, both companies got a hefty slice of the online marketplace in Southeast Asia.

In other areas, Japan’s own ecommerce giant Rakuten is pulling out of the Southeast Asian region by closing down operations in Singapore, Thailand, and Malaysia. It opted instead to concentrate on business in Taiwan and Japan, where it is performing much better. It also sold a Thailand-based company it acquired in 2009 to a Thai-owned web host, Porar Web Application.

In Indonesia, two sites focusing on the female demographics have merged to form the MoxyBilna Group (under the site name Orami) to have a fighting chance against larger sites.

All this means is that the Philippines is missing opportunities to make its mark on the global ecommerce economy.

According to Philstar, many Filipinos shop online, so the market is there. However, they do so on non-Filipino sites, mostly because only “1 percent [of local businesses are] currently online or have a website with a payment gateway facility.”

The country’s Department of Tourism and Industry (DTI) and Department of Information and Communications Technology have spearheaded efforts to rectify the slow adoption of local ecommerce platforms in the country. They project that ecommerce will have a 25 percent contribution to the country’s GDP in three short years. In the meantime, Filipinos still look for foreign-owned sites to satisfy their online shopping needs.

The hilly road ahead

According to a study by Google and Temasek, ecommerce in the country is projected to grow 34 percent annually within the next decade and is set to reach US$19 billion by 2025. But according to the World Bank, the Philippine economy is growing more than initially expected, so those figures may even be conservative.

This should give savvy entrepreneurs something to think about. Filipinos are ready and excited to engage in ecommerce, however, they are still mostly engaging with more prominent and popular foreign-based companies. This is because local ecommerce websites are limited and are not marketed or advertised properly.

Although more people are going online to shop, scam reports and the light government sanctions on scammers make them wary of online transactions.

Startups and B2B opportunities

The shape of things to come

Conclusion