09 Dec, 2021 Online shopping and rising internet penetration to lead Philippines e-commerce at 17% CAGR through 2025, forecasts GlobalDataPosted in Banking
Driven by growing consumers’ preferences for online shopping and increasing internet penetration, the Philippines e-commerce market has been registering growth during the last few years. The COVID-19 pandemic has further accelerated this trend. Consequently, e-commerce value is expected to grow at a strong CAGR of 17% between 2021 and 2025, forecasts GlobalData, a leading data and analytics company.
According to GlobalData’s E-Commerce Analytics, e-commerce transaction value in Philippines grew by 11.8% to be valued at PHP229.8bn ($4.8bn) in 2020. It is estimated to increase by 15.1% in 2021 to reach PHP264.5bn ($5.5bn).
Shivani Gupta, Banking and Payments Senior Analyst at GlobalData, comments: “While sectors such as travel and accommodation were affected due to lockdown and travel restrictions, a strong growth was seen in online purchases of retail goods such as grocery and electronics. This helped drive the growth in e-commerce sales.”
The pandemic augmented the e-commerce activities in the country as wary consumers are staying home to avoid exposing themselves to disease vectors. This trend will continue with rise in new online shoppers and proliferation of online sellers in the country. According to the Department of Trade and Industry (DTI) in the Philippines, the number of online sellers increased from 1,700 in March 2020 to 93,318 in January 2021.
The government is also taking various initiatives to boost the e-commerce sales. In January 2021, it launched the ‘Philippine e-Commerce Roadmap 2022’ to promote e-commerce adoption among small-medium enterprises (SMEs) and boost consumer confidence in online shopping. The government is looking to increase ecommerce contribution of GDP from 3.4% in 2020 to 5.5% in 2022.
As Filipino consumers continue to embrace online shopping, it will support the growth of electronic payments. According to GlobalData’s 2021 Financial Services Consumer Survey* for online purchases, alternative payment solutions such as Gcash, PayMaya, and PayPal are the most preferred payment method in Philippines, collectively accounting for 30.6% of total e-commerce payments in 2021. They are closely followed by cash which has 29.8% share while payment cards account for 23.5%.
Gupta concludes: “Rising consumers’ preferences for online shopping, increasing number of online merchants, proliferation of alternative payment solutions and government support will support e-commerce sales in the Philippines. It is forecasted to grow at a CAGR of 17.0% over the next five years to reach PHP495.0bn (US$10.3bn) by 2025.”
*GlobalData’s 2021 Financial Services Consumer Survey was carried out in Q1 and Q2 2021. Over 52,742 respondents aged 18+ were surveyed across 42 countries.