Philippines’ millennial potential for e-commerce
THE e-commerce industry in the Philippines has been continuously growing its online market reach from its rising middle class, tech-savvy population mainly consisting of “millennials”.
In fact, the global millennial workforce is expected to make up at least half of the world population by 2020, according to PwC report.
In the Philippines, the current workforce population comprises a millennial population of over 47 percent. And this is expected to rise.
A KMC Saville report found that in the next five years, the Filipino millennial working population is projected to make up 55 percent of the entire working population.
In terms of online activity, the Digital in 2018 report from We Are Social and Hootsuite finds that Filipinos are the most social in Southeast Asia, spending about four hours online in a day.
To understand the Philippines’ market behavior in the e-commerce industry, iPrice Group utilized its proprietary data by analyzing its 1,300-merchant datasets.
Findings show that the Philippines has the third-highest traffic in SEA, yet this only translates to a 0.8 percent purchase rate.
According to data, the purchase rate in mobile as compared to desktop is relatively low in all SEA markets. However, the Philippines is one of the lowest (together with Thailand) in all 6 markets analyzed.
Based on the SEA state of E-commerce report 2017, the Philippines is the third most active in mobile commerce with 71.25 percent share of traffic in SEA.
Despite the notion that online shopping connotes impulsive buying due to its convenience, Filipino consumer behavior implies an unexpected market response.
Before making an actual purchase, Filipino consumers tend to utilize different online platforms first to assess their prospect product.
A Path to Purchase report 2017 finds that before purchasing a product, Filipino consumers first perform a series of searches particularly from price comparison websites, product reviews, and online videos.
While the results could indicate a lagging factor in terms of consumer penetration, the country’s average total amount spent (basket value) suggests that Filipinos’ confidence in online shopping is high (comparing it against SEA market).
Analysing the macro-perspective of Philippines economy, the country has one of the lowest GDP per capita (US$ 2951.07) in SEA (which is closely related to basket value).
However, its basket value takes a great leap as the second highest in SEA, with US$56 (PHP 2,887) per order while Singapore tops with US$91 (PHP 4,736).
The rationale of these findings indicates that Filipino consumers, in general, have small purchasing power. However, trusted product reviews and comparison platforms could encourage their willingness to spend online.
Meanwhile, mode of payment in the e-commerce also largely influences purchasing activity. As more and more Filipinos are exploring the convenience of online shopping, the credit card is the most common payment method in the country.
Based on our SEA State of e-commerce report, 95 percent of e-commerce merchants in the Philippines offers credit card as a payment method, while the next most common mode of payment is cash on delivery at 80 percent.
Contributed by Jeremy Chew, Analyst, iPrice Group