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How to Start Your Own E-Commerce Business in the Philippines

Over the last few months, news has been inundated with reports of several large retail

stores in the US closing down or shuttering outlets. Billionaire investor Warren Buffet

divested $900 Million worth of holdings at Wal-Mart because of the retail chain’s refusal

to change with the times. And the times they are changing with e-commerce giants

Amazon and JD.com lording it over consumer retail. So if you are planning to start your

own e-commerce business in the Philippines, the time is now!

Although the Philippines lags behind its Southeast Asian neighbors in online shopping,

there are strong signs of growth. Statistics on online shopping in the Philippines in 2015

revealed the following promising figures:

 26 Million e-commerce shoppers representing 40% of all Internet users.

 71% estimated annual growth over the next 3 years.

 Estimated 46.1 Million e-commerce shoppers within 3 years.

 2% expected growth rate in the retail industry.

 The majority of shoppers came from the middle-income bracket.

 If you want to become an entrepreneur, starting your own e-commerce business in the

Philippines is a great idea and gives you several unique advantages:

 It is an inexpensive way to start a business.

 Low maintenance costs.

 Easier to market and promote products and services.

 Business is open 24/7.

 Wider scope and reach.

So what are you waiting for, let’s get your e-commerce business in the Philippines started!

1. What is Your Business Idea?

In the Philippines, the top selling e-commerce items are ranked in order of sales:

 Electronic Goods

 Special Interest

 Fashion Apparel

 Furniture and Home Appliances

 Food, Cosmetics, and Pharmaceuticals

Punchdrunk Panda is an example of a successful e-commerce business. The company

sells Filipino-made products which include fashion accessories, bags, socks,

headphones, camera straps, wallets, and pencil cases. According to them, they started

with a free trial first to build their online store using Shopify and was amazed by how idiot

proof or user-friendly it is.

Nonetheless, once you’ve determined the products and services you want to offer on your

e-commerce website, the next step is to look for suppliers.

2. Register Your Online Business

If your e-commerce business exchanges goods and services for cash, then it will be

considered a source of income. You will be required to issue official receipts. This means

you have to register your online business.

If your type of business is either a proprietorship or partnership, then you should register

it with the Department of Trade and Industry or DTI. If you plan to set up a corporation,

you have to register it with the Securities and Exchange Commission or SEC.

Related: 5 Essential Business Permits and Licenses in the Philippines

The advantage of being a registered entity is that it will be easier to gain approval and

favorable terms from suppliers. In order to find the best suppliers, you have to go straight

to the manufacturer and secure a referral.

Manufacturers will be more receptive to legally organized and registered businesses than

those that aren’t.

3. Build Your E-Commerce Website

Your e-commerce website is your bread and butter. Although there are programs that can

help you set up your own e-commerce website, it is always better to sign up the services

of a professional web designer.

 One of the best e-commerce platforms to use is Shopify. Punchdrunk Panda shifted to

Shopify because it is user-friendly, offers outstanding support services, comes with many

interesting features, and offers risk-free 30 days trial.

It’s not enough to just have an e-commerce website. It should have the following qualities:

 Responsive Design – 65% of online traffic now comes from mobile. If you want to be

discovered, your website has to be responsive to mobile devices.

 Focus on Speed – Search rankings are affected by site speed. Studies show that a 1-

second delay in speed can result in a 7% decrease in conversion rates.

 Make it Accessible – Search isn’t just about Google, Yahoo! or Bing. Other Internet

users may prefer Firefox, Mozilla or Safari.

 Don’t Make Customers Think – If your e-commerce site appears too complicated to

use, the customer will click out. It’s all about giving them a memorable User Experience

or UX.

 It Should Look Good – Think of your e-commerce store as your window to the Internet.

If it looks good and inviting, more people will visit your store.

 Decide on Your Checkout Counter – Once you have your customer at the checkout

line, you want the payment system as clean, easy and convenient. If consumers are

hesitant about credit cards, you can have PayPal or Shopify’s own payment system.

4. Fortify Your Delivery/ Shipment Systems

One reason why e-commerce is slow to develop in the Philippines is a general fear of

delivery and shipment problems.

 In the case of Punchdrunk Panda, although the founder is based in Canada, the company

has a local team which handles all shipping and delivery in the Philippines. Some e-

commerce businesses use standard courier services such as LBC or Aboitiz 2GO to

deliver merchandise.

If you plan to sell your products in the US, you may wish to consider Shipwire which works

well with Shopify. Punchdrunk Panda uses Shipwire’s services for their customers in the

US. Make sure the orders are easy to track down in case of delays.

5. Market and Promote Your Website

Marketing and promotion are important functions to carry out in order to grow your e-

commerce business.

Here are a few tips on how to market and promote your e-commerce website:

 Optimize Your Web Pages.

 Create relevant and engaging content on your website.

 Distribute content through social media.

 Use social media to build your brand, increase awareness and grow your network.

 Use Google Ads, Facebook Ads and AdRoll for remarketing; a process whereby relevant

ads are shown to the site visitor across multiple devices.

 Introduce product discounts, special offers, coupons and other purchase incentives.

 Include testimonies on your website.

 Post customer reviews and comments on your website.

 Integrate a form of customer service on your website such as chat or e-mail support.
Related: 10 Biggest Digital Marketing Mistakes Made by Entrepreneurs

Start Your Own E-Commerce Business in the Philippines

E-commerce presents great opportunities for you to succeed in the retail business in the

Philippines. It offers consumers convenience by shopping from the comforts of their own

homes without having to deal with the horrors of Metro Manila traffic.

Running an e-commerce business in the Philippines comes with its own set of challenges.

But with dedication, focus, and commitment you should eventually find yourself on the

smooth road to success.

As a final piece of advice, make sure to check out Shopify and get a free trial today. Who

knows? Your business is the next Filipino Success Story that will be featured by them.

(Oh man, I would love to see that).

Philippines - ECommerce

Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce,

and how much product/service in each sector is sold through e-commerce versus brick-and-

mortar retail. Includes what a company needs to know to take advantage of e-commerce in the

local market and , reputable, prominent B2B websites.

Last Published: 7/11/2017

Overview

eCommerce in the Philippines has a unique set-up; it is geared for massive growth but is

also facing significant challenges. The rising middle class, high consumer spending and

a young and vibrant, tech-savvy population is driving eCommerce forward by leaps and

bounds. According to eCommerceiq Asia[1], the Philippines eCommerce market in 2015

was estimated at US$0.5 billion which translates to only 0.5 percent of retail transactions

in the country. This market is estimated to grow into a US$10 billion industry by 2025.

Current Market Trends

This upward trajectory seems to be supported by Euromonitor’s data on internet and

device penetration:

 44.3 percent of the Philippine population use the internet

 29.1 percent of households have access to the internet, while only 3.7 percent

have access to broadband internet

 44 percent of mobile subscribers have access to broadband service on their mobile

phones

 99.2 percent of the Philippine population is covered by a mobile cellular network

 86.4 percent of households possess mobile telephone

  31.2 percent of households have personal computers

 31.3 percent of households have laptops

 55 percent of households have smartphones

 2.1 percent of households have tabletsFilipinos are prolific users of social

media. Estimates this year show that there are 48 million active social media users

from the Philippines. Of this number, 60 million are on Facebook; 12 million on

Twitter and 4 million are LinkedIn users.

Domestic eCommerce (B2C)

There is good reason to be optimistic about eCommerce growth in the Philippines.

However, the country also faces the following challenges to its growth:

 Infrastructure gap = slow internet speed. According to Akamai’s “State of the

Internet Report” for the fourth quarter of 2016, average internet speed in the

Philippines is only 4.5 megabytes per second (MBPS), the slowest in the Asia

Pacific.

 Low PC Penetration: PC penetration is estimated at 31.2 percent. 44.3 percent of

Filipinos use the internet. Most internet users gain access through

smartphones. Smartphone penetration is now at 55 percent of households.

  Low Broadband Penetration: Many Filipinos access the web through internet

cafés and their workplace. Broadband access from home accounts for only 3.7

percent of households.

 Low digital payment penetration: eCommerceiq Asia data shows that an estimated

70 percent of Filipinos do not use banks and less than three percent use credit

cards. Hence, online stores in the Philippines provide a cash on delivery payment

option or payment centers (i.e. 7/11 branches). In addition, telecom companies

have offered mobile wallet solutions; PayMaya (PLDT) and GCash (Globe).

 Security concerns: Those who have credit cards are wary of transacting online

given the numerous incidents of hacking and poor cybersecurity efforts that still

plague the country. Filipino consumers require further education

on security measures that can protect their online transactions. This will

establish increased levels of confidence in online banking, purchasing, and

selling.

eCommerce Intellectual Property Rights

The Philippines has passed adequate legislation to promote eCommerce; the

eCommerce Law, Cybercrime and Data Privacy Laws. However, enforcement agencies

like the Department of Justice and Philippine National Police, and the local courts are not

adept to handle cases involving electronic transactions. The system is simply not yet in

place.
Popular eCommerce Sites

 b2bpricenow– A trading portal with close to 8,000 members that are mostly from

cooperatives. It is officially endorsed by thePhilippine Congress as the Philippine

e-Marketplace for Agriculture and Fisheries. This site is a trading portal that

provides up to the minute price update on market information for agriculture,

consumer goods, and industrial manufactures.

 asiarx– Caters primarily to the pharmaceutical and medical supply industry, has

a regional scope, multilingual capabilities, tight real-time integration with supplier

systems, and focus on the customer’s perspective and business

processes. AsiaRx takes control of the entire procurement process from finding

the product to availability check, to order status verification.

 Philippines trade key– A B2B marketplace connecting Filipino exporters with

overseas buyers. It connects traders with global wholesalers, buyers, importers

and exporters, manufacturers and distributors in over 240 countries.

 Philippine companies – A Philippine business directory with 413,282 registered

companies. This website builds its database from publicly accessible directories

such as Business Registrations from various municipalities.

  Philippines tradeford – Provides global importers with information on products,

exporters, suppliers, manufacturers and wholesalers. TradeFord's database of

buyers and suppliers covers major industries such as apparel, fashion, chemicals,

construction, electronics, furniture, food and beverage, health and beauty,

machinery, transportation, and more.

 ken research – Global industry research and information service

company. Provides industry intelligence, equity research reports and business

consulting services covering several sectors.

Online Payment

The increase of online shopping and access to bank transactions online heralded a strong

market for online payment in the Philippines. Vendors are turning to online payment as a

convenient buying method.

Mobile eCommerce

Mobile internet penetration is growing in the Philippines at a rate of 30 million users a

year. There are 119 million Filipinos subscribed for mobile phone usage using prepaid

and broadband subscriptions. The vast majority of Filipinos access the internet through

their mobile phones, providing cost effective and consistent access. Philippine and

international businesses sell products and services through mobile that has a direct

access to online consumers. The Philippines is the fastest growing app market in

Southeast Asia.
Digital Marketing

The proliferation of social media and online platforms directly contributed to the growth of

digital marketing. There were 101 million Filipino online users in 2016 and strong growth

trends continue. Traditional marketing companies emerged with new marketing

techniques that include social media. Businesses are continuing to transition to digital

marketing to reach an even wider market for potential customers; this is a strong and

growing trend.

Major Buying Holidays

Consumers in the Philippines traditionally make purchases during the months of

November, December, March, April and May. These are the peak months that employees

receive salary bonuses. Businesses offer sales and discounts during these months.

Social Media

Filipinos are prolific users of social media. Estimates this year show that there are 48

million active social media users in the Philippines. Of this number, 60 million use

Facebook; 12 million use Twitter and 4 million are LinkedIn users. The Philippines is

recognized as one of the top countries for internet users worldwide in terms of time spent

on social media; 3.2 hours on mobile and 5.2 hours on desktop and tablet.

Insights into the growth of Filipino eCommerce with payment methods, target audiences,

marketing, social media, economy and logistics all profiled

Economy
The Philippines is home to 103.32 million people with a total GDP of 304.91 billion USD

and GDP per capita of 3,430 USD, which is expected to reach 4,937 USD by 2022.

Digital User Insights

There are currently 37.75 million eCommerce users in the Philippines, with an additional 18.02

million users expected to be shopping online by 2022. Four years from now, these 45.77 million

eCommerce users will spend an average of 48.72 USD online.

Internet usage

On average, 64.6 million people in the Philippines use the internet for 216 minutes every day.

Product Categories

Total Filipino eCommerce revenue across all product categories is 1.49 billion USD, and is

expected to grow to 2.62 billion USD by 2021. Electronics & Media is currently the leading

product category in the Philippines, accounting for 618.6 million USD market share, followed

by Toys, Hobby & DIY, which generates 336.5 million USD in sales.

By 2022, Electronics & Media will still be the most purchased online category, with an estimated

value of 892.1 million USD, and second favorite, Toys, Hobby & DIY will have an

expected worth of 629 million USD.

Logistics

In 2016, the Philippines was ranked 71st in the World Bank Logistics ranking.

Preferred Online Payments

47% of Filipino shoppers like to pay with cash on delivery when shopping online.
Where does the Philippines buy from?

China supplies the Philippines with 29.8 billion USD in imports – ranging from cars to petroleum.

The Philippines other key import partners are Japan ($10.3 billion), the United States ($8.2

billion), South Korea ($7.28 billion) and Singapore ($6.51 billion).

Internet and Device Usage

Internet penetration in the Philippines is currently 48.8%, and should reach 50.5% by 2022.

Smartphone penetration is substantially less (32.2%), but is projected to grow to 40.2% in the next

four years.

Monthly, 81.6% of Filipinos use a laptop or desktop computer, 81.4% use a smartphone and 49.3%

use tablets.
Advertising

In 2018, 21% of the Philippines' ad spend is projected to be spent on digital advertising.

Social Media

38.49% of people in the Philippines are active social network users, thanks to Facebook,

Messenger, Google+ and Yahoo! Messenger, which are the leading social networks.
For more market insights, check out the eShopWorld series of blogs covering a range of emerging

eCommerce markets.

A year-end tally of the Philippine ecommerce scene

Last year, The Philippine Roadmap for Digital Startups (a government initiative to spur

innovative startups) supported and helped launch a number of incubators and accelerator

programs. Some of these include the AIM-Dado Banatao incubator, Startup Village,

Voyager Innovations, and the Google Launchpad accelerator. The senate also passed two

bills related to startups: the Innovative Startup Act and the Philippine Innovation Act.

It was also last year that the Philippines had its first unicorn, Revolution Precrafted.

See: The Philippines just got its first billion-dollar startup

At large, Southeast Asia’s internet economy has grown exponentially. Recent findings

from Google and Temasek indicate that the SEA internet economy is growing faster than

expected, surpassing its US$200 billion estimate. And while online travel is still the

biggest segment in terms of internet-based spending, ecommerce has leapt from 5.5

billion in 2015 to 7.9 billion in 2017. By 2025, the industry is projected to hit US$88.1

billion to become the most valuable segment in the SEA internet economy.

AD

With the growing startup scene in the Philippines and the exciting ecommerce growth in

SEA, iPrice Group analyzed the online performance of the top ecommerce players in the

Philippines over the past year. We used the following metrics for this analysis: Google

search interest, iOS and Google Play mobile shopping application rankings, and Facebook

popularity.

Here’s the summary based on our findings:

1. Lazada dominates in all verticals while Shopee emerged as the fastest growing

ecommerce platform.

2. Despite the lead of international players, Beauty MNL was among the top five iOS

and Google Play mobile shopping ecommerce apps.

3. Kimstore was the second most popular Facebook ecommerce page and the most

searched local player.

The most searched ecommerce platform

In Q1 2017, the Alibaba-backed Lazada hit a record high 91 percent market share in the

Philippines. To date, Lazada has the highest ecommerce search interest penetration, with

a maximum 42 percent search interest lead over Shopee, Zalora, eBay, and Kimstore,

respectively.

Lazada shows no signs of slowing down with its logistics infrastructure expansion.

Alibaba subsidiary Ant Financial also invested in Globe Telecom’s fintech arm Mynt to

develop a mobile payment system.

Despite Lazada’s lead in the country, Sea’s Shopee quickly grew to overtake Zalora for

second place at the end of July, the same month it celebrated its founding anniversary.

One of Shopee’s all-time highs was during the launch of its first mega sale “9.9” campaign

last September, which coincided with Sea’s US$1 billion IPO. JG Summit (a Gokongwei-

led Philippine retail conglomerate) placed a US$550 million stake in Sea, which will be

leveraged for the growth of Shopee’s platform.

AD

The most popular online sale periods

With the success of Alibaba’s Singles Day sale, which has surpassed Black Friday and

Cyber Monday since 2012, more ecommerce players in SEA have jumped on the

bandwagon. While Lazada’s lead in Google search interest has been consistent throughout

all quarters, its biggest leads came during its “Online Revolution” campaign. The

campaign was adapted from Singles Day but extending with the platform’s own “12.12”
sale. Surprisingly, 12.12 has proven to be the most popular online sale for Lazada, even

for its competitors Shopee and Zalora.

The biggest online sale period happened during the “sale season” or the holiday season

which starts as early as September in the Philippines. This can be attributed to the traffic

congestion during this time. Aside from Christmas events, one of the biggest online sale

periods happened during the end of Q1 and at the beginning of Q2. This can be attributed

to the summer holidays and Labor Day in the country. Products people are most

interested in during these months (March, April, and May) are apparel and home

appliances.
Top mobile shopping apps

Lazada leads in Google Play mobile shopping apps for 2017 in all quarters, followed by

Shopee. Meanwhile, Shopee leads in iOS mobile shopping apps for Q3 and Q4, ending

Lazada’s lead in the first two quarters. The Lazada-Voyager Solutions partnership enables

consumers using Lazada’s mobile app to browse the platform without being charged for

data consumption. The platform has been actively pushing their mobile application

since more than 60 percent of their sales come from mobile devices.

In Q2, Goods (a local m-commerce platform) jumped to fifth place, replacing Sephora. By

Q4, Beauty MNL (another local m-commerce platform) overtook eBay for the fourth spot,

dethroning Goods in the top five list. Last December 2017, Robinsons Retail Holdings

(the retail arm of JG Summit Holdings) acquired 20 percent of Taste Central (the

company operating Beauty MNL).

Most popular ecommerce platforms on Facebook

According to Google and Temasek’s 2017 forecast, SEA is expected to have a significant

increase in its mobile internet usage (up to 3.6 hours per day) by this year. Hence, social

commerce or sales driven by social media is expected to also increase in SEA over the

coming years, despite it adding up to only 30 percent of total online sales in 2016.
AD

In the Philippines, the most followed ecommerce platform is Lazada with more than 6.6

million likes. The local ecommerce platforms that dominated the list were Kimstore,

Goods, and Eazy Fashion with 2.4 million, 1.3 million, and 1.1 million likes, respectively.
Methodology

Most searched ecommerce platforms: Using Google Trends, the findings were

collated by analyzing search interest from January 1, 2017 until December 16, 2017 in the

Philippines. The data was collated by comparing the search interest between the following

keywords: Shopee, Lazada, eBay, Kimstore, and Zalora.

Most popular mobile shopping app: The top mobile shopping applications in the

Philippines were collated by averaging their rankings on a quarterly basis using App

Annie’s Google Play data and Apple Store data.

Most popular ecommerce platofmr on Facebook: The data set was provided by

Socialbakers.