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Philippine E-Commerce Shows
Indications of Promising Growth

November 23, 2020

  •   3 min read



Startup investments in online retail closely follow the top three sectors in terms of deal activity. The sector has grown to $12.4M in disclosed deal value for the period between 2018 to 1H2020, covering 2% of the total.

The size of the gross merchandise value (GMV) of the Philippine e-commerce market was valued at $3 billion in 2019 and is expected to hit $12 billion by 2025. This is attributed to the emergence of a tech-savvy population and the burgeoning of the Filipino middle class. The ability of e-commerce platforms to allow users to compare prices captures the price-sensitive consumer. This demographic and consumer behavior, together with the increased support from the government, fuels the development and expansion of the e-commerce industry. The Philippine E-Commerce Roadmap established by DTI in 2016 aims for e-commerce to account for 40% to 50% of the country’s GDP by 2022. The DTI is honing in on speed, security, and structure to be able to effectively integrate e-commerce in the country. For 2022, the program will prioritize improving market accessibility, creating updated government policies and regulations such as e-marketplace protection, and modernizing infrastructure.

The COVID-19 pandemic continues to accelerate e-commerce in the country. With lockdown measures immobilizing consumers, digital payments and digital shopping become more of a norm. As of May 2020, 41% of respondents of a survey conducted by Rakuten Insights stated that they purchased more online during the pandemic. Top buys of Filipinos are food and groceries, personal hygiene products, and house cleaning goods. Specialty e-commerce platforms such as Poundit for tech and Metromart for food and groceries have flourished as the country is placed in and out of lockdown measures.

Established e-commerce platforms like Shopee and Lazada continue to introduce new features locally such as Lazmall and Shopee Mall sections which include more well-known retailers like Unilever, driving demand for online transactions. Zalora’s expansion strategy includes building a 3.7 hectare e-fulfillment center, the largest in the country. Well known retailers such as SM and Watsons have now launched in-house E-commerce platforms.

Notable funding deals include Private Equity firm Navegar’s investment into Great Deals, an e-commerce enabler, which drove investments into the sector in 1H2020. This represents a sizeable bet on the growing needs of online merchants for the full array of IT, infrastructure, warehouse capabilities and technology solutions. MyKuya’s expansion outside of Luzon is made possible by their seed round from Infinity Ventures. Their performance reveals that the on-demand services startup is capitalizing on growing demand for odd jobs and services during the pandemic. Compared to its competitors, coupon aggregator MetroDeal has performed well despite lifestyle and leisure activities taking a hit. Booky, a local discovery platform, also shows firmness in its plans to pivot as restaurants close down.

Apart from the more standard E-commerce business models, a number of startups begin to explore social commerce models, vying for dominance as the new normal shifts consumer behavior and commerce as a whole. Moreover, startups who have recently hit their targets earlier than expected due to COVID, continue to explore possible e-commerce opportunities in their existing business models. Live-streaming app KUMU now offers MSMEs a way to advertise, and viewers a way to make purchases of advertised products.


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