INTERNET RETAILING IN THE

PHILIPPINES
Euromonitor International
January 2019
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LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Prospects ..................................................................................................................................... 1
Internet Retailing the Fastest Growing Channel in 2018 ........................................................... 1
Players Focus on Building Brands ............................................................................................ 1
E-commerce Part of Retailers’ Omnichannel Strategies ........................................................... 1
Competitive Landscape ................................................................................................................ 2
Mobile-first Approach Works for Shopee .................................................................................. 2
Facebook Marketplace Goes Live ............................................................................................ 2
Lazada Strengthens Tools for Sellers ....................................................................................... 2
Channel Data ............................................................................................................................... 3
Table 1 Internet Retailing by Category: Value 2013-2018 ......................................... 3
Table 2 Internet Retailing by Category: % Value Growth 2013-2018 ........................ 3
Table 3 Internet Retailing GBO Company Shares: % Value 2014-2018 ................... 4
Table 4 Internet Retailing GBN Brand Shares: % Value 2015-2018 ......................... 4
Table 5 Internet Retailing Forecasts by Category: Value 2018-2023 ........................ 5
Table 6 Internet Retailing Forecasts by Category: % Value Growth 2018-2023 ....... 5

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INTERNET RETAILING IN THE

PHILIPPINES
HEADLINES
 In 2018 internet retailing registers current value growth of 21% to reach sales of PHP55 billion
 Internet retailing seen as complementary to physical stores
 Lazada faces a new rival in Shopee
 Over the forecast period internet retailing is expected to post a current value CAGR of 22%
(18% at constant 2018 prices) to reach sales of PHP145.9 billion in 2023

PROSPECTS

Internet Retailing the Fastest Growing Channel in 2018

Internet retailing in the Philippines continued to grow at a strong pace in 2018, albeit from a
fairly low sales base, with it remaining a relatively untapped channel. It benefited from the entry
of new players, led by Shopee, a possible contender to the e-commerce giant Lazada.
Lazada and Shopee have been successful at creating a buzz through holding various sales
such as Online Revolution and Singles Day. According to Lazada, the month-long Online
Revolution is the biggest shopping event every year and in 2017 generated around 100 million
visits to its website and more than doubled its sales on the previous year. In fact, this is not only
the biggest sales event in the Philippines but in the whole of Southeast Asia. Zalora also relies
on such events to boost not only its sales but also awareness of the platform. Zalora’s strongest
sales events are Black Friday and Cyber Monday.

Players Focus on Building Brands

Concerns about the authenticity of products have risen as e-commerce has become more
popular. With thousands of sellers, verifying the authenticity of each seller’s products is a
challenge. Both Lazada and Shopee have thus focused on attracting as many official stores and
brands as possible. To do this, Lazada launched LazMall to help showcase authentic and
original branded products, guaranteeing that if a customer receives a non-authentic product it
will compensate them with double the amount spent. In April 2018, Shopee also launched a
dedicated in-app space called Shopee Mall, which showcases official brands and Shopee’s top
sellers. In addition, Shopee provides several benefits when purchasing from Shopee Mall, such
as 7-day returns. It also guarantees that if a product is not 100% genuine, it will also refund a
customer’s money and provide free shipping within a minimum spend. According to Shopee, a
dedicated space for brands and top sellers caters for those consumers who are looking for a
premium shopping experience. Shopee also holds “Super Brand Day” events which showcase
the exclusive sales of its partner brands.

E-commerce Part of Retailers’ Omnichannel Strategies

More and more retailers in the Philippines are integrating e-commerce into their business
models. They are either setting up their own platforms, with this being the case with most
homeshopping and direct selling retailers, or partnering established e-commerce websites like
Lazada and Shopee. Lazada and Shopee are also aggressively partnering official brands to

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beef up their seller portfolio. In 2018, e-commerce still accounted for a very small share of
retailers’ overall sales, with online retailing in the Philippines continuing to lag behind most of its
neighbours. Retailers will, however, continue to focus on e-commerce as they seek to remain
relevant. However, in the Philippines, store-based retailing will remain the dominant channel as
Filipinos enjoy shopping with a personal touch. Retailers will thus choose an omnichannel
approach over pure online retailing, with online sales also helping to drive traffic to physical
stores via the click-and-collect model.
Nevertheless, the channel offers growth potential not only in Metro Manila but also other key
cities. In fact, according to Zalora, 60% of its sales derive from outside Metro Manila, primarily
because the apparel people want is not available in the provinces and ordering online is more
convenient than travelling to the city. However, as internet retailing grows, there will be a need
to review regulations which protect the consumer. This is not yet a pressing concern but the
growing internet marketplace could be an avenue for cybercrime and so government institutions
such as the Department of Trade and Industry and National Bureau of Investigation’s
Cybercrime Division will start to consider new rules and regulations.

COMPETITIVE LANDSCAPE

Mobile-first Approach Works for Shopee

Lazada remained the leading e-commerce platform in the Philippines in 2018, although it is
facing increasing competition from an aggressive new player, Shopee, which is successfully
targeting the mobile channel. Shopee has been around in the Philippines for a few years, having
initially focused primarily on C2C transactions. In 2017, Shopee aggressively increased its
presence by partnering large retailers and brands and promising a premium shopping
experience to Filpinos. Shopee’s mobile-first approach to the local market has proven
successful, with it becoming the fastest growing e-commerce company in the Philippines,
although still trailing behind Lazada. The Shopee mobile app had been downloaded by more
than six million people in 2018, while also carrying more than three million listings from over
200,000 sellers. 90% of transactions on Shopee in the Philippines are carried out on mobile
devices.

Facebook Marketplace Goes Live

In 2018, Facebook Marketplace became available in the Philippines. Marketplace allows
users to buy and sell items directly through their Facebook accounts. Although primarily a C2C
model, this will pose a threat to internet retailers as Filipinos are heavy users of Facebook.
Indeed, Filipinos spend an average of four hours a day browsing social media sites and so
Facebook Marketplace is likely to appeal to many.
Other e-commerce players remain positive about the impact of Facebook Marketplace on
internet retailing in the Philippines. As e-commerce in the country is still at a nascent stage,
Facebook Marketplace could help increase consumer awareness thanks to its significant
penetration.

Lazada Strengthens Tools for Sellers

Although retailers can easily launch their own e-commerce platforms, Lazada has been
emphasising the advantages of partnering a third party platform. Lazada benefits from a strong
marketing budget and successfully utilises social media platforms as a strategy for retail
innovation, with its Instagram and Facebook pages having large numbers of followers. Indeed,
social media is an integral part of e-commerce because Filipinos are such heavy users of it.

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Moreover, Lazada encourages sellers to work hard to build a sustainable business. It has
developed tools to help them achieve this, such as instant messaging, vouchers, a Page
Decorator to help sellers make their pages more attractive and Seller Picks.

CHANNEL DATA
Table 1 Internet Retailing by Category: Value 2013-2018

PHP million
2013 2014 2015 2016 2017 2018

Apparel and Footwear 3,528.5 4,419.9 5,490.0 6,881.2 8,855.6 10,632.4

Internet Retailing
Beauty and Personal 296.0 423.8 532.6 676.4 992.0 1,692.6
Care Internet Retailing
Consumer Appliances 97.5 107.0 127.1 122.5 124.2 137.0
Internet Retailing
Consumer Electronics 3,406.9 5,264.0 6,565.8 7,857.1 8,969.2 10,298.4
Internet Retailing
Consumer Health 3.2 5.4 23.8 44.0 72.6 140.9
Internet Retailing
Food and Drink Internet 87.7 93.4 98.0 104.1 110.9 125.1
Retailing
Home Care Internet 2.1 2.1 2.1 2.8 236.3 374.3
Retailing
Home Improvement and 32.1 33.4 34.2 35.0 41.1 44.2
Gardening Internet
Retailing
Homewares and Home 101.5 113.1 126.2 137.7 152.5 166.9
Furnishings Internet
Retailing
Media Products Internet 3,969.8 5,442.2 6,972.3 8,704.6 10,782.2 13,484.2
Retailing
Personal Accessories 348.7 411.4 602.3 746.1 889.1 1,087.8
and Eyewear Internet
Retailing
Pet Care Internet 53.3 55.9 58.7 60.0 66.3 74.3
Retailing
Traditional Toys and 16.6 18.5 20.5 22.7 25.2 28.2
Games Internet Retailing
Video Games Hardware 21.5 29.0 32.6 32.0 37.6 36.8
Internet Retailing
Other Internet Retailing 4,566.2 5,970.8 7,638.3 9,233.8 14,170.0 16,715.3
Internet Retailing 16,531.5 22,390.0 28,324.4 34,660.0 45,524.7 55,038.4
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 2 Internet Retailing by Category: % Value Growth 2013-2018

% current value growth, retail value rsp excl sales tax

2017/18 2013-18 CAGR 2013/18 Total

Apparel and Footwear Internet Retailing 20.1 24.7 201.3

Beauty and Personal Care Internet 70.6 41.7 471.9
Retailing

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Consumer Appliances Internet Retailing 10.3 7.1 40.6

Consumer Electronics Internet Retailing 14.8 24.8 202.3
Consumer Health Internet Retailing 94.1 112.8 4,267.3
Food and Drink Internet Retailing 12.8 7.4 42.6
Home Care Internet Retailing 58.4 182.8 17,989.4
Home Improvement and Gardening 7.6 6.6 37.6
Internet Retailing
Homewares and Home Furnishings 9.5 10.5 64.4
Internet Retailing
Media Products Internet Retailing 25.1 27.7 239.7
Personal Accessories and Eyewear 22.3 25.6 212.0
Internet Retailing
Pet Care Internet Retailing 12.1 6.9 39.5
Traditional Toys and Games Internet 12.0 11.1 69.4
Retailing
Video Games Hardware Internet Retailing -2.1 11.4 71.3
Other Internet Retailing 18.0 29.6 266.1
Internet Retailing 20.9 27.2 232.9
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 3 Internet Retailing GBO Company Shares: % Value 2014-2018

% retail value rsp excl sales tax

Company 2014 2015 2016 2017 2018

Alibaba Group Holding Ltd - - 16.1 18.4 21.3

Sea Ltd - 0.0 0.7 5.2 12.4
Rocket Internet GmbH 14.6 20.2 5.3 5.6 6.0
Amazon.com Inc 2.0 1.6 1.4 1.1 0.9
Ayala Corp 1.1 1.0 0.8 0.7 0.6
eBay Inc 0.5 0.4 0.4 0.3 0.3
Others 81.8 76.8 75.3 68.7 58.5
Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 4 Internet Retailing GBN Brand Shares: % Value 2015-2018

% retail value rsp excl sales tax

Brand Company (GBO) 2015 2016 2017 2018

3rd Party Merchants Alibaba Group Holding Ltd - 12.5 14.3 16.6
3rd Party Merchants Sea Ltd 0.0 0.7 5.2 12.4
Lazada Alibaba Group Holding Ltd - 3.6 4.1 4.8
3rd Party Merchants Rocket Internet GmbH 15.2 3.9 4.1 4.5
Zalora Rocket Internet GmbH 1.3 1.4 1.4 1.6
myRegalo Ayala Corp 1.0 0.8 0.7 0.6
Amazon Amazon.com Inc 1.0 0.8 0.7 0.6
3rd Party Merchants Amazon.com Inc 0.6 0.5 0.4 0.3
3rd Party Merchants eBay Inc 0.4 0.4 0.3 0.3
lazada Rocket Internet GmbH 3.7 - - -
Others 76.8 75.3 68.7 58.5
Total 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

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Table 5 Internet Retailing Forecasts by Category: Value 2018-2023

PHP million
2018 2019 2020 2021 2022 2023

Apparel and Footwear 10,632.4 12,231.8 13,777.5 15,365.2 16,644.5 18,030.2

Internet Retailing
Beauty and Personal 1,692.6 2,514.1 3,312.6 4,207.5 5,137.3 6,272.5
Care Internet Retailing
Consumer Appliances 137.0 150.1 164.1 178.9 194.1 213.3
Internet Retailing
Consumer Electronics 10,298.4 11,078.9 12,043.3 12,974.5 13,947.6 14,367.9
Internet Retailing
Consumer Health 140.9 166.5 226.8 278.6 333.1 389.4
Internet Retailing
Food and Drink Internet 125.1 141.2 159.7 180.8 196.7 208.2
Retailing
Home Care Internet 374.3 437.3 508.7 646.3 737.7 866.3
Retailing
Home Improvement and 44.2 47.0 49.9 52.4 55.3 58.3
Gardening Internet
Retailing
Homewares and Home 166.9 185.5 199.6 215.7 232.4 250.4
Furnishings Internet
Retailing
Media Products Internet 13,484.2 17,032.3 21,738.2 28,044.5 35,440.8 43,937.9
Retailing
Personal Accessories 1,087.8 1,378.9 1,839.4 2,305.0 2,785.4 3,263.8
and Eyewear Internet
Retailing
Pet Care Internet 74.3 81.2 87.0 93.2 99.8 107.1
Retailing
Traditional Toys and 28.2 30.2 32.3 34.5 36.7 39.0
Games Internet Retailing
Video Games Hardware 36.8 34.9 33.5 32.4 31.7 31.0
Internet Retailing
Other Internet Retailing 16,715.3 20,480.1 24,288.1 27,893.8 32,261.5 37,290.0
Internet Retailing 55,038.4 65,989.9 78,460.6 92,503.3 108,134.4 125,325.4
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Note: Forecast value data in constant terms.

Table 6 Internet Retailing Forecasts by Category: % Value Growth 2018-2023

% constant value growth, retail value rsp excl sales tax

2018/2019 2018-23 CAGR 2018/23 Total

Apparel and Footwear Internet Retailing 15.0 11.1 69.6

Beauty and Personal Care Internet 48.5 30.0 270.6
Retailing
Consumer Appliances Internet Retailing 9.5 9.3 55.7
Consumer Electronics Internet Retailing 7.6 6.9 39.5
Consumer Health Internet Retailing 18.1 22.5 176.3
Food and Drink Internet Retailing 12.9 10.7 66.5
Home Care Internet Retailing 16.8 18.3 131.4

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Home Improvement and Gardening 6.4 5.7 31.9

Internet Retailing
Homewares and Home Furnishings 11.1 8.4 50.0
Internet Retailing
Media Products Internet Retailing 26.3 26.6 225.8
Personal Accessories and Eyewear 26.8 24.6 200.0
Internet Retailing
Pet Care Internet Retailing 9.2 7.6 44.2
Traditional Toys and Games Internet 7.1 6.7 38.6
Retailing
Video Games Hardware Internet Retailing -5.2 -3.4 -16.0
Other Internet Retailing 22.5 17.4 123.1
Internet Retailing 19.9 17.9 127.7
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Note: Forecast value data in constant terms.

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