Local players in the Philippine e-marketplace reach more Filipinos in terms of social media activity. However, they struggle to establish a stronghold in terms of actual selling activity as international players are still the preferred choice for most Filipinos. It comes as a surprise that only a few international players dominate the country’s e-marketplace traffic activity.
Based on Kuala Lumpur-based iPrice Group’s Map of eCommerce in the Philippines during the second quarter of 2018, there were more local active players.
However, international players fueled market activity. In fact, the share of foreign players in the overall traffic accounted for 93 percent of the overall e-marketplace activity. Local players, on the other hand, only led in social media activity as they accounted for 75 percent of e-commerce activity from Facebook, Instagram and Twitter platforms.
Foreign players
There were only eight foreign players engaged in e-commerce traffic in the Philippines: Lazada, Shopee, Zalora, eBay, Sephora, Sophie Paris, My Sale and Melissa Philippines. Of these eight players, Lazada, Shopee, Zalora and eBay were the top four most visited e-marketplaces in the country. Of the four, Lazada had a dominant 68-percent market share, at least triple the size of its closest competitor, Shopee.
This trend is unique to the Philippine market because in its regional counterparts Malaysia, Vietnam and Thailand, foreign players have less than half of the overall e-marketplace traffic activity with 45, 20 and 47 percent, respectively.
For Indonesia and Singapore, local players Tokopedia and Qoo10 were the most visited e-marketplaces. The reason behind the dominance of international players in the Philippine e-marketplace was traced to the Filipinos’ online shopping preference that is mainly based on brand familiarity.
In fact, according to a Kantar Worldpanel survey, 84 percent of Filipinos (out of 3,000 household surveyed) preferred to buy from established companies despite the alternatives available in the market.
This specific Filipino consumer behavior affected the local e-commerce players as majority of them have just started operating in the e-marketplace.
Another factor that influenced the dominance of international players in the Philippine e-marketplace was that majority of big local brick-and-mortar companies such as SM and Ayala malls were amplifying their online presence with e-marketplace partnerships with the more established players such as Lazada and Zalora instead of creating their own e-marketplaces.
Meanwhile, the government’s project—road map of e-commerce—is mostly tied with international e-marketplaces wherein local brick-and-mortal companies and brands as well as MSMEs are encouraged to sell.
More pressure
While this will result in more customers and more jobs especially for MSMEs, it is putting pressure on the local players.
The most visited local e-marketplace in the country is BeautyMNL, placing fifth overall with less than a million traffic. Meanwhile, Kimstore, a tech marketplace, placed ninth.
The general e-marketplaces—Galleon, O Shopping and Takatack (which were previously in Q1 2018’s top e-commerce) all fell a notch, placing seventh, eighth and 11th, respectively.
The only local e-commerce that accelerated in terms of ranking was Argomall as it jumped two notches to sixth in the overall e-commerce ranking.
Interestingly, the majority of local players experienced inconsistency in traffic as there were occasions of leaps and slips. The e-marketplaces that saw increased traffic were Seek the Unique, Apartment 8 Clothing, Zeus, Straight Forward Clothing, Great Value Plus, Bayan Mall, TV Shop, Mall Hallo Hallo and CesaPH, which on the average rose in ranking by about seven notches.
E-marketplaces that slipped in traffic were Adobomall, Watch Portal, Goods, Mommy Mundo, Bigmk, Abubot, which on the average declined in ranking by about eight notches.
Despite the low market penetration and inconsistency in traffic of local players, the majority of local players found their market in social media.
Overall, the local players dominated Instagram and Twitter as they attracted 70 and 51 percent, respectively, of the e-marketplace social media followers.
Local marketplace
The local fashion and beauty e-marketplaces: Apartment 8 Clothing, Sunnies Studios, BeautyMNL, Kimstore and CesaPH topped Instagram placing first, second, fifth, seventh and ninth, respectively.
Meanwhile, social media activity for Facebook was taken over by international players as their share of social media followers in this platform accounted for 77 percent.
Filipino consumers are among the most active on social media, spending an average of four hours a day.
As such, Filipino consumers are highly exposed to brands leveraging their products in social media. Clearly, the popularity of social media is a huge opportunity marketplace for e-commerce and independent merchants alike.