Instagram drives PH e-markets’ competitiveness

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While dominance on Facebook make foreign e-marketplaces the most visited by Filipino online shoppers, local e-commerce players thrive through Instagram.

This was the findings in the Philippines’ s top 47 eCommerce report by iPrice Group, a one-stop shop e-commerce aggregator.

The share of local players’ social media followers in Instagram increased to 72 percent from last quarter’s 70 percent, according to the report that analyzed Southeast Asia’s (SEA) e-commerce activity during the period.

Local fashion and beauty e-marketplaces Sunnies Studios, Apartment 8 Clothing, BeautyMNL, Kimstore and CesaPH were the top SEA e-marketplaces on Instagram placing 1st, 2nd, 5th, 8th and 9th, respectively.

Their dominance on Instagram was attributed to the start of their online business in the photo and video-sharing social networking service owned by Facebook, Inc. as well as in Multiply before building their website.

Meanwhile, Facebook is dominated by foreign players as its share of social media followers accounted for 74 percent of the overall Philippine e-marketplace which is three percent less compared to the previous quarter.

Foreign players fuel the overall e-market activity in the Philippines, iPrice Group found. The share of foreign players in the overall traffic accounts for 93 percent of the overall e-marketplace activity.

There are 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 players, Lazada, Shopee, Zalora and eBay were the top four most visited e-marketplaces in the country.

Lazada had a dominant market share of 59 percent which slipped from last quarter’s 68 percent.

Shopee the second most visited e-marketplace in the country increased its market share to 27 percent from last quarter’s 19 percent.

From the local players, the most visited is still BeautyMNL, with a low increased market share of 1.92 percent from last quarter’s 1.72 percent. In total, the local players market share is only 7 percent.

“The popularity of social media is a huge marketplace opportunity for eCommerce and independent merchants alike. Given the accessibility of these platforms, local players should utilize Facebook and Instagram in order to acquire more consumers and increase their engagements and sales,” iPrice Group said.

“Instead of focusing on a single channel like a website perhaps, an omnichannel approach is proven to reach targeted consumers,” it added.

To date the Philippines has been consistently the smallest e-commerce industry in SEA, according to Google and Temasek latest 2018 report.

The report highlighted that the Philippines estimated 2018 valuation grew to $5 billion, a 30 percent rise from last year’s $2 billion. By 2025, the report projected that the country will experience a 25 percent growth worth $21 billion.

Meanwhile, Indonesia is projected to be the biggest market in SEA. Currently it is valued at $27 billion and is expected to hit a gross merchandise value of $100 billion by 2025.

Based on the iPrice Group’s analysis of the country’s e-commerce performance in online purchase rate and number of local players, foreign players still have the highest market penetration in terms of website traffic, but there are more active local players.

One time big time shoppers

iPrice Group also found that although Philippine e-marketplaces still has a low online purchasing rate, majority of Filipino online consumers are purchasing costlier items given the assurance in quality.

Based on our SEA state of e-commerce report, the Philippines has the third highest share of mobile traffic in the region with 71.25 percent. However, in terms of purchase rate it only converts about 0.8 percent in mobile and 2 percent in desktop.

The purchase rate in mobile as compared to desktop is relatively low in all SEA markets, the Philippines is consistently one of the lowest in all 6 markets analysed in both mobile and desktop.

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 compared against the SEA market.

Analysing the macro-perspective of the Philippine economy, the country has one of the lowest gross domestic product per capita ($2951.07) in SEA (which is closely related to basket value). However, its basket value in online shopping (the minimum average spending online) is the second highest in SEA with $56 (P2,887) per order while Singapore tops with $91 (P4,736).

The rationale behind these findings is that Filipino consumers in general have small purchasing power thus the low interest in spending. However, through trusted product reviews and comparison platforms it could encourage their willingness to spend online.

A Path to Purchase report 2017 finds that majority of Filipino online consumers first do a series of searches particularly price comparison, product reviews and videos before purchasing a product.

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