Online shopping platforms
The market for online shopping has long been dominated by e-commerce platforms such as Lazada, Shopee, and Zalora, which sells goods from its own fulfillment centers and allows a third-party seller through its platform. With an increasing number of online users, merchants have turned digital to easily reach their target consumers. These platforms offer attractive sales deals such as free shipping, huge discounts on several items, and cash-on-delivery payment options. As of the first quarter of 2021, the Shopee website garnered nearly twice as many monthly web visits compared to Lazada. Stores have also established presence on social media platforms such as Facebook and Instagram to further promote deals.
Challenges in the e-commerce industry
The slow growth of e-commerce in the country can be attributed to the challenges in financial inclusion, as more Filipinos still prefer to pay in cash as the proportion of people with bank accounts remains less than 40 percent of the total population. Credit card ownership is also relatively low, due to fears of accumulating debt. As such, merchants are faced with challenges related to the risks for fraud associated with the cash-on-delivery payment method. At the same time, the potential for cancellation of orders or delivery refusals is also a cause for concern.
Although banks have started offering better deals to encourage Filipinos to open an account, mobile money services were seen as a better option. Requiring only a phone number, the number of mobile wallet users have reached roughly 25 million in 2020 and was forecast to continue increasing in the next five years. Government efforts to boost digital payment technologies have also resulted in an increased demand for installing fintech apps which could also drive growth in digital transactions. Efforts to improve telecommunications infrastructure, such as the introduction of a 5G network, are also seen as an important factor for the continued development of the e-commerce market in the country.