SINGAPORE. –Lazada sees electronic commerce in the Philippines and the rest of Southeast Asia growing “a lot higher” in the next five to 10 years, even as these markets are opening up from the pandemic and despite the global economic slowdown and rising inflation.
Lazada Group sees the Philippine e-commerce market growing faster than its peers in the region.
James Dong, Lazada Group chief executive officer (CEO), in a press briefing on Wednesday said the Philippines is one of the leading markets, size-wise, because of its large population base, GDP per capita and internet penetration which is growing.
“The growth, speed wise, (in the Philippines) is slightly above average in Southeast Asia,” Dong said without giving figures.
In his keynote speech at the Lazada Brands Future Forum at Resorts World Sentosa here yesterday, Dong said e-commerce penetration in Southeast Asia is expected to exceed 63 percent by 2025, up from just 53 percent this year, citing a study conducted by the company. This means a total of more than 400 million users.
Lazada Philippines CEO Carlos Barrera said the growth of e-commerce in the Philippines has always been faster than “we had previously anticipated.”
“Online penetration in the Philippines is very high…social media is extremely strong… the Philippines was ranked among the top three, top two counters in the world (with most) time spent (online) and (Filipinos are) willing to embrace all the new things that we do,” Barrera said.
Dong said the penetration rate of e-commerce in the region is still very low.
“We are looking at a very promising five to 10 years in the future. The consumption power is growing very fast in the region and also in the Philippines,” said Dong.
Barrera said the general consensus is that the Philippine retail market is valued at $80 billion to $90 billion, depending on how the market is computed to include sari-sari stores.
Of that, online is about $10 billion, still very small when compared to those in Southeast Asia.
Depending on the source, that would be about a 10 to 12 percent of the retail industry, Barrera said.
According to Dong, the Philippine penetration rate is among the average in Southeast Asia, behind Thailand and Singapore.
Past the pandemic, Lazada has seen a shift in consumer behavior and people are not spending as much time online, an observation shared by Barrera, who said consumers are switching a lot of their purchases from essentials during the pandemic such as health, groceries, mother and baby to fashion and beauty.
Dong said Lazada also observed a change in the way consumers scout for things to purchase after the pandemic.
“We observed that more than 57 percent of the consumers choose e-commerce platforms to search rather than a search engine.”
Barrera said Lazada hasimproved its price competitiveness but noted that the Filipino customer is very promotional sensitive. “They care about free shipping, vouchers… We are also aware that people are looking for cheaper alternatives.”
Barrera said generally speaking, when comparing prices of products, those sold online tend to be cheaper.
In the case of Lazada,micro, small and medium enterprises onboard the platform are either online only or online first such as their cost structure is adjusted and optimized to be affordable as they do not have large rentals, overhead and a lot of fixed costs.
Lazada is focused on maintaining, retaining and growing its customerbase post-pandemic, rolling out campaigns aimed at improving user shopping experience.
The LazMall BFF 2022 brings together the region’s industry leaders and Lazada partners to exchange ideas and innovation aimed at enabling brands andsellers to thrive and offer differentiated retail experience in Southeast Asia.
Lazada is present in the Philippines, Singapore, Thailand, Indonesia, Malaysia and Vietnam.