The time consumers, especially the younger generations, spend on social networking platforms is transforming social commerce into a fast- growing trend in the Philippines.
Consumers are flocking to social media sites to discover and buy products. As a result, they are propelling social commerce so much that it is gaining ground on brick-and-mortar retailers and traditional e-commerce channels. A survey conducted in 2021 by artificial intelligence (AI) solutions firm iKala of 1,600 shoppers and over 23,600 sellers showed that H1 social commerce orders in the PH soared 129 percent, a record high for the country. This growth was faster in H1 and H2 than the 102 percent average in social commerce orders in four other Southeast Asian countries.
Commenting on the results, iKala co-founder and CEO Sega Cheng said that the region already had some of the world’s most avid social media users. Spurred by COVID-19, they have taken to social platforms for their shopping needs at a roller- coaster pace. Even when brick-and-mortar stores began reopening their doors, it became evident that social commerce was not a passing phase. The convenience and easy accessibility of the format earned it a permanent position in how South East Asian consumers shop.
According to a Research and Markets Q1 2022 survey, the Philippines’ Social Commerce market will surge 23.6% to US$747.5 Million in 2022. As a result, the market’s Gross Merchandise Value (GMV) should also increase steadily over the forecast period from US$747.5 million in 2022 to an estimated US$2348.3 million by 2028.
What’s spurring the growth?
The sector’s growth in the PH corresponds with that of Southeast Asia. Social commerce markets are expected to remain one of the biggest over the coming 4 to 8 quarters. Also, the analysts noted that social comprised 45% of the region’s overall e-commerce market in 2021 and would climb further in 2022. The PH’s growth is propelled by several regional and local startups competing for a market share. Another contributor is increasing investments from mega-platforms like Instagram, TikTok, and Facebook.
Market impetus is also deriving from rising investment by venture capital and private equity firms and competition leading to acquisitions and mergers. Another trend in the PH is that various brands are turning to social commerce platforms to boost sales. For instance, Shopee Philippines and Belo Medical Group are already using TikTok to access their retail potential. Samsung Philippines is also using TikTok to drive consumer purchasing intent and engagement. The company reported improved brand awareness and engagement after using a gamified hashtag challenge in its 2021 campaign to launch its smartphone models. The campaign saw an 11.25% rise
in purchasing intent, a 9.5% increase in brand preference, and a 7.35% rise in ad recall among PH consumers. Lastly, the success of Pinduoduo Inc., China’s largest agriculture-focused social commerce platform, has encouraged global social commerce startups, including those in the Philippines, to try to achieve the same success in their regions.
This is our key takeaway
The Philippines’ social commerce market is on a one-way ticket to success. To cite Cheng, the attraction of social commerce is that virtually anyone with a smartphone and an internet connection can begin selling on social media. Navigating buyer expectations presents challenges. However, more retailers are beginning to leverage nascent technologies and tools to provide a seamless buyer’s journey. As the landscape ripens, those sellers who are quick to implement efficient solutions to eradicate pain points will ultimately retain engagement and trust.