Philippines social commerce market set to boom

The time consumers, especially the younger generations, spend on
social networking platforms is transforming social commerce into a fast-
growing trend in the Philippines.

Talking numbers

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.