M-commerce boom in Philippines as smartphone penetration increases

M-commerce boom in Philippines as smartphone penetration increases

M-commerce is booming in the Philippines, thanks to a young, digitally-connected population, better payment options and a bigger variety of vendors.

MANILA: M-commerce is booming in the Philippines as smartphone penetration increases.

While developed markets like Singapore have the highest rates of smartphone penetration, it is the Philippines and Thailand that are leading the charge in m-commerce.

“We are starting from a lower base because mobile phone penetration in the Philippines is still quite low - one of the lowest in Asia - but at the same time it is growing faster than the other countries,” said Inanc Balci, co-founder and CEO of Lazada, an online shopping service.

Euromonitor International says this due to a young, digitally-connected population, better payment options and a bigger variety of vendors. It expects m-commerce to reach US$9 million in both Philippine and Thai markets by 2018.

“We see two issues driving this; one is telco companies are investing more and making internet available in more places in the Philippines but at the same time smartphone prices are going down, partly because local brands are bringing better and cheaper smartphones into the market,” said Balci. “When all of these things come together, we see mobile phone penetration increasing and at the same time mobile commerce penetration increasing as well.

More than 50 per cent of visitors to Lazada today come from mobile platforms. Financial institutions are jumping on the bandwagon, racing to create mobile banking apps for their clients. They are cashing in as m-commerce quickly becomes a part of people’s daily lives.

According to analysts, the growth of m-commerce in the Philippines is due to its booming business process outsourcing (BPO) industry. Over 1 million people are employed in the sector, most of them working graveyard shifts to suit international working hours. This leaves them little time to shop when the shops are open making the 24 hours nature of m-commerce much more convenient.

According to research firm IDC, the fastest growing sectors now are transport service apps like Uber, Grab Taxi or Easy Taxi.

But there are stumbling blocks. The first is trust. Many Filipinos are still uncertain about online payments, and they are opting for Cash on Delivery instead.

The second is connectivity. “Although you have telcos who are increasingly upgrading the networks here and offering flexible internet bundles, we think having unfailing (internet) connection is an area they can improve on,” said Jerome Dominguez, associate market analyst at International Data Corporation.

Though still in its early days, smartphone penetration in the Philippines is expected to hit 50 per cent this year. That triples the number of smartphone users in the country, which translates into a lot more money.

Source: CNA/ec

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