Why Expand Business in Philippines? 

The Philippines economy grew by 5.9% in 2019 to USD 341.3 billion, remaining one of Asia’s fastest growing economies. The government’s plans for sustained infrastructure spending is expected to help keep the country’s economic engine running smoothly.

With a population of over 109 million, the Philippines is the 13th most populous country in the world. Being the world’s third largest English-speaking country, the Filipino workforce is one of the most compelling advantages the country has over any other Asian country.

One of the most dynamic and fastest growing sectors in the Philippines is the Information Technology – Business Process Outsourcing (IT-BPO) Industry. The Philippines is also a mineral-rich country with large reserves of unexploited mineral wealth. Its reserves of copper, gold and zinc are among the largest in the world.

Over the past few years, the Philippines has begun making structural reforms in order to improve its competitive business environment. This includes liberalizing foreign investment restrictions in infrastructure, tourism, telecommunications, and power industries.

The country has emerged as an attractive market for foreign companies due to its strong and stable economy, sound macroeconomic, fiscal and monetary policies, and large domestic market.

Popular Marketplace in Philippines Market

This ranking covers the largest eCommerce platforms in The Philippines based on findings from our eCommerce Marketplace Monitoring Services in Southeast Asia–and taking website traffic & app download data from January 2024 into consideration–to give you a better understanding of the online landscape in the region. We’ll also go over some global marketplaces that although do not have a dedicated PH store, are still popular in The Philippines.

1. Shopee PH

With upwards of 46% of the market share in The Philippines, Shopee stands as the king of B2C eCommerce in the country, with a lead of almost 30 million visits over Lazada. What’s most impressive is how quickly Shopee has grown from its 2015 launch to challenging Lazada in almost every major SEA market. The Singaporean eCommerce giant began as a C2C platform but is now just as strongly associated with its B2C offerings in the minds of its many customers throughout Southeast Asia. Following a mobile-first strategy. It’s no surprise that Shopee’s app is #1 on both the Google Play Store and Apple’s App Store for marketplace downloads.

2. Lazada PH

Supporting C2C, B2C, cross-border, and flagship brand sellers. Lazada’s highly-developed logistics capabilities–offering same-day and next-day delivery in many urban areas–are one of its biggest advantages. The company is constantly expanding its network, with new warehouses opening up new opportunities throughout the country. Lazada, like Shopee, offers products in dozens of categories. In the Philippines, the most popular of these is fashion.

3. Carousell PH

Operating in half a dozen countries in the region, Carousell is now the second-biggest marketplace in Singapore and a prominent player in Southeast Asia. While starting as a classified ads site mainly for electronic devices, it has now evolved into a marketplace for both C2C and B2C, offering everything from fashion and beauty products to new and used cars and even properties!

4. Zalora

Zalora is a Singapore-based fashion and cosmetics retailer. The platform is one of only three in the country to break more than a million monthly visits. Zalora’s impressive calendar of more than 50,000 products boasts both renowned international brands as well as up-and-comers from the Philippines. This is part of an ongoing tactic in each region Zalora operates, selling both globally respected products and raising the profile of local brands.

5. Seataoo

A local player and one that is quickly gaining popularity since its launch in September 2022, Seataoo is a Philippines-based marketplace that specializes in cross-border eCommerce mainly for sporting clothing and equipment. It now operates in 25 regions among which Singapore, Hong Kong, and The Philippines are the biggest.

6. eBay PH

Global C2C giant eBay is relatively popular in the Philippines, where consumers are hungry for great value bargains. The thriving second-hand user-driven marketplace forms the foundation for eBay’s expansions into the B2C sphere. eBay Store acts as more of a traditional B2C marketplace, with brands selling their goods as well as retailers selling a variety of brands. However, in the Philippines despite its C2C strengths, eBay still trails far behind market leaders.

7. Temu PH

Having entered The Philippines’ market as recently as August 2023, Temu focuses on the sale of ultra-affordable goods and is the sister company of Pinduoduo–the third-largest online marketplace in China–and is one of the cross-border eCommerce platforms to follow closely in the next months. Weeks after its launch in The Philippines, Malaysia followed, and Temu will likely continue its regional expansion shortly.

Business Opportunity in Philippines

The online marketplace sector in the Philippines is booming, driven by increasing internet penetration, smartphone usage, and a growing middle class. Platforms like Lazada, Shopee, and Zalora dominate the market, offering vast opportunities for sellers and entrepreneurs. This article explores how to tap into these online marketplaces effectively and capitalize on the burgeoning e-commerce industry in the Philippines.

1. Understanding the Market Landscape

The success of online marketplaces in the Philippines can be attributed to the convenience they offer to both consumers and sellers. With millions of active users, these platforms provide a ready-made audience, robust infrastructure, and marketing support.

Key Players:

Lazada: Owned by Alibaba Group, Lazada offers extensive reach and a range of seller tools.

Shopee: Known for its user-friendly interface and aggressive marketing campaigns.

Zalora: Specializes in fashion and lifestyle products, providing a niche platform for related sellers.

2. Identifying Profitable Niches

To succeed on these platforms, it is crucial to identify and focus on profitable niches. Here are some high-potential categories:

a. Fashion and Apparel

Opportunities: Local and international brands, custom clothing, accessories.

Strategy: Offer unique styles, competitive pricing, and leverage trends.

b. Health and Beauty

Opportunities: Skincare products, cosmetics, health supplements.

Strategy: Highlight natural and organic products, engage with beauty influencers.

c. Electronics and Gadgets

Opportunities: Mobile phones, accessories, home electronics.

Strategy: Provide detailed product descriptions, competitive pricing, and warranties.

d. Home and Living

Opportunities: Home decor, furniture, kitchenware.

Strategy: Focus on quality and unique designs, offer bundling discounts.

e. Pet Supplies

Opportunities: Pet food, accessories, grooming products.

Strategy: Cater to pet owners’ needs with unique and high-quality products.

3. Setting Up Your Store

Establishing a store on these marketplaces involves several key steps:

1. Register as a Seller

Process: Complete the registration on platforms like Lazada, Shopee, or Zalora.

Requirements: Valid ID, business registration documents (if applicable), bank account details.

2. Product Listing

Details: Create detailed and accurate product listings with high-quality images.

SEO: Use relevant keywords to enhance searchability within the marketplace.

3. Pricing Strategy

Competitive Pricing: Analyze competitors’ pricing and adjust accordingly.

Promotions: Utilize platform-specific promotions like flash sales and vouchers.

4. Inventory Management

Tools: Use inventory management tools provided by the platforms.

Stock Levels: Maintain adequate stock to avoid order cancellations.

4. Marketing and Promotion

Effective marketing is essential to drive traffic and sales on online marketplaces.

1. Platform Promotions

Features: Participate in platform-wide sales events like 11.11, 12.12, and other seasonal promotions.

Ads: Invest in sponsored ads within the marketplace to increase visibility.

2. Social Media Integration

Channels: Leverage social media platforms like Facebook, Instagram, and TikTok to promote your products.

Engagement: Engage with your audience through interactive posts, live selling, and influencer partnerships.

3. Customer Reviews

Importance: Positive reviews build trust and influence purchasing decisions.

Encouragement: Encourage satisfied customers to leave reviews by providing excellent service and follow-up.

5. Logistics and Fulfillment

Efficient logistics and fulfillment are critical to maintaining customer satisfaction.

1. Fulfillment Options

Marketplace Fulfillment: Utilize fulfillment services offered by the marketplace (e.g., Lazada Fulfillment).

In-house Fulfillment: Set up your own warehousing and logistics operations.

2. Shipping

Providers: Partner with reliable shipping providers to ensure timely delivery.

Tracking: Provide customers with tracking information to enhance transparency.

3. Returns and Exchanges

Policies: Establish clear return and exchange policies.

Process: Streamline the returns process to handle customer complaints efficiently.

6. Analyzing Performance

Regularly analyze your store’s performance to identify areas for improvement.

1. Metrics

Sales Data: Monitor sales trends and revenue.

Customer Feedback: Gather and analyze customer reviews and feedback.

2. Tools

Analytics Tools: Use the analytics tools provided by the marketplace to track performance.

Third-party Tools: Consider additional tools for deeper insights and competitive analysis.

Problem and Challenges Expanding Business in Philippines

The Philippine government has implemented several programs and policies to address the challenges, including the Zero Hunger Task Force and the UN’s partnership. However, businesses still face difficulties navigating government red tape, regulatory uncertainties, and slow infrastructure development.

Furthermore, the country’s ranking in Transparency International’s Corruption Perceptions Index has fluctuated, and its complex, slow, and complicated judicial system can inhibit the timely and fair resolution of commercial disputes.

Despite these challenges, the Philippines market offers immense potential for businesses willing to overcome the hurdles. In this article, we will explore the challenges of expanding business in the Philippines market and provide insights into how to navigate them successfully.

1. Economic Challenges

The Philippines faces several economic challenges that can impact business operations. High unemployment and poverty rates are a major concern. In 2020, the unemployment rate in the Philippines reached 10.3%, the highest since April 2005, accounting for 4.5 million unemployed Filipinos in the labour force. Poverty rates also remain high, with 16.7% of the population living below the national poverty line in 2018.

Inadequate infrastructure is another challenge for businesses operating in the Philippines. The country lags behind many of its neighbours in infrastructure development, with traffic congestion in Metro Manila being a major problem. Port congestion is also regularly raised as a constraint to business.

The Philippines also heavily relies on fossil fuels as an energy source. In 2019, 73.56% of its energy came from fossil fuels. This reliance on non-renewable energy sources can lead to fluctuations in economic growth rates and can impact businesses operating in the country.

Adding to these challenges, the country’s economic growth rate has been volatile, with a record 10% contraction in 2020 due to the COVID-19 pandemic. While the economy is expected to grow by around 5.3% in 2023, according to a report by McKinsey, the World Bank is more pessimistic and expects the pace of expansion to slow to 5.7%. These economic challenges can make it difficult for businesses to enter and operate successfully in the Philippines market.

2. Political and Regulatory Challenges

Expanding a business in the Philippines market also comes with several political and regulatory challenges that businesses must be aware of. The government’s bureaucracy and red tape can be a significant obstacle for businesses looking to establish themselves in the country. According to the World Bank’s Ease of Doing Business 2022 report, the Philippines ranks 95th out of 190 countries in terms of ease of doing business.

Moreover, regulatory uncertainties and slow infrastructure development can also hinder business growth. The country has been grappling with limited infrastructure development, which has affected transportation, communication, and power supply. 

Foreign ownership in the Philippines is limited by the Foreign Investment Negative List (FINL), which restricts foreign ownership in certain industries. The 12th Regular Foreign Investment Negative List (RFINL) was issued in June 2022, providing foreign investors with greater access to the Filipino economy. However, foreign equity is still prohibited in certain industries, such as mass media (except recording and internet).

The judicial system in the Philippines can also be complex and slow, inhibiting the timely and fair resolution of commercial disputes. This can be a challenge for businesses operating in the country. According to the World Justice Project (WJP) Rule of Law Index 2022, the Philippines ranks 97th out of 140 countries in terms of judicial independence, highlighting the need for judicial reforms.

3. Environmental Challenges

Businesses operating in the Philippines also face environmental challenges. Environmental disasters and the need for sustainable development are major concerns. The Philippines is prone to natural disasters such as typhoons, earthquakes, and volcanic eruptions due to its location on the Pacific Ring of Fire1. In 2021, the Philippines ranked fourth among countries most affected by weather-related loss events.

Environmental policies and regulations that affect businesses are also a concern. The Philippine government has passed several policies to address environmental issues, including the Clean Air Act of 1999 and the Philippine Clean Water Act of 2004. However, research has found that the general public doesn’t feel equally informed about these policies outside of cities.

Similarly, the Ecological Solid Waste Management Act requires all local government units to implement a waste management system, which can increase operating costs for businesses. Additionally, the country has committed to reducing greenhouse gas emissions by 75%, of which 2.71% is unconditional, for the period 2020 to 2030 for the sectors of agriculture, wastes, industry, transport, and energy.

4. Corruption is a pervasive and long-standing challenge in the Philippines. 

The country’s ranking in Transparency International’s Corruption Perceptions Index has fluctuated over the years. In 2022, the Philippines ranked 116th out of 180 countries with a score of 33 out of 100, below the global average of 44.5 12.

Graft and corruption in the government and business sector can impact businesses operating in the country. Anti-corruption efforts by the government and their impact on businesses are also a concern.

The Philippines’ Anti-Red Tape Act of 2007 and the Ease of Doing Business Act of 2018 were introduced to address corruption and bureaucratic hurdles, but their implementation has been slow.

Overall, businesses operating in the Philippines or who want to expand into the Philippines market need to be aware of these economic challenges and consider them when making decisions.

Expand Your Business in Philippines with AsiaCommerce

Considering the diverse challenges that come with expanding your business in Philippines, it’s essential to have a reliable partner by your side. That’s where AsiaCommerce comes in. 

Our SEA Market Entry service is designed to help you navigate the complexities of entering the Southeast Asian market seamlessly. Whether you’re a startup looking to make your mark or an established business seeking new opportunities, our comprehensive suite of solutions is tailored to meet your unique needs.

With AsiaCommerce, you gain access to a team of experts who specialize in market research, partnership arrangement, and sales program development. We understand that each market in Southeast Asia presents its own set of challenges and opportunities. That’s why we conduct in-depth research to provide you with valuable insights into local consumer behavior, industry trends, and regulatory requirements. Armed with this knowledge, we help you forge strategic partnerships with key players in your target industry, ensuring a smooth entry into the market.Furthermore, our consultation services extend beyond market entry strategy. We offer guidance and clarification on product branding, helping you position your offerings effectively to resonate with your target audience. Whether you’re navigating cultural nuances or grappling with regulatory compliance, AsiaCommerce is here to support you every step of the way. With our expertise and personalized approach, you can overcome the challenges of expansion smoothly and unlock the full potential of the Southeast Asian market. Visit our service page now to get further information for your business expansion.