PH online shoppers engage in cross border shopping

Around 50 percent of online shoppers in the Philippines are now engaged in cross-border shopping, with sales accounting for 24 percent of the entire ecommerce market in the country, according to a recent report from JP Morgan. Trade and Industry Assistant Secretary Glenn Penaranda cited the JP Morgan study in a keynote speech Wednesday, June 7, at the Philippine Global e-commerce Summit 2023. “Cross-border shopping plays a crucial role in the ecommerce landscape, constituting a significant portion of total e-commerce sales,” said Penaranda. China, the US, and South Korea are among the most popular countries for cross-border purchases, according the JP Morgan report. In the Philippine context, Penaranda said, E-commerce contributed 3.4 percent or $12 billion to the country’s gross domestic product in 2020. In 2021, the Philippine E-commerce market sales reached $17 billion, largely contributed by the 73 million online active users. This is estimated to reach $24 billion, with 17 percent growth through 2025. Another study from Global Data showed that the Philippines is poised for further e-commerce growth, with a projected annual increase of 15.8 percent in transaction value from 2022 to 2025. By 2025, e-commerce transactions are estimated to reach an impressive ₱495.2 billion ($9.7 billion), a substantial increase from the nearly ₱270 billion recorded in 2021. Given all these bright outlook on e-commerce in the country, Penaranda said “The Philippines stands at the forefront of digital adoption and growth.” He cited a young population of 110 million people with an average age of 25 and highly internet-savvy, with 89 million active social media users. The country has attracted major international and regional ICT companies such as Facebook, Google, Alibaba, Grab, and Lazada, who have established strong footholds in the e-commerce, online sharing, and social The Philippines is also a powerhouse in the IT-BPM sector, driving economic growth and innovation. Accounting for 15 percent of the global market, the Philippines is the second-largest player due to talented workforce with critical technological and people skills. In addition, Penaranda boasted of the country’s “strong customer service orientation” that positions the country as an ideal destination for global customer engagement. The country's services encompass contact centers, animation, game and software development, shared services, and more. However, he also noted that the benefits of going digital are not being experienced equally by all sectors of the economy. In particular, Penaranda said the “micro, small and medium enterprises (MSMES) face significant barriers related to access and use of digital technologies that prevent them from reaping the full rewards of participating in the new economy and reaching their full potential.” “The lowest hanging fruit is the one related to a lack of innovation in digital financial products addressing the specific needs of MSMES,” he noted. While banks and fintech companies play a critical role in innovation and inclusive economic growth, Penaranda said the government is pushing for various programs recognizing that a whole-of-nation approach is needed to further the financial inclusion of MSMES. To facilitate the further development of e-commerce, the DTI has launched the ECommerce Philippines 2022 Roadmap. This visionary roadmap aims to make e-commerce "MADALI" by prioritizing Market Access, Digitalization, and Logistics Integration. By investing in these crucial areas, we are laying the foundation for seamless e-commerce experiences. This digital shift has opened numerous opportunities for bilateral and global cooperation. This include the Regional Comprehensive on Economic Partnership (RCEP), which just took effect last week in the Philippines. RCEP promises a more favorable trade environment for cross-border e-commerce and acts as a catalyst for the internationalization and participation of MSMES in global value chains. Further, the Philippine Export Development Plan (PEDP) 2023-2028 underscores the significance of Cross Border E-commerce as a strategy for export growth and competitiveness. With this approach, DTI through the Export Marketing Bureau will continue to spearhead business to business (B2B) interactions by partnering with ecommerce platforms, operators and strategic partners in major markets and participation in national, regional and global sales promotion activities to promote Philippine enterprises. The Department will also provide support and assistance in onboarding MSMES in global marketplaces. Programs will be focused on expanding the online export base, particularly by making it easier for small and medium-sized exporters to export online.