The Philippines has a population of around 120 million and grows at one of the highest rates in Asia. As disposable incomes increase and the country becomes more digitized, the demand for online shopping has increased exponentially.
Compared to China, the E-Commerce market is comparatively small though. Yet, by selling in multiple Southeast Asian countries on platforms like Lazada and Shopee, you get access to almost 700 million people.
Starting selling in the Philippines is comparatively cheap as well and you won’t have to pay significant large amounts to service providers like Tmall Partners.
As a result, selling in Southeast Asia and the Philippines offers sales opportunities to small companies, as well as medium and large-sized companies.
In this article, we review how you can start selling in the Philippines as a foreign company.
Topics covered:
- Which products are in demand in the Philippines?
- Top E-Commerce Platforms in the Philippines
- Trade Fairs for Exporters
- Shipping & Logistics
Which products are in demand in the Philippines?
A variety of products are in demand in the Philippines and the appetite for foreign products will just continue to increase over the years.
Below you can find some of the product categories that are in the highest demand on local eCommerce marketplaces.
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- Selling on Tmall & Lazada
- Logistics & fulfillment options
- Payment gateways
- Incorporation & trademarks
Fashion & Clothing Products
Fashion and clothing products have topped the list during Double Eleven (11.11) events. In 2018, products such as shawls, make-up pouches, and socks were in the greatest demand during the yearly event.
Consumer Electronics
Consumer electronic products are also in high demand, including tablets, cellphones, laptops, drones, and TVs, just to give you a few examples. Brands like Samsung, Huawei, Realme, and Xiaomi.
The demand for home appliances and IoT products such as vacuum cleaners, automatic cat litter boxes, and mixers also see great sales potentials.
Sports & Fitness
Along with the increasing gym trend, we see a growing demand for gym products. Examples include yoga mats, gym clothes, gloves, swim glasses, trunks, protein powders, and related products.
As locals become more health conscious, this segment will just continue to grow in the coming years.
Cosmetics & Skincare
This product category also sees great sales volumes and potentials in Philippines’s eCommerce market. Examples of products in demand include highlighter palettes, blush makeups, lotions, and different oils.
Foreo Luna, which provides facial cleansing brushes, also saw high sales volumes, expanding rapidly in Asian markets.
Food & Beverages
The same as for other Southeast Asian markets, food and beverages are in high demand.
As one can order practically anything online, we have seen an increase in online orders of beer, wines, candy, canned food, noodles, and much more.
If you already sell offline in the Philippines, you can maximize sales by adding the products to different online platforms as well.
Top E-Commerce Platforms in the Philippines
Philippines is the home to all the major eCommerce platforms in Southeast Asia. In this section, I’ve listed the leading eCommerce platforms and what set them apart.
Lazada
Lazada was founded as early as 2012 and fights head to head with Shopee to remain the biggest online marketplace. Owned by the large conglomerate Alibaba Group, Lazada was initially started by Rocket Internet and grew rapidly since.
Lazada has the widest product assortment, according to my experience. It also has advanced cross-border sales solutions. Sellers typically pay 1% – 4% in commissions to the marketplace.
It’s highly convenient to sell on Lazada as you can use their in-house fulfillment and shipping services, referred to as Fulfillment-By-Lazada (FBL) and Lazada Global Shipping (LGS).
If you want to import products to the Philippines and sell them online on local eCommerce sales channels, it’s better to use local fulfillment solutions.
This will help you reduce shipping lead times and costs.
Shopee
Shopee is currently the biggest eCommerce marketplace in Southeast Asia, available in all major markets.
The company is renowned for its customer service and short shipping lead times, which are highly appreciated among local buyers.
Sellers pay less to sell products on Shopee compared to Lazada. Yet, my general recommendation is to sell on both marketplaces, reaching all buyers and maximizing sales.
Thanks to the lower online operating costs, sellers can list products on multiple websites.
Even if Shopee has an in-house fulfillment solution called Fulfillment-By-Shopee (FBS), it’s primarily available to top sellers and/or sellers with capacity issues. Thus, the fulfillment solution isn’t as promoted as FBL.
Carousell.ph
Carousell was founded in Singapore and is a major online marketplace in the nation. Carousell acquired OLX in 2019 and is now branded under the name Carousell.ph.
In addition to Singapore and the Philippines, Carousell is available in Australia, Hong Kong, Malaysia, Indonesia, and Taiwan.
The website offers a plethora of products, including gadgets, clothes, furniture, baby products, and much more.
I recommend you check the website for more information on the products available.
Trade Fairs for Exporters
It can be worthwhile visiting one or more trade fairs to expand your network, learn more about the market, promote your products, and prepare for market entry. Below I’ve listed two trade fairs that you should have a look at.
The National Food Fair
The National Food Fair is held jointly between the Department of Trade and Industry – Bureau of Domestic Trade Promotion (DTI-BDTP) and Shopee Philippines.
While the event is held in person, it was managed online in 2021 due to the ongoing pandemic.
The event has featured around 3,500 products on Shopee, including beverages, sweets, snacks, seasonings, staple foods, baking ingredients, breakfast foods, superfoods, and much more.
Visitors can participate in the event for a whole week. Worth mentioning is that products can be sold with discounts of up to 30% and companies can buy products in bulk, with lucrative prices.
World Food Expo (WOFEX)
WOFEX is a major food event held twice a year and focuses on food products. The event is held with one spring edition and one autumn edition.
WOFEX is currently the biggest food fair in the Philippines, held in the two biggest venues nationally, the World Trade Center and the SMX Convention Center.
If you plan to sell food and beverages in the Philippines, it can be worth visiting the fair for the latest market updates and to connect with local food companies.
Shipping & Logistics
Your shipping and fulfillment options will differ depending on if you import the products to the Philippines or sell cross-border.
The first option is preferred if you plan to sell on a wider scale, want to be closer to the market, and reduce shipping costs.
Selling cross-border can be beneficial if you just want to test the market, sell in many Asian markets, or don’t want to incorporate in the Philippines.
Besides, if your products are relatively light but with high prices, the cross-border channel might work as well.
Shipping to the Philippines
If you don’t want to import the products, the preferable option is to use a fulfillment center in Hong Kong and sell the products cross-border.
Due to higher labor costs and cross-border shipping solutions, the logistics costs can be somewhat high though.
There are plenty of 3PL companies in Hong Kong that help sellers who operate in the Philippine market, including Easyship, Floship, Stork up, and UFL.
Keep in mind that Hong Kong doesn’t levy any import duties and serves as a cross-border hub.
If you plan on importing the products to the Philippines, you’ll have plenty of warehouses and 3PL options available.
Order Fulfillment
Your order fulfillment options will also differ depending on if you import the products or not. If you sell cross-border on Lazada, I recommend you use Fulfillment-By-Lazada, to centralize your fulfillment operations.
However, local 3PL companies in the Philippines can offer lower prices thanks to reduced labor costs and rental fees. This will in turn reduce storage costs.
I recommend you contact a handful of local 3PL companies to receive personalized quotations, according to your predicted order volumes.
FAQ
Below we have included some commonly asked questions and our replies. Feel free to write a comment below if there’s anything else you wonder about.
What trade agreements do the Philippines have?
Philippines has a few trade agreements in place as of the moment I’m writing this article, including:
- ASEAN Trade in Goods Agreement
- Philippines – Japan Economic Partnership Agreement
- Philippines – European Free Trade Association Free Trade Agreement
It also has preferential trade agreements with India, Japan, China, Hong Kong, South Korea, Australia, and New Zealand.
How big is the Philippines eCommerce market?
The eCommerce market was valued at USD 3 billion in 2019 and is expected to grow to USD 12 billion by 2025.
By comparison, China’s eCommerce market will reach USD 3,000 billion by 2024. Vietnam’s eCommerce market was valued at around USD 13 billion in 2020.
Vietnam’s eCommerce market was valued at USD 10 billion in 2019 and USD 12 billion in 2020.
