ELECTRONIC commerce (e-commerce) remains underdeveloped in the Philippines for selling fast-moving consumer goods (FMCG), with traditional retail outlets still the leading point of purchase, Kantar Worldpanel said, citing the results of a study.
Kantar Worldpanel Philippines General Manager Alexandre Duterrage said that while e-commerce is becoming an “attractive” channel for purchasing FMCG particularly via smartphones, it will take a long time to develop in the Philippines because some elements of the e-commerce, particularly those related to infrastructure, are lagging.
“E-commerce is an ecosystem. And you have to have most of the parts of the ecosystem to be in the green for this ecosystem to thrive. Today in the Philippines, there are some challenges,” Mr. Duterrage said.
“Some challenges really are easy: psychological. [T]he job of the retailer to create this trust… So, what [really needs to be fixed is the] infrastructure. We know how difficult traffic is in Manila so you know also that shoppers when they want to buy, they get it immediately,” he added.
In the consumer research firm’s annual Smartshopper survey, the online channel or e-commerce took up a 0.1% share of Philippine FMCG sales. Traditional outlets like sari-sari stores and market stalls were still the preferred channels due to convenience, particularly for the lower classes.
This compares with the 19.7% share of online channels South Korean FMCG sales and 6.2% in China. According to the study, online shopping is used mainly for personal care products.
The leading FMCG product in the Philippines is adult milk at P47.8 billion in the six months to June, up 4% from a year earlier. Coffee products sales rose 2% to P41 billion in the same period.
“The disposable income of households is growing but the surplus is not used in FMCG. It’s used for something else — clothes, smartphones, equipment; in a certain way, FMCGs are sacrificed to be able to afford these [other] products,” Mr. Duterrage said. — Anna Gabriela A. Mogato