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Philippines e-commerce boom bad for malls, retail stores
MANILA, Philippines — The Philippines is expected to become the top e-commerce market in Southeast Asia as early as 2020 – a not so welcome development for Filipino malls and retail stores as this could spell doom for their operations.
The Philippine e-commerce industry, valued at over $1 billion, is expected to grow exponentially in the next three to five years, according to Inanc Balci, chief executive officer of Lazada Philippines.
“We are definitely not at the top of e-commerce (across Southeast Asia), but we are on our way to being on top. I believe the Philippines will be the top e-commerce country in Southeast Asia in the next three to five years. In the medium term, after 2020, we have the chance to be at the top worldwide,” Balci told The STAR
“I don’t see any reason why it should grow slower. Because when you look at the market dynamics, like smartphone growth in the Philippines, it is one of the highest in the world. The Facebook penetration in the Philippines is one of the highest in the world, Filipinos are internet savvy, they now enjoy a high disposable income and they do a lot of retail spending. So we believe these are the best conditions any e-commerce company can hope for,” he said.
Having the distinction of being the top e-commerce market may not be a welcome development for the country’s mall and retail store owners.
In the US, malls and prominent retail store brands are closing down as more consumers embrace online shopping.
The SM Group, owner of the biggest chain of retail stores and the largest shopping mall developer in the country, recognizes that such a trend is happening in the US and is preparing for its occurrence in the local shores.
“There is a digital change. We just have to see how to improve ourselves to have business alongside them (e-commerce platforms),” SM Investments Corp. vice chair Teresita Sy-Coson said.
Asked on the possibility of SM, which has 63 shopping centers across the country to date, closing down branches, Sy-Coson said: ”We’ll try not to. We are part of the Filipino lifestyle so we’ll try to continue that.”
SM, seeing the need for an online platform, earlier this year entered into an agreement with Lazada to sell merchandise online, starting with light-to-carry non-food items.
Lazada, an online marketplace part of the Alibaba Group of Chinese billionaire Jack Ma, has been instrumental in the growth of the Philippine e-commerce industry in the past few years.
The online marketplace also operates across the region in countries like Singapore, Indonesia, Malaysia, Thailand and Vietnam.
For Balci, however, the rise of e-commerce should not be regarded as a threat to traditional brick and mortar stores.
Balci said sales from offline stores continue to constitute the bulk of the total retail sales in the country.
“In the mid-term I don’t believe that e-commerce will be higher than offline retail in the Philippines, but you never know for the long term,” Balci said.
“You never compete with offline retailers,” he said, noting that an online marketplace is an additional platform for offline retailer to reach out to more consumers.
“When you go to shopping malls in the Philippines, most of the stores there are selling on Lazada. They use Lazada because they cannot open stores in all 7,000 islands in the Philippines and not everyone can go to their store. When you go to Lazada, millions of people can get access to your products. We don’t compete but we complement with offline retailers in the Philippines,” Balci said.
Source: http://www.philstar.com/business/2017/11/06/1755954/phl-e-commerce-boom-bad-malls-retail-stores