Social commerce orders in Philippines hit record high in H1

by Louella Desiderio – The Philippine Star, 14 Oct 2021

MANILA, Philippines — Social commerce orders in the Philippines hit a record high in the first semester, according to artificial intelligence (AI) solutions firm iKala.

In a report, iKala said orders of goods made on social media platforms in the Philippines soared by 129 percent in the first half, a record high for the country.

This was faster than the 102 percent average growth in social commerce orders in four Southeast Asian countries based on a survey of 1,600 shoppers and more than 23,600 sellers in the first two quarters of the year.

Also posting record high growth in social commerce orders in the first semester was Malaysia at 186 percent.

With the Philippines and Malaysia in the top 15 in terms of usage and time spent on social media, iKala said it makes sense that users in these countries are shopping more on social media platforms.

Other countries such as Thailand and Singapore registered increases of 64 percent and 29 percent in social commerce orders in the first half, respectively.

In terms of social commerce gross merchandise value (GMV) or the value of goods sold on social media platforms, the Philippines posted a 74 percent growth in the first half, lower than the 91 percent average for the four Southeast Asian markets.

Malaysia registered the highest growth in social commerce GMV at 207 percent in the first semester; Thailand posted a 59 percent increase; and Singapore saw a 25 percent uptick.

Meanwhile, the average revenue generated per social commerce order in the Philippines grew by 58 percent in the first half, below the 88 percent average growth in the four Southeast Asian countries.

Malaysia saw the highest revenue growth per social commerce order at 111 percent in the first half, followed by Thailand at 92 percent and Singapore at 89 percent.

Despite the growth in social commerce in terms of orders, GMV and revenue per order, e-commerce platforms remained the most preferred channel by consumers in the Philippines at 92 percent, as well as in Southeast Asia at 91 percent.

Social commerce, however, emerged as the second most preferred channel for shopping in the Philippines at 82 percent, and in Southeast Asia at 78 percent, surpassing offline stores.

“Southeast Asia already had some of the most avid social media users in the world, and spurred by the pandemic, they’ve taken to social platforms for their shopping needs at an exhilarating pace. Even as brick-and-mortar reopens, it’s become clear that social commerce is not a phase — the ease, convenience and accessibility of this format has earned it a permanent place in the way this region shops,” iKala co-founder and chief executive officer Sega Cheng said.

Shopping on social media platforms, however, still comes with challenges as consumers cited expensive shipping (51 percent), no return and exchange policies (41 percent) and a lack of customer service (34 percent) as key points of friction.

When it comes to the preferred mode of payment, consumers in Singapore and Malaysia rely more on credit cards and digital wallets respectively, while those in Thailand and the Philippines are opting for cash on delivery.

Cash on delivery remains important to consumers amid scams and risks in online retail.

“The beauty of social commerce is that almost anyone with a smartphone and an internet connection can start selling on social media, but it’s not without its challenges. Navigating consumer expectations poses challenges, but more retailers are starting to leverage emerging tools and technologies to make the customer journey seamless. As the landscape matures, sellers who are quick to adopt effective solutions to eliminate pain points will be able to retain engagement and trust in the long run,” Cheng said.

Through its AI-driven solutions, iKala is helping businesses have a more efficient social commerce strategy.

At present, iKala is supporting over 172,000 businesses across Southeast Asia.