E-commerce barriers remain high

Trust in online shopping and digital payments in the Philippines is among the strongest in Southeast Asia, but logistics barriers and uneven regulatory enforcement are hampering the growth of small businesses, a regional study found.

A report by Singapore-based Blackbox Research said three in four Filipino e-commerce leaders view the country as ahead of its neighbors in digital payment maturity and consumer confidence.

However, they warned that inefficiencies in delivery, infrastructure and regulation are acting as a “hidden tax” on micro, small, and medium enterprises (MSMEs).

“Filipino consumers have shown remarkable trust in the digital economy, but the systems supporting that trust have yet to reach full maturity,” said David Black, founder and CEO of Blackbox Research.

“The opportunity now lies in closing those structural gaps so that MSMEs can scale alongside consumer demand,” he added.

Philippines Competitiveness Rating

Barriers

The study interviewed 46 e-commerce leaders and experts across Southeast Asia.

Regulatory inconsistencies were cited as a major barrier in e-commerce industries, with 87 percent of respondents saying uneven enforcement allows some cross-border sellers to evade taxes and product certification requirements.

In the Philippines, logistical gaps remain one of the biggest hurdles. The cost of shipping accounts for 20 percent to 30 percent of the order value, double that of those in mature markets.

The 7,641 islands in the archipelago further complicate shipping. Delivery timelines vary from 24 to 48 hours in Metro Manila to as long as seven to 14 days for remote provinces.

And while investment into e-commerce technologies is high, the report said this focused primarily on visibility and customer acquisition instead of reliability, returns processing and customer support.

Optimistic

Despite these challenges, the Philippines recorded an e-commerce optimism score of 7.93 out of 10 for the next three years, among the highest ratings in Southeast Asia.

“If logistics bottlenecks and compliance burdens can be tackled, the country is well placed to convert digital confidence into inclusive, nationwide growth,” the report said.

To maximize the country’s potential, the study called for greater public-private investment in MSMEs, expanded regional logistics hubs and simpler compliance processes.

“For the Philippines, the task is clear: strengthen the systems that sustain consumer confidence and ensure MSMEs are not just participants but beneficiaries of the region’s digital transformation,” the market research firm said.

“Without decisive collaboration on logistics, regulation and innovation, the very trust that fuels growth today could become its greatest constraint tomorrow,” it added.

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Source: Inquirer

Pinoy Gen Zs emerging as self-rewarding, intelligent consumers–study

“Deserve ko ‘to!” (I deserve this!)

It’s a phrase that Filipinos have come to use to reaffirm their spending habits, which sometimes can be described as compulsive, especially when facing tempting discounts and promos that are offered right around pay days.

It’s a behavior that’s seen strongly among today’s Gen Z consumers, who spend primarily to reward themselves, says a recent study—one that is crucial for brands to understand in order to cater to this growing demographic, and facilitate immersive shopping experiences that promote convenience and appeal to their personal preferences.

The study, jointly conducted by Filipino-focused sociocultural research firm The Fourth Wall and communications firm Uniquecorn Strategies, says that three out of four Filipino Gen Z consumers living in urban areas shop online because they believe that they deserve it—a philosophy driven by their desire for happiness, fear of missing out on trends and the need to simply give themselves a gift for overcoming work or study-related stress.

The survey, conducted among 400 Gen Z consumers in Metro Manila, shows that 50 percent of a typical Filipino Gen Z’s finances come from parental allowances, while the other half come from full-time work, businesses, or side gigs. On average, they make six online purchases per month, ranging from a minimum of one to a maximum of 10.

Citing prior research, the study notes that there are about 41 million Gen Zs (born between 1996 and 2010) in the Philippines, making up about 38 percent of the total population, according to Philippine Statistics Authority’s latest official 2020 census.

“The young generation is rapidly becoming a significant portion of the consumer market, and is already shaping market trends, especially the e-commerce space,” says John Brylle Bae, research director at The Fourth Wall. “This self-rewarding behavior among Filipino Gen Zs stems from their growing self-awareness, driving them to seek rewards that affirm that sense of self-worth.”

The research, which leveraged machine learning clustering and social listening, also identify five dominant psychographic profiles of urban Filipino Gen Z consumers, who have distinct preferences and motivations:

• the Austere Austins, who prioritize budget-friendly options;

• the Budgetarian Bellas, who focus on cost-effective choices;

• the Frugal Fionas, who advocate for affordable and sustainable products; and

• the Deserving Desires, who seek rewards for their hard work and dedication.

Intelligent buyers

Overall, however, Filipino Gen Zs are intelligent buyers, the study states. They splurge based on quality (81 percent) and price competitiveness (10 percent), and are most likely to repurchase from the same brand that consistently delivers high-quality and affordable products. Still, they are willing to try other brands, even if they are emotionally attached to their preferred ones.

The study also shows that Filipino Gen Zs buy based on trust and personal affinity. Upon hearing about a product, 81 percent do their due diligence and look up customer reviews first on shopping platforms and Google.

Word of mouth, therefore, is still one of the primary ways they discover products (60 percent), while others rank social commerce ads (59 percent) as important to their shopping experience. They take cues from the people they deeply trust, which include friends and family. They are also more influenced by honest, objective, or out-of-pocket reviews from influencers or content creators with the right expertise.

These digital natives, naturally, also prefer the convenience of online shopping. Almost all the respondents (92 percent) use their own mobile phones for purchases and prefer cashless payment methods (53 percent).Given this, the study identifies several key opportunities for brands to connect with Filipino Gen Z consumers more effectively:

There is a significant potential for advertising on more personal yet credible emerging media platforms such as podcasts, and brands can leverage self-expression and identity in their branding to establish a personal affinity with target customer personas.

Tuning into these behaviors, says Uniquecorn Strategies founder and CEO Dean Bernales, will ultimately help brands come up with the right strategy to employ to capture the Gen Z market.

“Retailers should pay close attention to the shopping desires and needs of Filipino Gen Zs. Brands need to reassess their supply chain strategies and enhance their social commerce platforms to build trust, create personal connections and develop a relatable image to capture the young market,” Bernales says.

Source: Inquirer

Climate change and consumer behavior

Climate change has significantly intensified over the years, impacting lives around the world. In a recent Deloitte study, more than half of respondents said they have experienced at least one extreme weather event, pushing majority of them to agree that climate change is an emergency. Organizations are also feeling increasing pressure to integrate sustainability in their business agenda, with consumers demanding the same from producers of goods and services.

Globally, almost 60% of respondents said they make deliberate changes to their personal activities and purchasing habits to help mitigate environmental damage. Thirty-three percent also said that sustainability considerations are impacting where they bank and invest their money, and nearly 40% are paying more for sustainable product alternatives.

Beyond their personal steps toward sustainable consumption, people’s heightened environmental awareness extends to their workplace expectations. Among those surveyed by Deloitte, there has been a decline in the number of people who believe their employer is doing enough to address climate change and sustainability.

Moreover, almost 25% globally said they have considered switching jobs to work for a more sustainable company, and the same number of people say that they will consider a potential employer’s position on sustainability before accepting a job. This just proves that sustainability is slowly becoming less of just a consideration, and more of a key criterion in choosing where to work.

THE YOUNGER GENERATIONS’ EMOTIONAL INVESTMENT AND INITIATIVES

While concern for the environment spans across all generations, Gen Zs and millennials have expressed greater emotional engagement and more curiosity about the impact of climate change.

In the Philippines, climate change as a cause of anxiety is especially apparent. Over 90% of the country’s college-educated, working Gen Z and millennials have expressed worry about their environmental impact, and most of them intend to make better climate choices. Eighty percent are willing to pay more to purchase environmentally sustainable products or services, 95% primarily use recyclable or recycled plastics/paper to reduce environmental impact, and 90% improve their home to make it more sustainable.

These personal commitments signal a clear expectation: businesses must respond by offering more sustainable choices. As the younger generations increasingly align their actions and behaviors with environmental values, they look to companies to complement these efforts with sustainable products, services, and practices.

Furthermore, their appeal for businesses to prioritize environmental responsibility also bleeds into their employer choices, with 95% of them considering companies’ environmental credentials or policies when choosing a potential employer, and 30% of them changing jobs and/or industries due to concerns about the organization’s sustainability impact, higher compared globally.

Along with their expectations from businesses, Gen Zs and millennials are also calling for increased involvement from the government in mitigating climate change impacts. They urge policymakers to take climate action, fostering a sustainable future through policies and public-private partnerships.

Clearly, from choosing recycled packaging to calling for the government and businesses to prioritize sustainable practices, these generations are driving the shift in consumer behavior and employer expectations.

CLIMATE ACTION IS NO LONGER OPTIONAL BUT IMPERATIVE

The incorporation of sustainability-related actions to both personal and professional domains is already an existing principle for most, especially younger generations. As sustainability becomes embedded in people’s every-day lives and decision-making, businesses must evolve in response.

Organizations that fail to integrate it into their culture and operations risk losing climate-conscious customers and top talent. In this age of accountability, being sustainable shouldn’t just be a differentiator — it should be the baseline.

Source: Business World