e-Conomy SEA 2023: PH Digital Economy Set to Hit $24B by End of 2023 Largely Due to E-Commerce Boom

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e Conomy SEA 2023 Philippines

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The e-Conomy SEA 2023 Report titled “Reaching New Heights: Navigating the Path to Profitable Growth” sheds light on how the Philippine online market is set to soar. The report predicts that by 2023, the total online sales (GMV) will hit a whopping $24 billion, growing by 13% each year, mostly thanks to online shopping. Looking ahead, it’s expected to keep growing at a fast pace, reaching $35 billion by 2025, making the Philippines one of the top countries in Southeast Asia for online growth.

This report, a mix of insights from Google Trends, Temasek, Bain & Company, and other sources, zooms in on six countries in Southeast Asia: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

This year’s report is special because it not only talks about how much money is changing hands online (GMV) but also how much profit businesses are making. Despite some economic challenges, businesses seem to be finding ways to grow. In fact, the report says that the money made from online business in Southeast Asia is expected to reach $100 billion this year, growing faster than the total online sales in the region.

e-Conomy SEA 2023 Report

The star of the online show in the Philippines is shopping. About 70% of all online activities are people buying things online. This shift from buying from local stores to shopping on digital platforms is making online shopping in the Philippines a big deal. By 2025, it’s estimated to reach $24 billion in total online sales, growing at a fast pace of 21% each year. Other online activities like watching videos or booking travel also contribute to the digital economy’s growth.

The part of online activities with the biggest jump from 2022 to 2023 is travel, shooting up by 88%. This is because more people are traveling, and it’s boosting the online travel industry.

This year, the Philippines stands out in Southeast Asia for having the fastest growth in how people get around (Transport and Food), watch things online (Online Media), and travel (Online Travel). Companies are expanding their services to areas outside big cities to keep growing. They’re also adding more options for getting around on two wheels because it’s a cheaper way to travel.

Here are Some More Important Points about the Philippine Online Scene:

  1. Growth Continues: Besides people buying things, the report expects the services sector to grow too. More people spending money and more tourists mean businesses providing services will do better.
  2. Online Entertainment Boom: Things like music, video streaming, and online gaming are expected to bring in $3 billion by 2023 and $5 billion by 2025. That’s a 13% and 19% growth each year, showing how much people love being entertained online.
  3. Getting Around and Eating Out: Travel and Food Delivery online services are expected to reach $2 billion in 2023 and grow by 19% each year to hit $3 billion by 2025. This is because more people are moving around, going back to offices, traveling, eating out, and shopping in physical stores.
  4. Online Travel Takes the Lead: Online Travel is the star of the show with an 88% growth rate from 2022 to 2023. As travel returns to normal, it’s expected to reach $3 billion in sales this year and grow by 18% each year to hit $4 billion in 2025.
  5. Digital Payments Rising: Using digital wallets and direct account payments online is becoming more popular. This year, it’s expected to reach $93 billion and jump to $126 billion by 2025. This growth is because it’s cheaper for businesses to use digital payments. Also, more businesses are using informal payment methods to avoid the formal process of signing up with digital payment companies.

“With continued double-digit climb towards $35B by 2025, the country’s digital economy continues to exhibit resilience and generate opportunities for Filipinos despite macroeconomic headwinds. This momentum is poised to continue, fueled by the immense potential of AI and the digital participation of internet users outside Metro Manila which could drive medium to long term growth.”

Nikki Del Gallego, Head of Data and Insights, Google Philippines

“It really is quite a feat that both Southeast Asia’s digital economy GMV and revenue continued their double-digit growth momentum despite this challenging macroeconomic environment, with revenue breaking the $100B mark in 2023. More than anything, this shows the resilience of the Southeast Asia digital economy and that the key players are figuring out the monetization puzzle and making headway towards healthier unit economics. Despite external headwinds, we are optimistic that the digital economy – both for SEA and the Philippines – will continue to grow substantially in the longer run.”

Bennett Aquino, Partner, Bain & Company

“It is truly remarkable that the Philippine digital economy is on track to achieve sustained double-digit growth. Through a whole-of-government approach, the Department of Trade and Industry (DTI) remains committed to collaborating closely with partners from various sectors, including Google, to empower Filipinos in realizing the benefits of the growing digital economy through upskilling opportunities.”

Secretary Fred Pascual from the Department of Trade and Industry

The Role of AI in Driving Profitable Growth

In this wave of digital change, using AI to make things work better and give users a better experience is crucial. AI can help businesses be more efficient and make online activities more personalized. From managing stock and finding the best delivery routes to suggesting the perfect online show, AI is the secret sauce.

Google is taking the lead in this by offering free courses on AI skills through its Cloud Skills Boost Program. The program aims to make it easier for people to build careers in AI. Google is also supporting startups that use AI in their products through the Google for AI Startups Cloud Program. As the digital journey continues, the story of the Philippine online market unfolds as a tale of growth and endless possibilities.

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Emman has been writing technical and feature articles since 2010. Prior to this, he became one of the instructors at Asia Pacific College in 2008, and eventually landed a job as Business Analyst and Technical Writer at Integrated Open Source Solutions for almost 3 years.

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