January 23, 2020

How E-Commerce Logistics Market is Supporting Growth of Courier and Express Delivery Market in Philippines?

Ken Research reveals that Rising Internet Penetration, Growth in Last Mile Delivery, Preferences for Online Shopping due to Better Discounts and Online Grocery Logistics is Expected to Drive E-Commerce Logistics market in Philippines.

Philippines E-commerce logistics market has been observed in its early stages of developments majorly driven with an increase in internet affinity and demand for value added services. In addition to this, various logistics service provider’s offers additional services and discounts for online orders. The market holds tremendous potential for future growth largely owing to the fact that E-commerce firms/platforms of Philippines have shifted their focus to increasing customer engagement and hence are concentrating more towards deal savvy customers by offering discounts and flash deals for fashion apparels, beauty products, gadgets and technology.

Focus towards Customer Engagement by Online Platforms: Increasing Usage of Advanced Mobile Applications and banking solutions for the customers has made it easier for them to shop online, which further intensified the e-commerce logistics market in the Philippines. Number of internet users has increased from 47.4 million 2015 to 67.0 million in 2018. Filipinos are among the world’s heaviest Internet users, spending an average of 10 hours and two minutes using the Internet every day. Furthermore, Philippines have a young, tech-savvy population (the average age is 24.3 years). The majority of Filipinos who shop online belong to the age group of 18 to 31 years who are tech-savvy and prolific social media users. Most of the online shoppers in Philippines belong to middle income group

Declining Average Logistics Order Cost: The average logistics order cost in the Philippines was evaluated at USD 1.6 per order in 2013 which further declined to USD 1.2 in the year 2018. This was majorly due to increase in the total number of consumers and average revenue earned per consumer for E-commerce, thus leading to increased online spending. Some of the fastest selling product categories include fashion, electronics, food, furniture, and toys.

Promoting E-Commerce Logistics Development in the Rural Areas: Due to remote locations and lower levels of E-commerce awareness in the rural areas, this population segment lacks compared to urban sectors. Transforming small rural supermarkets into multi-functional commerce and distribution centers would enable them to provide a variety of service offerings to rural residents such as helping customers to order tickets online or purchasing goods from E-commerce websites.

Improvement in Last Mile Delivery: Last mile delivery is the only link in the E-commerce supply chain that connects the customer and the delivery person, especially on a door-step delivery. Consumers are highly likely to discard a retailer when there are issues with their deliveries, thus making a good user experience essential for companies. This can often prove as one of the critical parameters for evaluating customer experience and efficiency of final delivery. New models for handling the last mile such as “click and collect” locations are further anticipated to drive the growth of E-commerce logistics with a CAGR of 24.6% during 2018-2024, with revenues reported at PHP 36.6 billion by 2024.

Delivery Preference for E-Commerce Logistics Orders in Philippines: One day delivery has dominated the market in terms of number of orders owing to increasing focus of the companies on providing better services coupled with increasing customer needs for better service. Clothing, Fashion Accessories and Others are the major products which are delivered through one day delivery. Various E-commerce giants such as Lazada, Shopee and Zalora have started to offer 2 day/1 day delivery along with minimum cart order, thereby attracting consumers to actively seek for free shipping while shopping products on online portals and buying more in terms of value thus aiding the business of these companies.

Preference towards In-house Logistics Operations: Domestic companies majorly prefer to manage their own operations for better efficiency and ease of government norms for domestic companies. To win the trust and sales from customers, e-commerce companies emphasize on timely, reliable, convenient delivery as an integral element of their business model for creating for customer’s most rewarding shopping experience.

Dominance of Cash on Delivery as Payment Mode: Cash on delivery as the mode of payment has dominated the market owing to low consumer confidence in online payments and limited card penetration. Near about 80% of the orders for e-commerce in Philippines are being done for Cash on Delivery

According to the study by Ken Research, Philippines Logistics and Warehousing Market contributed over PHP 632 billion during 2018. This is expected to grow to over PHP 1,010 billion by 2024. The Government of Philippines has come up with a ‘National Logistics Master Plan (2017-2022)’ which aims to advance Philippines competitiveness through the establishment of an efficient transport and logistics sector that will contribute towards a robust and resilient Philippine economy. The logistics companies are expected to invest on advanced technologies solutions such as autonomous logistics, real-time tracking, automation and robotics in order to provide an improved customer service. With the growing international trade, incorporation of advanced technology based solutions will help in an efficient delivery of products by the logistics providers.

Conclusion: The growth of e-commerce logistics has supported development of Express logistics market due to an expansion in the Filipino economy. The growth of e-commerce industry, increasing penetration of international and domestic players and growing industrialization has positively affected the growth of express delivery in the country. The need for time bound deliveries/e-commerce orders coupled with quality service is expected to drive the express delivery market in the coming years. Furthermore, the need for time bound delivery will increase with economic growth and development of trade and commerce thus creating growth opportunities for the express industry.

For more information on the research report, refer to below link:-

Philippines Logistics and Warehousing Market
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