Rising Number of Internet Users to Help Philippines E-Commerce Logistics Market to Reach Almost PHP 600 Bn in terms of GMV in 2025. Will it be able to achieve it? Ken Research

 Philippines E-Commerce Retail Market recorded GMV of PHP 160 Bn in 2020. The country has a young, tech-savvy population (the average age is 25.7 years) that’s hungry for products and services.

1. Of the Total 109.5 Mn Population in the Philippines, 67% (73 Mn) are The Internet Users, the Second Largest in Southeast Asia.

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Expansion in Internet Services (over 70% internet penetration in 2020) coupled with increasing demand for online logistics services have collectively given a boost to development of E-commerce logistics industry in the Philippines. The number of internet users in the country has increased from 47.4 million 2015 to almost 73.0 million in 2020.​ 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. ​Moreover, faster deliveries and live tracking are the trends recently witnessed in the country for better and convenient deliveries. ​

2. The Yearly Income of the Average Filipino was Recorded It to be around $3,600 in 2017, Just Need an Extra around $240 to Get Upper-Middle Income Countries Status.

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Philippines has sustained average annual growth of around 6.3% from 2010 – 2018, up from an average of around 4.5% from 2000 - 2009 and is on its way to becoming an upper-middle income country in the near term. In addition to this, growing awareness among Filipino consumers about global brands as well as preferences for improved and latest fashion trends and technologies has heightened the demand.

3. Almost, 63% of the Total Internet Users in Philippines are Online Shoppers.

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109.5 Mn people in the country accounted for a young, tech-savvy group of Millennial & Gen Z consumers spending on an average 101 hours and two minutes every day using Internet, resulting in higher number of orders in 2020. The population density of the Philippines is high, but the distribution of the population is uneven. Parts of Metro Manila have a population density that is more than 100 times that of some outlying areas such as the mountainous area of northern Luzon. Moreover, companies are increasingly extending their reach in other provinces as well apart from Metro Manila i.e., Visayas and Mindanao​.

Technology or Government key initiatives- who plays a big role in enabling the Philippines e-commerce logistic market to reach PHP 67 billion in the next five years? - Ken Research

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The escalation in the number of smartphones in the country, the fast-growing middle-class population, high consumer confidence, changing consumer preferences, etc. have augmented the growth of e-commerce leading to surging demand for e-commerce logistics as well in the country. The Philippines e-commerce is anticipated to expand with a double-digit CAGR in the next few years.

1. Philippines E-commerce logistics grew at a CAGR of ~40% between 2019 and 2020 owing to the rising preference for online shopping due to the perks attached to it

Online shopping trends in the Philippines: Click to know more

The Philippines’ E-commerce logistics market has been observed in its early growth stages of development, thus growing year on year majorly due to rising E-retailing coupled with an increase in the number of online orders. The number of online shoppers has increased tremendously due to the Convenience & Huge Discounts offered by Leading Marketplace Platforms. Moreover, Expansion in Internet Services (~71% internet penetration¹ in 2020) coupled with increasing demand for online logistics services have collectively given a boost to the development of the E-commerce logistics industry in the Philippines.

2. However, the country has some logistics constraints that inhibit growth but the government is on the way to resolving the bottleneck and helping the market to thrive

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The e-commerce logistics market has several bottlenecks. Existing burdensome and complicated customs processes have been the subject of a lot of complaints, even for low-value shipments.

Moreover, a lack of awareness of customs taxes and duties has resulted in creating confusion among those Filipino consumers who buy online from international websites and those who ship local products to international buyers. Also, a unique challenge for an online merchant in the Philippines is the low trust among Filipino consumers towards credit cards. According to a Money Max survey, many Filipinos are reluctant to get credit cards because they fear it will lead to overspending and debt. To curb these issues, the government has been taking several initiatives

3. Additionally, the technology disruption will enhance the e-commerce shipment in the country and enable the logistic sector to boom with double-digit growth in the future

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The Philippines e-commerce logistic market is poised to witness technological disruption. Machine Learning and Big Data Analytics can resolve the existing inefficiencies in the market. Further, up gradation in Technology such as GPS Monitored Robots, Drones, Inbuilt RFID, GPS, IoT, and telematics that will be used for tracking Inventory. This will lead to an 80% increase in damage protection, 25% rise in vehicle utilization, and a 20% growth in line haul visibility.  Also, real-time tracking in the last mile delivery will enhance the number of deliveries by 35% in the industry. Owing to technological advancement along with government strong initiatives to support e-commerce logistics in the Philippines, the market has a high potential to grow with a double-digit CAGR in the next five years.

3 Catalysts in Philippines E-Commerce Logistics Market: Is the Growth Sustainable? : Ken Research

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Philippines E-Commerce Logistics market is expected to reach almost PHP 67 Bn in terms of revenue delivering nearly, 1 Bn shipments in 2025.

1. With the Support of Government’s Philippines E-Commerce Roadmap (2015-2020), Philippines E-Commerce Logistics Market Recorded More Than PHP 20 Bn in 2020.

Cross – Comparison: Digital Trends in 2020: Click to Know More

The Country’s Department of Trade and Industry (DTI) developed the Philippines E-commerce Roadmap (2016-2020) with a primary goal of getting online business activities to account for 25% of the country’s GDP by 2020, up from 10% in 2015. The main focus areas are Infrastructure, Investments and Innovation is in the process of building clear rules and support systems for customers and other online merchants.

2. Gadgets & Electronics is the Top E-Commerce Product Category With 33% Share, Followed by Fashion & Footwear With 28% Share in Total Online Purchases.

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Growing awareness among Filipino consumers about global brands as well as preferences for improved and latest fashion trends and technologies has heightened the demand. Moreover, Updated Technology such as GPS Monitored Robots, Drones, Inbuilt RFID, GPS, IoT, telematics will be used for tracking Inventory.  Lately, Gadgets & Electronics is the Top E-Commerce Product Category With 33% Share in Total Online Purchases.

3. Several Government Initiatives Support E-Commerce Market in Philippines to Reach Almost PHP 67 Bn in Terms of Revenue Delivering Nearly, 1 Bn Shipments by 2025.

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• Bangko Sentralng Pilipinas (BSP), along with other industry stakeholders, launched NRPS to increase retail electronic payment transactions to 20% by 2020 and in due course to also improve the country’s economic competitiveness. Self-governing body of direct clearing participants called the Payment System Management Body or PSMB was created on 31 March 2017 to assist BSP. Launch of 2 specific Automated Clearing Houses (ACHs), PESONet on November 8, 2017 and InstaPay on April 23, 2018.
• BBB” program consists of around 20,000 infrastructure projects nationwide, including roads, highways, farm-to-market roads, airports, seaports, terminals, evacuation centers, lighthouses, hospitals, schools, government centers, etc. Average percentage of infrastructure budget to GDP was0% or PHP 932 Bn ($19.1 Bn) in 2017-19. In 2020, budget allocation for the “BBB” program was 4.6% of GDP (PHP 972.5 Bn) due to COVID-19.