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
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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.
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