High-speed internet access in the Philippines and the growing popularity of online shopping drive the country’s -commerce market. In 2018, e-commerce revenue in this country amounted to USD 840 Mn. Another data said that e-commerce sales account for 2% of the total retail sales and will grow to 7% in the following years.
This development of e-commerce will indeed have some impact on the Philippine logistics industry. To find out how far e-commerce affects the logistics industry, we need to understand each of them.
The Overview of E-Commerce Market in the Philippines
Over the last few years, the Philippines’ e-commerce market showed steady growth due to various factors. Aside from the increasing online shopping popularity and penetration of high-speed internet access, this positive growth is also affected by increasing awareness of global brands and preference of up to date technology and fashion.
Zalora, Lazada, and Shopee are the leading e-commerce in the country. Alibaba Group has invested its capital in Lazada since 2016, and its total investment amounted to USD 4 billion. These platforms collaborate with technology-driven logistics companies, such as Ninja Van and Lalamove, to deliver goods effectively and meet customers’ demands.
Logistics Industry in the Philippines: Issues and Solution
On the contrary, transport and storage are worth around 4% of the Philippines’ GDP in the last five years. It shows that the logistics sector will grow steadily in the upcoming years and remains significant in the Philippines’ economy.
The e-commerce market is not the only sector that depends on the logistics industry. Unfortunately, most business players in this industry suffer from various issues that cause inefficient flows of goods and the inability to meet the customers’ demand for transparency of order status. If business players do not address these issues right away, they will not keep up with the changing industrial activities.
Based on the latest white paper by YCP Solidiance on “Digitalization in the Philippine Logistics Industry”, these issues can be solved effectively by digitalization. Nowadays, only a small number of businesses have employed this modern practice, e.g., e-commerce companies and modern logistic service companies. Both of them have shown positive growth due to digitalization.
How E-commerce Market Affects the Logistics Industry
The Philippine e-commerce companies and logistics service companies depend on each other intensely and continuously. The former needs the latter to help them deliver goods to their customers effectively. Therefore, the logistics industry will continually develop as e-commerce grows. Both of them may not gain the same growth level, but the logistics industry can try to keep up e-commerce growth if the former go digital as soon as possible.
Digitalization is crucial in helping the logistics industry shorten lead times, offer transparent order statuses, and adapt to the changing e-commerce market. It can be achieved in various ways, such as purchasing software and hardware, hiring experts, invest in digitalized companies, and join the digital platform.
The Philippine logistics industry will be significantly benefited from digitalization. By employing this strategy, this sector will grow hand in hand with the e-commerce market so that business players will seize the opportunity presented in both industries.