By Abhimanyu Kashikar
We’ve just passed the halfway mark of 2019, and in a few months, the Philippines will be ushering in the start of the ‘ber’ season—the four-month long period where Filipinos gear up for the end-of-year Christmas and New Year’s celebrations.
With the festivities coming up, so too will the number of people who are planning their holiday shopping. And this year—thanks to robust economic growth and rising incomes—Filipinos are expected to spend more.
Yet, while this is signaling a boon to sellers, the expected massive influx of shoppers (especially during the final weeks of the year) will prove challenging for them due to the pressures they’ll face when fulfilling their orders. This challenge will be more pronounced for sellers operating on online channels, considering the steady growth of the country’s e-commerce over the decade.
E-commerce is on the up
Thanks to its constant growth in internet penetration and social media activity, the Philippines’ e-commerce sector is now stronger than ever. Currently, the country has over 37-million e-commerce users with an additional 18 million expected over the next three years. On top of that, this year alone, revenue from the sector will reach close to US$1 billion.
The sector’s boom means that retailers are now more encouraged to sell their goods online. Although most Filipinos still choose to do their shopping in-store, e-commerce players are expected to enjoy a larger slice of the retail pie—especially as officials are working hard to help the e-commerce sector contribute a quarter of the country’s national GDP.
We can definitely see an all-in effort by sector’s stakeholders, but to sustain the industry for the long-term, the ones that need to thrive are the sellers themselves and, of course, their customers.
Biggest challenges faced by logistics players
The Philippines’ archipelagic geography and massive urban traffic gridlocks mean that e-commerce is becoming a more convenient option for Filipino shoppers. On the sellers’ end, this presents a lucrative opportunity to set up an online presence, which is relatively cheap even for new businesses. However, setting up an online commerce presence tends to be the easy part; the harder one is keeping customers happy by fulfilling their order on time—which can be challenging for logistics companies during holiday seasons due to last-minute shopping.
Any mishap occurring along the supply chain network can significantly disrupt the fulfillment process. Communication and management of the process are therefore pivotal; however, many logistics players still regularly face the following challenges:
Visibility. The company’s management has or very low (or in some cases, absolutely none) visibility over the overall operations.
Manual management. Most logistics companies still track and manage everything via hard papers or Excel sheets, leading to errors through a tedious and time-consuming process.
Productivity and growth insights. There is no visibility on the team’s performance; additionally, the management has no insights through which they can aim for better growth.
Accounting and ERP (enterprise resource planning) connectivity. A lot of companies using third-party systems are unable to sync their multichannel selling data with their systems.
On top of these challenges, logistics companies in the Philippines face the issue of infrastructure, which has not kept apace with the steady growth of e-commerce (although this is set to pick up due to the government’s priority to invest in infrastructure). Because of this, e-commerce stakeholders operating on the supply side need to look to technology to bridge the fulfillment gap.
Digitizing delivery processes
While big firms have been able to invest in the right technologies to provide more timely, reliable and safe deliveries, the longevity of the Philippines’ e-commerce sector will depend on the participation of even its smallest players.
Yet, the introduction of new digital technologies for logistics is helping sellers, marketplaces and logistics companies (big and small) realistically rethink and strategize their operations to the benefit of their customers. They are raising the accessibility of innovations for more market players, which can lead to inclusive growth of the Philippines’ logistics sector and, in turn, benefit the consumers with more efficient fulfillment of their orders.
Some of the benefits of digital solutions for logistics include:
They are typically web-based and on-demand. This means that they are more flexible and easier to deploy to meet the specific needs of an organisation, no matter its size or the complexity of its processes
User friendliness. The solutions have been designed to streamline and manage complicated logistics problems by taking more integrated, holistic approaches to processes such as marketing resource management. This sort of end-to-end functionality helps to optimise planning across the supply chain.
Better resource utilization. SaaS offerings give companies greater access to more advanced tools for route planning such as dashboarding and multichannel data analytics; helping to negate high investment costs related to complicated systems integration and hiring in-house IT staff to manage the process. This is particularly beneficial for newer and smaller companies.
The Philippines e-commerce sector is now performing at an all-time high. It is helping to provide consumers with more intuitive and convenient ways to shop during the end-of-year shopping rush, whilst simultaneously providing more options for sellers and logistics companies to effectively take part in the digital economy. However, the ones that can tap into the right digital technologies to power their businesses will be the ones reaping the benefits in the long-term.
Abhimanyu Kashikar is co-founder and COO of Anchanto, an e-commerce company with presence in 14 countries.