Electronic commerce is bridging the gap between consumer demand and product supply amid the coronavirus disease 2019 pandemic that has disrupted nearly 90 percent of all businesses in the Philippines and other countries.
Major online shopping malls such as Lazada and Shopee are still in operation, and so are independent businesses running on e-commerce solutions provided by technology companies such as Anchanto, a Singapore-based software-as-a-service provider that offers end-to-end electronic commerce solutions including warehouse, inventory and product information management for brands and retailers.
Anchanto helps online sellers, retailers, brands, distributors, third-party logistics and fulfillment providers, warehouses, service providers and postal associations to equip themselves with e-commerce capabilities.
“Almost 30 percent of our more than 2,000 Filipino businesses onboard our platforms were able to continue their operations using our platform in this downturn as they managed to quickly change their models or were already in the essentials categories,” says Abhimanyu Kashikar, country head of Anchanto Philippines.
Kashikar says, however, that the pandemic has also substantially affected the e-commerce landscape in the country. “Indeed, the lockdown that has followed the pandemic has impacted all the businesses, and e-commerce is no exception. But the e-commerce businesses are relatively in a better position as compared to traditional retailers that are forced to shut shop completely, and are able to run operations with lower volumes,” he says.
He says among the challenges faced by the e-commerce sector during the Luzon-wide quarantine are in the areas of logistics and last-mile delivery as many villages restricted the movement of vehicles and individuals.
“For e-commerce, warehousing and logistics including last-mile delivery plays a very important role. With movements being restricted, running overall operations is becoming difficult for e-commerce businesses along with other industries,” he says.
“Like any other businesses, the e-commerce industry is greatly affected during this time. In fact, due to lockdowns and community quarantines, fulfilling orders for buyers and stocking up supplies for sellers are a big challenge today. Delays on deliveries as logistics and overseas shipments are on shutdown, even expiration and old stocks are expected as well at this time. We can say that the e-commerce seasonality curve is damaged,” says Kashikar.
He says despite the challenges, several e-commerce players remain active to help provide essential goods needed by the people who are under orders to stay at home. “For the e-commerce businesses, there has been a sharp shift in the buying behavior across various categories. There has been an exceptional growth in demand across daily essentials such as groceries, gym weight training equipment, electronics such as headphones, laptops, power banks, dog food, hair coloring products, work furniture such as tables and chairs, craft kits and projects,” he says.
Consequently, there was less demand for non-essential goods. “There has been a sharp decline in some of the other categories such as travel accessories such as camera, suitcases and camping equipment, part and event supplies, sunglasses and eyewear, luxury accessories and other outdoor equipment and gears. But some of the categories are outright blocked for sale on marketplaces, and this has caused enormous impact for many businesses,” says Kashikar.
Kashikar says while the overall e-commerce volumes have gone down, the demand for essential products has actually gone up. At the same time, he believes that many enterprises now see the greater value of e-commerce.
“Even though as we go through tough measures such as lockdowns and practice social distancing, life moves on and people continue to have needs. Businesses have realized this and hence they are trying to figure out ways to keep their operations running and serve their customers,” he says.
Kashikar says that as order volumes have gone up for the ‘daily essential category products, many businesses have started selling daily essential and grocery products with their existing setups. “Not only this, many of the traditional retail businesses are also trying to move to e-commerce and get inventory moving by listing on various marketplaces,” says Kashikar.
He believes that once the pandemic is put under control, the recovery of the e-commerce industry will be a gradual process. “While some of the categories will pick up faster than others, others will take a bit longer to catch up. This quarter will be recorded as the 'worst quarter till date' by many businesses,” he says.
Kashikar believes that major marketing and sales strategies will come up in the second half of 2020 to bring back consumers’ appetite. “This will encourage a large number of businesses leveraging strategies such as D2C [direct to consumers] to make the most of semester 2 of this year that will have many special season sales lined up. Not only retailers, but this will also encourage aggregators, marketing agencies, consultants, development agencies and similar businesses to help more businesses to adopt digitization,” he says.
He says the recovery will heavily depend on logistics which is the backbone of e-commerce. “Currently, with all major airlines shutting down their operations, freight costs have skyrocketed resulting in very high operational costs for fulfilling and shipping. But as soon as this situation changes, e-commerce volumes will rise once again and the industry will emerge stronger than ever. This situation has already started changing already with players such as Grab staring Grab Mart to deliver essentials. 3PLs will also join soon,” he says.
“One thing is certain—these past few days have changed the very dynamics of the industry, and as a result, e-commerce as we know it will never ever be the same again. We will witness newer investments in and more and more businesses will move towards e-commerce,” says Kashikar.
Kashikar expects the e-commerce sector in the Philippines to grow in the coming years, albeit gradually. "With an impressive annual growth rate of 12 percent, the e-commerce revenue in Philippines is expected to reach $1.3 billion by 2022 [Statista], making it a very lucrative market for businesses across Asia Pacific,” he said.
“As more businesses start exploring and shifting towards e-commerce, technology will surely play a very important role. While moving to e-commerce quickly will be a priority for traditional businesses, existing ones will be looking to expand their reach to more customers,” he says.
“With our tried-and-tested platforms, and more than 100 integrations, we can help all businesses scale and grow their multichannel e-commerce and logistics operations in the region. Businesses such as brands, retailers, e-distributors, service providers, online sellers, SMEs and even third-party logistics players can use our platforms to manage their end-to-end e-commerce operations,” says Kashikar.