‘Logistics must keep pace with e-commerce growth’

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THE logistics sector must keep up with the rapid growth of e-commerce in Asia through continuous innovations to meet the needs of retailers and consumers, an industry expert said.

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Colin Mewburn Mercer, vice president of Global of Integrated Supply Chain Solutions at Agility, said 20.4 percent of retail sales in the Asia Pacific region will be done through e-commerce by 2019, which is double the 10.4 percent e-commerce penetration at present.

“While it is essential to the survival of retailers, the fulfillment of those orders is simply seen as an added cost to them, thus putting pressure on logistics providers to provide their services both faster and at an ever-lower cost,” Mercer said in an article published in Logistics Insight Asia Weekly Digest.

The logistics expert said “there is an extra step” in complying with home deliveries or actual delivery of goods “to someone’s door” than the usual store deliveries with a set schedule.

“Accordingly, the supply chains and distribution systems the industry has come to know will have to evolve to meet the needs of e-commerce retailers and customers,” he said.

Mercer pointed out that retailers demand for three things in a logistics provider: visibility, vendor control and cost savings. “This is especially vital in fast-moving retail industries — in these sectors, the turnaround time can be so tight that logistics really makes a difference in whether or not a product can be sold,” Mercer said.

The retailers require that the goods are received by the customers “quickly and efficiently, without damage.”

According to Anne Rayner, the global head of communications of Taylor Nelson Sofres Inc. (TNS), the Philippines saw 9 percent growth in its e-commerce space last year, which is much higher than the average global e-commerce growth of 3 percent in the same period.

Some 20 percent of Filipinos have purchased products through online channels, half of which are done via mobile devices, Rayner said.

TNS said that in terms of e-commerce, the Philippines still has a lot of room for growth, but is only hindered by Filipinos’ inclination to buy “at the last minute” and their “trust issues” in online transactions.

In taking advantage of these challenges in e-commerce, Mercer said logistics providers should also evolve into meeting retailers and consumer demands by developing systems and processes which provide flexibility in providing solutions and a higher level of personalized service.

In the Philippines, the Department of Trade and Industry (DTI) has included logistics as one of the focus sectors of the Comprehensive National Industrial Strategy (CNIS) that aims to improve industry competitiveness.

The CNIS is the country’s blueprint for an overall industrial development strategy that will integrate the agriculture, manufacturing and services sectors. Its initial focus will be on five main sectors: manufacturing, infrastructure and logistics, tourism, Information Technology and Business Process Management (IT-BPM), and agribusiness.

Through the Industry Roadmapping Project (IRP) of the DTI, the logistics industry has also crafted its own roadmap that will serve as a guidebook in growing the sector moving forward.

According to the National Logistics Masterplan, the government should invest P5.7 trillion in infrastructure development to improve the country’s logistics sector.

The Duterte administration supports boosting infrastructure spending in the next six years to sustain the country’s robust economic growth.

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