Asia Business Channel

Despite retail malls, E-Commerce continues to expand in the Philippines

High-end retail complexes are nationwide – An interior photo of the Ayala Mall in Quezon City.

 

Written by: Marilyn Balcita
Special Correspondent, Hong Kong Trade Development Council

“Its rapidly-developing economy has seen new malls become a common sight in the Philippines' second and third-tier cities, but – less visibly – e-commerce is also getting to grips with this archipelago nation's logistical challenges.”

The digital future was very much the theme of this year's Manila-hosted National Retail Conference & Stores Asia Expo. Now in its 26th edition, the Philippine Retailers Association-organized expo is the country's longest-running tradeshow in the sector and one that has only been buoyed by recent economic developments.

As one of the fastest-growing economies in Asia, it's no surprise that new shopping malls are springing up across the Philippines, with many provincial towns and cities benefitting from preferential government development policies. Retail accounts for about 23% of the country's services industry, with the sector having grown by 5.9% in 2019. With municipal and senate elections being held in the May this year, this also provided a boost for the sector, with both food and beverage, and fast-moving consumer goods sales enjoying a notable upturn.

At the same time as high street retail outlets and out-of-town malls are benefitting from higher levels of investment, the country's e-commerce sector is also developing apace, a move spurred by the evolving logistics solutions that are increasingly geared to surmounting the thorny problem of making timely and cost-effective deliveries across the archipelago nation's 6,000 constituent islands. With a recent report by Statista, the Hamburg-headquartered market and consumer data aggregator, indicating that e-commerce revenues across the Philippines climbed 22% in 2018 to US$840 million, from $688 million a year earlier, it seems clear that these solutions are proving to be effective. For 2019 as a whole, revenues are expected to exceed $996 million.


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Entrego: End-to-end fulfillment


In domestic terms, Taguig-based Entrego is one of the big new B2C logistics companies to have emerged to tackle the challenges of the e-commerce age head-on. Originally set up as the in-house logistics operation of the Zalora online shopping site in 2013, it was later spun off as a separate joint-venture company between the Ayala Corporation, the Makati-based business that is the country's oldest and largest conglomerate, and the Global Fashion Group, a Zalora affiliate.

Outlining Entrego's current range of services, Sales Representative Mikko Cariño said: "We have three main divisions that underpin our end-to-end fulfillment solutions service – warehousing, parcel management and freight forwarding. At present, we are primarily focused on parcel management and can deliver to about 98% of the country. In total, we service some 32,000 villages from more than 60 hubs throughout the islands. As 70% of Filipinos are unbanked and want to use cash, we also offer a payment-on-delivery collection service for most of our online retail clients.

"We also have booths in a number of malls where customers can collect their orders. Filipinos tend to visit malls quite frequently, so if we provide collection points in such locations it means that they can do a number of things at the same place and at their own pace. We also offer more traditional delivery options, such as requiring bank cards or other documentation."

Another spin-off logistics business exhibiting at the event was 101 New York, a division of the Gramans Group, a Manila-headquartered clothing manufacturer / distributor. Outlining the company's development, Senior Sales Manager Marty Vidal Habulan, said: "We set up in the early 1990s and were mainly dealing in fashion products. As we expanded, we garnered a lot of expertise on the logistics front, which led us to create a dedicated freight-forwarding company back in the early 2000s.

"Although we still handle a lot of garments, we have also moved into construction logistics, with our clients tending to be local companies that are importing various items. We also work with SM, one of the largest retailers in the country. At present, we are focusing on developing our food-storage business and expanding our e-commerce delivery services."

Among the many exhibitors offering software solutions for managing the growing complexities of modern retailing was Anchanto, a Singaporean provider of backend e-commerce services that has now opened a dedicated Philippines office. Outlining the company's particular offer, Inside Sales Manager Cedrick Eng said: "Primarily, we are selling two individual software products. The first, Sellusella allows a client to manage and co-ordinate all its online shops. If, for example, you are maintaining five online store accounts – Zalora, Lazada and so forth – you can consolidate them all using the system and ensure that one update will automatically update them all.

"Our other product is Wareo, a warehouse-management system that handles everything from receiving to outbound picking, packing and palletization. We also offer a range of pricing options so that start-ups can get in at a low-cost level with an SME account and then scale-up as and when they need to."


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Retail Associates: E-commerce management


One local company that offers analogous services is Retail Associates, a Pasig City-based business that started life as an IT consultancy in 2006. It now provides advisory and software solutions to both overseas and local retailers. Explaining where the company fits into the overall retail mix, Product Manager Jayson De Leon said: "As we are a Microsoft World Partner, all our software integrates with their systems. We also provide specialised management facilities tailored to the needs of different retail segments, ranging from clothing lines to hospitality services.

"We also offer an integrated accounting system that has an embedded e-commerce management facility with a high level of functionality. You can use it for everything from designing your website through to managing your click-and-collect operations. We are anticipating sustained growth in this segment and are already servicing some fast-growing clients, such as All Day, which has about 100 stores in the Philippines."

Among the big US software players attending the show was Atlanta-headquartered Aptos. Having now established offices in both Singapore and Hong Kong, the company is targeting growth in Asia for its proprietary Singular Commerce Platform, a system designed to unify every aspect of the management of a retail business. Outlining the company's current priorities, Solutions Sales Director Matteo Pulze said: "For 2019, we are very much focusing on the Philippines. Worldwide, we have about 1,000 clients and typically target tier-one and tier-two operations. We see a lot of potential here and we already have a customer-service center established locally.

"Among our existing local client base is Golden ABC, a retail operation that began as a modest Philippines-only business back in the 1980s. Now it is a 900-store fashion behemoth, with outlets throughout Asia and the Middle East."


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National Retail Conference & Stores Asia Expo: Showcasing what's in store for vendors and distributors


The 2019 National Retail Conference & Stores Asia Expo took place from 15-16 August at the SMX Convention Center, Pasay City.




 Editors Note:

 Marilyn Balcita, Special Correspondent, for the Hong Kong Trade Development Council (HKTDC), wrote this
 article. All content rights are solely those of the HKTDC and we republish this article by kind permission of the
 HKTDC. For more information on the activities, events and research of the Hong Kong Trade Development
 Council, please visit them on the web at: https://hkmb.hktdc.com/en



 

 

 

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