Known as one of the highest internet penetration rates and are the most active on social media, 73 million Filipino internet users spend an average of 9 hours and 45 minutes per day on the internet, with 3 hours and 53 minutes spent on social media sites, according to the We Are Social report from January 2020.
It continues to increase significantly at the height of the pandemic in 2020, where Filipinos adapt to the new normal, and almost everything is done digitally. Powered by the Internet, Filipinos began remote working, studying from home, and even paying bills and government dues. Using mobile phones to complete daily tasks such as grocery shopping and dinner preparation without going to malls and grocery stores has resulted in our country’s highest increase in mobile e-commerce adoption. According to the We Are Social report released in January of this year, 69.6% of Filipino internet users aged 16 to 64 purchased something online using a mobile device.
With consumers increasingly turning to online shopping amid pandemic restrictions, entrepreneurs have become even more receptive to digital phenomena. Online business transactions have been transformed by technology into an endless marketplace where doing business has become more convenient and efficient for both vendors and vendees.
According to The Department of Trade and Industry (DTI) Secretary Ramon M. Lopez, online business registration has already reached 93,318 for January 2021; most of these businesses were registered during the strict lockdowns that began in March last year. “This is a clear indication of Filipino resilience, as many of our countrymen have adapted to the difficult times,” Lopez said.
The majority of new online sellers are micro, small, and medium-sized businesses (MSMEs). These are the merchants and vendors who were initially impacted and displaced by the COVID-19 situation. Fortunately, they eventually adjusted and shifted to an online platform. They are not only surviving but also thriving during the pandemic.
President of the Management Association of the Philippines (SCMAP), Pierre Carlo Curay, said that revenue in the e-commerce market was $953 million in 2019 and is expected to reach $4.42 billion this year. The year-on-year growth rate of e-commerce is at 14.4%, and the revenue is expected to show an annual growth rate of 16.7%, resulting in a market volume of $7.6 billion by 2025.
E-commerce filling the gap for Logistics & Warehousing
The rapid boost of the e-commerce industry in the Philippines also supported the growth of the logistics sector and industrial real estate market amid the new normal. Innovations and initiatives in E-commerce logistics are becoming more common to meet the immense logistics demand. At the same time, modernization and expanding warehouse facilities will provide opportunities for higher value and profits.
Logistics companies are embracing automation trends by utilizing API integrations to connect e-commerce stores with a fulfillment center, in addition to traditional Electronic Data Exchange (EDI). The demand for efficient goods and fast shipping is also expanding. As a result, the Express Delivery market and e-commerce in the region are thriving. To meet the time-sensitive needs of the logistics sector, express delivery systems have established a door-to-door link across domestic and international markets and developed advanced shipment tracking facilities.
Meanwhile, logistics facilities continue to tap rural markets outside city centers in the Philippines to deliver consumer goods and retail products to rural areas. More industrial space outside the NCR is expected to become available as land and property owners capitalize on changing consumer behavior.
According to SCMAP President Mr. Curay, due to the growth of e-commerce, a lot more will go into warehousing. “There will be a lot of fulfillment centers, and there will be fulfillment centers more direct to customers, and the growth will be there. Technology is further to manage a very complex supply chain”, he added.
Given this, it anticipates “healthy demand” for warehouses in the coming year, noting that the sector already accounts for 70% of the country’s economic output, as indicated by the increase in storage investments in the Philippines. According to the Philippine Statistics Authority (PSA) report, transportation and storage accounted for 53.4% of total foreign and Filipino investments approved during the first half of 2020.
It is expected that the transition for buying goods online will be long-term and permanent for most consumers as the pandemic has significantly changed retail behavior in the Asia Pacific and around the world. As a result, even after the crisis caused by the Covid-19 pandemic, the Philippines’ logistics and warehousing industry will thrive. To support this growth, leading property firms such as Ayala Corp., SM Investments Corp. at Filinvest Land Inc. have invested and are currently engaged in logistics and industrial developments.
According to Forbes, the demand for warehouse and storage space is closely related to consumer spending and the state of a country’s economy. The recent surge in e-commerce and online shopping provides a healthier, more stable, and resilient source of demand for the industrial market, and experts predict that this trend will continue even after the pandemic.
Online shopping has been a driving force behind the rapid acceleration of warehouse demand across the country, creating an ultra-competitive environment for potential investors in these properties. It aided the growing need for warehouses and distribution hubs to support storage and logistics firms, allowing this sector to outperform other commercial property types. This simply proves that the Philippine real estate sector remains one of the most dynamic and adaptable industries even during a pandemic or any global trend. Commercial, retail, and industrial spaces are expected to evolve continuously in response to consumer demand.
“AVISO is a real estate consultancy firm that provides Comprehensive Site Selection (CSS) services that involve industrial and logistics hubs for retail and e-commerce. Our team assists in the process of securing a new location for clients through a comprehensive approach that includes several criteria with consideration for technical, economic, social, and environmental aspects. For inquiries and property requirements, you may send us an email at brokerage@askaviso.com, or call us at (02) 8 570 6535 and 0917-629-8396.”
Written by: Mary Grace Ladringan and Angelo Gandia
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References:
https://www.cleo.com/blog/logistics-management-trends
https://psa.gov.ph/sites/default/files/Q1%202020%20AFI%20Full%20Report.pdf
https://business.inquirer.net/315854/capturing-warehousing-boom
