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Shortening the last mile to curb shipping delays

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Filipino shoppers have complained of orders bought online during the seasonal 12.12 Christmas sale in 2022 that either did not arrive or were tagged missing. E-commerce customers have grown accustomed to snagging deals from brands as diverse as smartphone maker realme and car manufacturer Honda on such sales days.

Customers want their goods fast – but they also don’t want to pay much for shipping, as pointed out by Constantin Robertz, CEO of Locad, a Philippine-born logistics technology startup.

“The only way to [address] that…and be reliable and predictable is to shorten the last mile,” Mr. Robertz said.

“Change the origin-destination combinations, keep inventory closer to the customers, and then fulfill locally,” he added.

Shipping delays can be distilled down to three factors: location, order fulfillment, and inventory management, he told BusinessWorld in a January 16 event.

Location, Mr. Robertz said, is the distance between the order’s origin and its destination. If the warehouse is right next door, “there’s only so much that can go wrong… but if the parcel comes cross-border, the number of things that could go wrong along the way are exponentially multiplied.”

Mr. Robertz also pointed out that the demand surge during sales days like 11.11 and 12.12 goes up tenfold, and that merchants who are into product development and not fulfillment will likely take much longer to push out their orders.

“Sync your inventory across all sales channels so you don’t end up overselling and… scrambling to get the goods from the manufacturers,” he advised.

Locad, he said at the January 16 event, leverages a network of last-mile carriers, and then measures in real-time these carriers’ delivery lead times – from the pick-up, to the sorting center, to the destination city.

When a certain carrier encounters bottlenecks, “we change the allocation to the carriers that can do it faster,” he said.

Ecommerce in the Philippines

Shopee reported an increase of over 13 times in items sold in the Philippines during the first two hours of its 12.12 sales in 2021. The Singapore-headquartered company – alongside Lazada, Zalora, and BeautyMNL – are the country’s top ecommerce platforms.

The Philippines’ digital economy is expected to reach a gross merchandise value of $35 billion by 2025, growing at a 20% compound annual growth rate from the current $20 billion, according to an October 2022 report by Google, Temasek, and Bain & Co.

The main driver will be the e-commerce sector, the report said.

The Philippine government has long recognized the role of ecommerce, with its passing into law the Electronic Commerce Act (Republic Act No. 8792) in the year 2000. COVID-19, however, triggered the e-commerce turning point in the country. – Patricia B. Mirasol

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