Can you think of a circumstance where there’s no detailed arrangement or plan regarding the movement of inventory from its starting point to the point of delivery? The whole idea of managing e-commerce operations will remain pointless if you don’t have a systematic approach to follow by!
While the warehouse, inventory, and order management could be some of the crucial aspects of your business operations, the one element that binds them together is logistics. What exactly is logistics and what is its role in running a business successfully, especially if you are operating in the Philippines?
Right from determining the order routes (based on expediency, regulatory environments, etc.) to aligning shopping providers as per the nature of the order, a systematic logistics management system attributes to minimized operational costs and amplified business profits.
Growing E-commerce Opportunities in the Philippines!
Are you planning to start your own e-commerce empire in the Philippines or you are established in the country but want to expand operations and boost business profits? Well, the answer is to ‘Manage your Value chain by organizing logistics operations’.
Despite the Philippines not keeping up with the growing trends of e-commerce digital in the early 2019s, the country today represents major opportunities for all sorts of e-commerce businesses. According to a report from Facebook and Bain & Company, the share of the people who shop ‘mostly online’ grew from 33% in 2020 to 45% in 2021 from the economies including Singapore, Malaysia, and the Philippines.
So amid such growing demand, wouldn’t you also want to grow your bottom line? Before we go deep into the topic, we would like you to first understand the logistics challenges that e-tailers like you are already facing and couldn’t grow any further. Don’t you want to find that out?
Logistics Challenges that E-commerce Businesses are Facing in the Philippines!
From travel restrictions to the closure of borders, the coronavirus pandemic last year deranged the logistics operations. While logistics in many other countries faced the same challenges, a report from OECD highlights that the cost of logistics to sales remains high in the Philippines at 27%. Comparing the rate with other SEA-based countries, it’s quite high! According to the report, customs processes delays, congestion, delays in cargo delivery, are some of the major issues in logistics.
Moreover, there have been many instances of unsatisfied customers due to damaged goods and delayed delivery. Be it linguistic barriers or poor logistics infrastructure or high shipping charges, there are many challenges faced by online businesses. So let’s study these challenges in detail.
1. Error-Prone Manual Processes
Even today after the advancement of technology, businesses are highly dependent on manual logistics operations. For instance, let’s take the case of the AWB number into consideration. In order to generate the AWB number of a consignment, your dependency as a seller increases on the logistics partner. The whole process of generating and assigning the number to each shipment takes both your and your logistics partners’ time. Not to mention that the discrepancies in the value chain along with the longer lead times could become the by-product of manual processes.
2. Faulty Infrastructure
The Philippines is roughly classified into two main regions; Luzon and VisMin (Visaya & Mindanao). While travel is difficult from one region to another, there are many linguistic barriers as well as the language; Tagalog and Bisayaof both regions are totally different from each other. Moreover, the status of transportation in the Philippines could be defined by congested streets and traffic issues, which only increases the lead time of order delivery. And this becomes an absolute problem when it comes to the delivery of perishable goods – given their shelf life is less and they may get expired before reaching the destination. The problem gets magnified when the delivery platform you have integrated into your system does not deliver to a specific location or isn’t aware of the nooks & crannies of the locality.
3. High Logistics Cost
The absence of the larger authorities around the country to track the movement of the goods generally create inconsistencies in the logistics, increasing the cost of shipping. Now, these overhead expenses could either be borne by the seller or the consumers. While the former could actually minimize the profit margin, the latter could lead to poor customer service, which would eventually discourage them to shop more. But imagine if you would have the choice the partner with different courier partner/shipping aggregators as per your preferences, then you might have saved your operational costs – given you can allot the orders based on the type of the shipping partner.
Know more about How to Sell On Lazada Marketplace in Southeast Asia?
4. Cumbersome Returns Processes
Right from manufacturing & production to transportation & distribution, operational glitches and distorted messages are bound to happen. And these all lead to high order returns. While returning an order is a cumbersome process, the failure could cost you both unsatisfied customers and heavy losses. Be it Customer Initiated Return (CIR) or Return To Origin (RTO), you can’t ignore the operational costs associated with them.
When the returned products re-enter your supply chain, it challenges your operational efficiency. Not only does it acquire your warehouse space, but there’s also a risk of it depreciating quickly than the other products. To help you understand the various struggles businesses witnesses when the customer returns a specific product, we have culled out a list of some main activities included in the process.
- Organize the warehouse space
- Allocate a dedicated area for returned products
- Segregate returns items based on their nature and type
Coming over to the bad returns (where your products get damaged in the process) you not only have to take care of the operational costs, but the product cost will also make its place in your expenses. But imagine if you would have systematic doorstep QC systems, you would not have to think about the expenses, don’t you think so?
As we mentioned earlier, logistics is what binds all of the other supply chain management solutions; warehouse management, inventory management, order management, etc., together. To overcome the above-mentioned challenges, your business needs a consolidated view via a single platform that can further simplify your logistics management. Why?
7 Reasons to centralize your Logistics Management in the Philippines!
1. Easy Returns
As returns management helps businesses enhance their customer’s experience, it’s always advisable to seek help from a solution provider who can manage the end-to-end process including sorting, integrating with smart shipping providers, providing AI-based reports, etc. But the question is why is it necessary to deploy a returns management system?
By serving the demands of your customer, you are not only enhancing their experience but also retaining social proof, as the chances to get positive feedback increase with the improved customer experience. Not to mention the fact that incorporating doorstep quality check processes in handy can help overcome the causes of bad returns.
2. Improving value chain visibility
You need to have complete visibility of the entire workflow; inventory receipt, storage, management of orders, and shipment. A centralized system enables you to ensure the shipments are following a prescribed route throughout the routing process and in case of any sort of disruptions, you can send notifications, alerts, etc., to the stakeholders so that actions can be taken on or before time.
3. Reduce extra costs
By centralizing the whole value chain from a single panel, you can track your operational costs and know when you are going over the budget. This way not only can you reduce that extra cost but also disburden your customers from delivery costs. Don’t you think?
Moreover, if you have a choice of shipping aggregators/courier partners, will it not become easier for you to leverage the specialties of each based on the region, nature of the order, situations, etc.? Also, you can align your delivery packages with the best-in-class logistics players in the area who are familiar with the area and the surroundings. You can integrate as many players by joining hands with e-commerce enablers like Unicommerce, which provides integrations with delivery partners such as Ninja Van, UPS FedEx, DHL, and many more.
4. Transparent operations
The integration of multiple processes, modules, and workflows lets you attain a well-structured organization where the information gets disseminated systematically. Also, the automation in AWB generation can save you time all while letting you monitor the fulfillment process from start to end. This way you can showcase the path of transparency to your customers all while achieving 100% accuracy in the inventory.
5. Enhance customer experience
Customer experience is not only limited to the ultimate purchase. Right from sending the order tracking details to delivering the order on or before time to supporting their queries throughout the process via phones, emails, etc., there are multiple aspects when it comes to retaining your customers. By integrating your order management with logistics, you can perform end-to-end tracking of shipment status all while offering a top-notch experience.
6. Identify potential order returns
You can set up an elaborative outbound quality check (QC) process amid the order processing process and ship the product only if it passes the QC test. This way you can reduce your order returns dramatically. To execute this, you need your logistics and warehouse management in place by centralizing your operations.
7. Achieve 99.99%+ order fulfillment rates
The main aim of any business is to process the received order as quickly as you can. To automate and streamline the operations, you can outsource e-commerce enablers like Unicommerce. With the operational flow being automated, you can perform several tasks including; allocating the warehouse, managing the inventory levels, and monitoring where the product is placed. By simplifying these processes, you can hasten the completion of the delivery process and decrease the order fulfillment time.
Check out how the new-age solutions of Unicommerce enabled Marico to achieve a 99.99%+ order fulfillment rate!
The Solution to Overcome Challenges – Consolidated Logistics Management System!
We have already understood the challenges that sellers are witnessing when it comes to managing logistics in the Philippines, but what’s the solution to these problems?
Do you think that integrating with the leading logistics companies alone will solve your problem? But what about the processes associated with it? Can you really fulfill orders faster if your order management processes are not synchronized? Or can you actually perform inward and outward logistics operations if the layout of the warehouse is not clear?
A problem that the sellers across the Philippines have witnessed is the contingency situations and logistics regulations. Moreover, the overall infrastructure is still under development to incorporate complete digitalization and automation of processes. So given all these challenges, can you actually scale your online business in the Philippines? The answer is YES! But one thing that you definitely need to take care of is having a consolidated view of your e-commerce operations. While the integrated logistics management process keeps your operational costs low, it also reduces the dispatch time and keeps the SLAs intact.