Philippines E-commerce Logistics Market Outlook to 2028

Philippines E-commerce Logistics Market Overview

• The Philippines' E-commerce Market has experienced significant growth, reaching a valuation of USD 1727.3 Mn. This expansion is primarily driven by the increasing number of active internet users. The surge in online activity has been further propelled by the COVID-19 pandemic, as more Filipinos turned to online platforms for shopping due to movement restrictions.

• Metro Manila stands as the dominant region in the country's e-commerce landscape. Its prominence is attributed to its high population density, advanced infrastructure, and a tech-savvy consumer base. The concentration of businesses and better internet connectivity in Metro Manila compared to other regions have made it a hub for online retail activities.

Philippines E-commerce Logistics Market Segmentation

Philippines E-commerce Logistics Market is divided into further segments:

• By Category of Products: The Philippines International E-Commerce Logistics Market is segmented by product category into Apparels, Electronics, FMCG, Health Care, and Others (including Home Care & Furniture, Toys & Baby Products). Apparels dominate the market, as Filipino consumers increasingly purchase clothing, footwear, and accessories from international platforms.

• By Payment Mode: The Philippines International E-Commerce Logistics Market is also segmented by payment mode into Cash on Delivery (COD) and Non-COD. COD is the dominant payment method, accounting for 78.4% of international shipments. This is driven by Filipino consumers' preference for paying upon delivery, especially for purchases from unfamiliar overseas retailers.

Philippines E-commerce Logistics Market Competitive Landscape

The Philippines E-commerce Logistics Market is dominated by a few major players, including J&T Express, Flash Express, YTO Express, NinjaVan, and GoGo Xpress. These companies have established strong distribution networks, fast delivery solutions, and competitive pricing, making them the go-to logistics providers for e-commerce platforms such as Shopee, Lazada, and Zalora.

Philippines E-commerce Logistics Industry Analysis

Market Growth Drivers

• Improvement in the Philippines' Global Ranking in Logistics Performance Index: Department of Trade and Industry (DTI) reported that according to the World Bank survey, there is a significant improvement in the Philippines' global ranking in the 2023 Logistics Performance Index (LPI). From a middle third position at 60th spot among 160 economies in 2018, the country now ranks 43rd, or in the top third among 139 economies.
• Rise of TikTok Marketplace in the Philippines: TikTok marketplace is rising quickly in the Philippines as a new social E-Commerce platform. After launching their business on TikTok Shop, they have received 4,000+ orders in some regions from the platform, on top of their combined 6,000 orders from Shopee and Lazada.
• Outsourcing Logistics to Third-Party Providers: Many businesses are outsourcing their logistics needs to third-party logistics (3PL) providers to manage their warehousing, order fulfillment, and delivery operations. 3PL logistics players have the scale and wide reach which in-house logistics providers are not able to fulfill.

Market Challenges

• Infrastructure and Delivery Issues: The rapid growth of the Philippines' e-commerce logistics industry has been hindered by infrastructure-related challenges. Many areas, particularly in remote provinces, experience delayed deliveries due to poor road networks and unpredictable weather conditions. For instance, during the holiday season, major logistics providers such as J&T Express and NinjaVan struggle with delivery backlogs, leading to customer dissatisfaction.
• Preference for Cash-on-Delivery (COD): Filipino consumers have a strong preference for cash-on-delivery (COD) as their primary payment method. This creates operational challenges for e-commerce platforms that aim to promote digital payments. Shopee and Lazada, for example, offer various e-wallet and card payment options, but COD remains dominant, leading to issues such as higher return rates and increased risks of fraudulent orders.

Philippines E-commerce Logistics Future Market Outlook

Over the next five years, the Philippines' e-commerce market is ready for substantial growth reaching a market size of USD 4658.4 Mn by 2028. Factors such as increasing internet penetration, a growing middle class with higher disposable incomes, and the continuous improvement of digital payment systems are expected to drive this expansion. Additionally, government initiatives aimed at enhancing digital infrastructure and promoting online businesses will further bolster the market's development.

Market Opportunities

• Expansion of Logistics as a Service (LaaS): The Logistics as a Service (LaaS) model is set to revolutionize e-commerce logistics in the Philippines by offering seamless third-party solutions for order fulfillment, warehousing, and delivery. Platforms like QuadX and Lalamove are already enabling businessesespecially SMEsto scale their e-commerce operations without having to invest in costly infrastructure. In the coming years, AI-powered route optimization and real-time tracking technologies are expected to further enhance LaaS, leading to faster deliveries, reduced costs, and greater operational efficiency.
• Rise of Drop Shipping and AI-Driven Inventory Management: Drop shipping is emerging as a game-changer for the Philippines' e-commerce industry, enabling online sellers to operate without maintaining large inventories. Companies like Alibaba and Oberlo are facilitating the growth of drop shipping businesses by connecting Filipino entrepreneurs with global suppliers. As automation and AI-driven predictive analytics improve, drop shipping will become even more efficient and risk-free, allowing businesses to anticipate customer demand and avoid excess inventory issues.