Delivery Delay Hurts Philippines E-Commerce Sector

Last November and December 2015, I received numerous complaints on package delivery delays. There are many usual reasons behind this including the weather, traffic, public holidays, and events requiring road closures.

But these delivery delay problems are not new. They are much more painful now because of the increased volume of people ordering online responding to various e-commerce sites’ attractive offers. Most of the prominent sites posted no less than 20% growth.

And this is where the problem begins, we don’t have enough logistics or courier providers in the country to to serve the players and meet the increasing e-commerce volume.  The situation gets worst in the provinces where most of the people who order online are from.

In the end, both the customer and e-commerce merchant gets hurt in the process as these problems are already beyond their control.

No wonder in other countries, some e-commerce sites have their own delivery service as these parcels are their life. If their packages don’t get delivered, these customers won’t buy anymore from them or to any other online.

It has reached a point where I believe government should already intervene and update their current policies for this sector.

Addressing e-commerce supply chain challenges

The Consumer Protection on E-Commerce covers all players in this sector. The government needs to update its guidelines to address present conditions. These includes:

1. What is an acceptable delivery time period?

We are supposed to improve and get faster in delivery. We should already enter a phase mulling about same-day delivery and maximum of 2 days.

I shipped some books and documents in Metro Manila last December 14 and it took 2-3 weeks for them to be delivered.

Provincial deliveries were worst as boats and planes were mostly booked. Packages had to cue and all they can do is wait. Once it gets to the province, the lack of delivery transport or agents causes further delay. Naga City-based Apple Allison shared her experience on this issue.

Items ordered online that had to be shipped from overseas takes at least 5 to 6 weeks. Almost half of time is for local processing.

2. Who is accountable to delivery delays?

Some e-commerce sites compensate for this delay by giving a gift voucher to the customer. If an e-commerce site is big enough where everyone wants their business, this delay compensation can be charged to suppliers if they were the cause of it. But this is not a standard practice.

3. Quality of packages and Replacement

The delivery delays are already a bad thing. But what’s worst is when a package gets to a customer in damaged state.

1st time online buyer Remella bought 3 watches online on the last week of November 2015.

Her package were only delivered on the last week of December (after Christmas). The watches were wrapped in plastic.

Worst, 2 of the watches were damaged. For me, this is a case of bad packaging for those handling outgoing items from their warehouse. As these are watches and are fragile, they should be at least in a box or in protective packaging.

Remella had no choice but to contact the online store again to complain about it.

The site will have to make arrangement for the damaged watches to be picked up and wait for it to be replaced.

Remella can also see if replacing with other items can be an option or refund the amount paid for through credit card. This is a big consumer headache.

4. Functioning Help Desk is a must

Whenever I receive emails from consumers asking for help on undelivered orders, I ask them to forward me a copy of their last message or follow-up to the e-commerce site. They would usually indicate any or all of the following experiences:

• They don’t reply to emails.
• No one is answering the phones.
• No reply to their social media messages posted on the Facebook Page of an e-commerce site.

They seek for help asking if the site is legitimate or a scam.

The Consumer Protection on E-Commerce requires e-commerce players to provide the following information on their site:

1. Disclose information about their business identity that includes: (section 5.1)
– Business registration number
– Name of owners
– Address
– Contact information
– Representative agent for summons

2. Merchants are required to set-up their own internal complaint handling system.

It is unfair to see an e-commerce site doing tons of online marketing but hardly have a delivery, fulfillment, customer service infrastructure to match it. They have to be balance.

5. Out of stock items

Online buyer Jonna contacted me about purchasing a lot of items, worth almost $1000, from an e-commerce portal last Christmas Day.  Some of her items got delivered but a big number of them were out of stock. She was offered a refund for the remaining amount. But since this takes time through credit card, she opted for it to be converted to store credits.

E-Commerce portals should make an effort to ensure that their listings are accurate. Collecting payment from a customer ahead and not being able to deliver due to “out of stock” is no longer reasonable unless there is a commitment of turn-around refund time.

6. Accurate Pricing Information to Guide Customers

My Facebook connection, Donald, sent me a message alerting on the use of “original price” and the introduction of a sale price. A search on “Sandisk OTG On-The-Go Ultra Dual USB Drive 3.0” drives the following results from OLX, Lazada, and Goods.ph.

For OLX results, prices vary. You can choose an item seller near you, if available, should you prefer meet-ups.

For most classified sites, products sold are either pre-owned or brand new. Some may have warranty or not – depends if it is being sold by an individual or business. Assumed to be genuine. Buyers need to check on the seller’s reputation and feedback when making a purchase.

Searching on Lazada shows the item’s original price is P540 while its sale price is P449. While Goods.ph shows the original price as P950 and its sale price at P531.25.

Although e-commerce sites are usually dependent on the prices provided by their suppliers, they need to ensure this is updated based on present market rates to avoid misleading discount accusations.

7. Fake items sold online

E-Commerce affiliate Apple consulted me recently about a bag, bought in a shopping portal, by a buyer friend who claims that it was fake. To make sure, she visited the brand retail outlet to show the bag and was given a brief by the store manager on what is real and fake. Indeed, it was not authentic.

Furious, Apple checked the seller and searched for it online. She saw the seller having a Facebook page , called and asked why are they selling fake bags on this prominent shopping portal. The person who answered said the bag was real and committed in giving her a copy of the purchase receipt. Later that day, no receipt was sent and she was given instead a link on how to file for a refund from the portal site.  The seller also took down the bag from the site listing.

Although shopping portals penalize sellers who sell fake items and faulty service, but if no consumer files a complaint, imagine how many gets deceived in the process. Both portal and seller are accountable under the Consumer Act of the Philippines and other laws in these situations.

8. Uncertainty in Taxes for Overseas Orders

When an item you ordered is from overseas and bought it from international sites, this usually arrives within 4 to 8 weeks.

Upon reaching your Philippine Post Office, you will be asked to go there, they open the package, and pay the corresponding amount which is usually around at least 20% of its assumed value.P50 at the minimum.

I use “assumed” as even if you got an item so cheaply from countries like China, you might even find yourself paying taxes equivalent to the amount you purchased of the item. They now asked you to present the purchase receipt or Paypal receipt for ordering proof.

If your order passed through international couriers for faster delivery, the experience is even worst. You would have to go an office near the airport and with no idea yet on how much you need to pay as it needs to be assessed first. The amounts charged once you get there are horrendous as well. The experience makes you just want to explore the long shipping periods as the Philippine Post Office is much less of a nightmare and more “reasonable” in their fees charging.

That is why I hope the President, Vice President, Senators, and Congressmen we will elect are those who have the Customs Modernization and Tariff Act as one of their priorities.

Our current policies in this area is what makes us not competitive in the export market. While China-based e-commerce sites can offer free shipping to many parts of the world, we are unable to export competitively as our international logistics process and taxes still live in the 80s or 90s era.

The updating of the Consumer Protection Policies on E-Commerce and passing of the Customs Modernization and Tariff Act are key deliverables in the Philippine E-Commerce Roadmap. Private sector and government must work together to address these issues to make our country e-commerce competitive.