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Biz Buzz: Logistics craze

/ 12:12 AM April 10, 2017

We’ve seen conglomerates like Henry Sy Sr.’s SM Group and Manuel V. Pangilinan-led Metro Pacific Investments Corp. making a big play in the logistics sector but what about the country’s oldest conglomerate, Ayala Corp.?

Ayala said it was considering certain areas in the sector, although it was careful not to elaborate. Despite the secrecy, Ayala —whose core businesses are property, retail, telecommunications and banking—has already made a recent logistics investments and even disclosed it to the public.

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We’re talking about its recent acquisition of online apparel retailer Zalora Philippines, controlled by Rocket Internet-born Global Fashion Group.

The most apparent reason was Ayala’s entry into the fast-growing e-commerce segment. For Zalora, fresh equity would help it acquire more brands, while tapping the Ayala Group’s massive base of offline retailers.

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But almost invisible to the public eye is the literal engine of Zalora’s business here: A thriving logistics arm that comprises 400 motorcycle riders, apart from warehouses and delivery hubs.

According to Zalora Philippines co-founder and CEO Paulo Campos III, its own “Zalora Express” delivery service handles about 75 percent of all the company’s orders (the remainder are third-party providers).

The arm, which started with just five riders, was in response to the Philippines’s vast population of people with no credit cards or bank accounts, meaning cash on delivery was the name of the game. Zalora Express now serves the country’s top 90 cities, Campos said.

“People think an online business is a website,” Campos said. “But I would say the website is 10 percent and 90 percent is the stuff you don’t see: The warehouse, the drivers, the deliveries and returns.” —MIGUEL R. CAMUS

Solar tech for less

Solar Philippines, founded by young entrepreneur Leandro Leviste, dreams of a future where every rooftop in this country can generate electricity. A fanboy of American business magnate Elon Musk—the man behind Tesla and SolarCity—Legarda similarly seeks to make solar power accessible to households and small businesses in this part of the world at a cost lower than current electricity prices.

The solar company is set to roll out to a broader market a leasing scheme erstwhile offered only to shopping malls like SM. It proposes to install the solar panels at zero upfront cost, converting as many rooftops as possible into power plants. This scheme is seen enabling Filipinos to save 20 to 30 percent on electricity and also bring comfort to people living in areas susceptible to power outages.

The standard lease terms will be 10, 15 and 25 years at zero upfront cost and transfer ownership to the homeowner at the end of the term period at zero back-end cost. Leviste tells Biz Buzz he’s targeting an average leasing rate of P1,500 a month for 1.5 kilowatts, inclusive of the entire system and installation. This is, in turn, seen to result in an average savings of P2,000 a month. The actual rates will vary depending on the chosen lease term and location.

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Solar Philippines will initially target Manila, Cebu, Davao, Iloilo, Bacolod, Palawan, Mindoro, and other cities with the most expensive electricity.

“While some people want to save Planet Earth, everyone wants to save on electricity and we hope this new model can bring solar panels from 1 percent of rooftops to 100 percent in a few years,” Leviste said.

Last month, Solar Philippines opened a solar panel factory in Tanauan, Batangas, allowing it to mass-produce the solar panels. The company is now working to convince utilities to shift to solar, but notes the challenges of introducing new technology to a highly traditional industry.

“Utilities continue to sign up with expensive coal, gas and diesel, despite [the fact] that solar is already cheaper,” says Leviste. “It may be more practical for solar farms with batteries to supply the utilities which supply consumers. But until utilities divorce fossil fuel, going direct to consumers is a necessary step. We hope that, when they see millions of Filipinos choosing solar over fossil fuel, they, too, will shift to cost-saving renewable energy.” —DORIS DUMLAO-ABADILLA

Telcos vs rich villages

It appears the gloves have come off for the country’s telco operators on the issue of homeowners’ associations of the various gated communities that have been barring or hindering their entry.

Globe Telecom this week published an “open letter” calling out dozens of villages for preventing the construction of cell sites or dragging their feet when it comes to acting on right-of-way applications for fiber lines.

To be accurate, this is a long-running issue. But the pressure on Globe and PLDT is especially high these days now that spotty telco services have become an official talking point of no less than President Duterte.

Furthermore, PLDT and Globe have bound themselves to an end-2018 commitment to the government to rollout LTE, or high-speed mobile internet, across almost all cities and municipalities. That was a condition for a co-use agreement for telco frequencies assigned to San Miguel Corp., a key part of PLDT and Globe’s joint acquisition of SMC’s telco unit last year.

Surely, neither telco can claim to meet that commitment if villages that dot Metro Manila still lack good internet services.

While service quality still leaves much to be desired, Globe is doing right by engaging these homeowners’ associations, whose behavior has been less than reasonable to date.

Fear tactics play a role, as association officials scare residents that radiation from cell sites can cause serious diseases, like cancer. It has been proven a myth many times over by modern science.

All the while, residents languish due to poor mobile network quality in their homes.

As a telco official noted, those who complain the loudest are the same people who oppose the entry of the telcos in their exclusive communities. As is often the case, ignorance carries a high price. —MIGUEL R. CAMUS

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TAGS: ayala corp., Business, Henry Sy, Manuel V. Pangilinan-led Metro Pacific Investments Corp., solar energy, Solar Philippines, telcos
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