The Rise of Express Courier in E-

commerce Business
Prepared for :
Indonesia Supply Chain & Logistics Summit
Jakarta, 19 May 2015

1
Topic
Indonesia’s Logistics Market & Growth
1
Prospects

2 Why E-commerce? Why Express Courier?

3 E-commerce Supply Chain Best Practices

4 Challenge & Opportunities

2
Indonesia’s Logistics Market &
Growth Prospects

3
 Indonesia Logistic Market & Growth
Overall Indonesia Logistic Market Situation

Industry size¹ of outsourced/contract

logistics service in Indonesia is
IDR 298.4 Trillion (~USD 29.0 Billion)
with more than 2,500 players².

1 The industry refers to Indonesia’s transportation, storage, and courier market

2 Only 920 companies are registered in INFA (Indonesian Forwarder and Logistic Service Provider Association)

Source: Spire’s Primary interview and analysis

4
 Indonesia Logistic Market & Growth
Overall Indonesia Logistic Market Situation

Industry growth¹ is promoted by GDP

growth and domestic consumption
as well as ASEAN Economic
Community by the end of 2015.

1 Industry refers to Indonesia’s transportation, storage, and courier market

Source: Spire’s Primary interview and analysis 5

 Indonesia Logistic Market & Growth
Overall Indonesia Logistic Market Situation

The industry¹ is inhibited by lack of

infrastructure and industrial
development plan as well as lack of
skilled labors.

1 The industry refers to Indonesia’s transportation, storage, and courier market

Source: Spire’s Primary interview and analysis 6

 Economic Growth & Logistics Market, 2014
25.0%

19.2%
20.0% 18.0%
17.2% 16.8% 17.5%
15.8% 15.3%
15.0%

10.0%
6.5%

5.0% 6.2% 6.5% 6.3% 5.8% 5.3% 5.5% 5.8%

4.6%

0.0%
2009 2010 2011 2012 2013 2014 2015E 2016F
Real GDP Growth Transportation, Storage & Courier

Growth of transportation, storage, and courier services in 2015 will be aided by the growth
of trading sector, especially the domestic ones.
Rise of middle class will result in profound changes as well as create opportunities in
transportation & logistics industry.

Source: Biro Pusat Statistik (BPS), Spire Data & Analysis

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 Indonesia’s Transportation, Courier & Storage
Segment Distribution, 2014

Railroad
Transportation
Other Supporting 1%
Transportation
(Incl. Storage)
12%

Air Transportation
26%

River
Transportation
3% Road
Transportation
Sea Transportation
6%
52%

Source: Biro Pusat Statistik (BPS), Spire Data & Analysis

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 Why E-commerce ?
Why Express Courier ?

9
 Indonesia’s E-commerce Market Development

+255 MILLION
POPULATION

+90 MILLION
INTERNET USERS

3rd Rank
Facebook Users
5th Rank
Twitter Users
4th Largest Population in the world

Online Retail Sales Figures Number of Online Shoppers

$ 1.8 4.6
2013 BILLION 2013 MILLION
$ 2.6 5.9
2014 BILLION 2014 MILLION
$ 3.5 7.4
2015 BILLION 2015 MILLION
$ 4.4
8.7
2016 BILLION 2016 MILLION

Source: MENKOMINFO, Tech in Asia 2014, idEA, eMarketer 2014, Statista 2014, Spire Data & Analysis
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 Indonesia’s Best Selling e-Commerce Products in 2013

TRAVEL
20%
FASHION MUSIC &
GAMES

37% 20%
OTHERS ELECTRONICS
12%
18% BOOKS
7%

Source: velaasia.com, Euromonitor, Payvision, Spire Data & Analysis

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 Types of e-Commerce in Indonesia (1)

CLASSIFIEDS/LISTING C2C MARKETPLACE SHOPPING MALL

Example: Example: Example:

Characteristics: Characteristics: Characteristics:

 The sites do not facilitate online  Every transaction must gone  Similar characterization with
transaction. through the website. marketplace, with stricter
 Individual seller can use the  Can be used by individual seller. verification process for the seller.
service for free.

How they gain profit: How they gain profit:

How they gain profit:  Premium ads  Commission
 Premium ads  Premium seller
 Commission

Source: Tech in Asia 2014, Spire Data & Analysis

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 Types of e-Commerce in Indonesia (2)

B2C ONLINE STORE SOCIAL MEDIA STORE

Example: Example:

Characteristics: Characteristics:
 Selling their own products.  Selling their own products through
social media platform.

How they gain profit:

 Profit from sales. How they gain profit:
 Profit from sales.

Source: Tech in Asia 2014, Spire Data & Analysis

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 Indonesia’s E-commerce & Logistic Providers
Famous Indonesia e-Commerce Platform

e-Commerce Logistic Provider

Source: KOMINFO, Tech in Asia 2014, idEA, eMarketer 2014, Statista 2014, Spire Data & Analysis
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 Market Development Express Courier Service in
Indonesia’s E-commerce business

Breakdown of E-commerce Logistics Key Success Factors

Market Share (2014)
On-time and consistent performance are

10% 1 crucial in e-commerce industry as these are

the keys to customers satisfaction.
5%
Strong IT capabilities and integrated systems
5%
35% 2 are needed to enable status tracking of
shipped goods.
10%
Broad network/geographical coverage is
3 important to ship products to customers
outside of Jakarta.
15%
20%
Key Business Logistics Services Used*
JNE First Logistic Others
1 Land Freight
TIKI DHL
RPX FedEx 2 Air Freight

*Note: Based on limited sample size of respondents in the market 3 Sea Freight

Source: Spire Primary Interview with Players, Spire Data & Analysis
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 Criteria of Express Courier Service in Indonesia

Shippers &
consignee may
track the
This delivery Most importantly,
precise
includes the overnight and
movement of
seamless transfer second-day
the package
across multiple express services
using track &
mode of transport. reduce overall
trace
This services also inventory and
known as Pick-Up
technology Track &
& Delivery Services Trace Speed of create effective
supply chains. The
Delivery
Technology average express
delivery in
Indonesia is
Door-to- about 1-2 working
Door days.
Service

Close High Level

Custodial of Reliability
Control & Coverage

Using sophisticated information ECS company promises that the

system will enhance package
security to reduce risk of loss or
damage
Source: Spire Primary Interview with ECS Players, Spire Data & Analysis
package will arrive at the
required destination and on
time. This is particularly
important to create customer
awareness 16
 E-commerce Supply Chain Model in Indonesia

E-commerce Marketplace Supply Chain Model

Vendors/Distributor Retailer

Order
Order Origin from ECS Provider
MARKETPLACE Received to
Web Portal/ e-Sales take place to
Customer
Deliver Order

The Marketplace supply chain model usually has no warehouse since the e-companies are more
dependent on vendors or retailer regarding the product availability.
The vendors or retailer will directly send the product ordered by the customer.

Full e-commerce Supply Chain Model ECS Provider

take place to
Deliver Order
Vendors/Distributor Retailer

NO Order
Order Origin from Delivery
YES WAREHOUSE Received to
Web Portal/ e-Sales Hub
ITEM PRESENT Customer
IN
WAREHOUSE

Full e-commerce supply chain using warehouse and also delivery hub owned by the e-commerce
company. In this case, E-commerce company will stock their own product and directly send them to the
customer.

Source: Spire Primary Interview with ECS Players, Spire Data & Analysis 17
 Marketplace gives better shopping experience and
lower costs for both merchants and customers

Customer buys 3
products from 3 consolidates the individual items and Customer receives
different merchants assembles the order at the fulfillment the order in one
in a multi-brand center, all processed and fulfilled at branded package
site on one portal, the same day next day via express
or MARKETPLACE delivery
Picks up
“unpacked”
items from 3
merchants

On some sites, customer may choose a logistics partner from several options available.
Marketplace may also have their own logistics service. Several prerequisites are
essential to use the service. (e.g. distance, product weight, and so forth.)

Source: Spire Primary Interview with ECS Players, Spire Data & Analysis 18
 Challenges & Opportunities Express Courier Services in
E-commerce
Challenges
E-commerce Supply Chain
Lack of infrastructure, resulting in
high logistics cost and longer
delivery & shipping time.
Geographic location, with ±
20,000 islands.
Slow development in logistics
industry due to lack of support
from the council of “Sistem
Logistik Nasional”.
Limited trained/skilled logistics
workers
Source: Spire Primary Interview, Spire Data & Analysis
Opportunities
E-commerce Supply Chain
Rapid growth of internet users.
Double growth of smartphone
users since 2013, providing
accessibility and connectivity.
Growth of e-commerce players.
Growth of customers’ trust in
using online payment system.
Growth of urban lifestyle, leading
to the convenience of online
shopping.
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 Case Study: JNE – Largest Nationwide Network in
Indonesia (1)

Branch: ± 55 with ± 50 warehouses

Agent: ± 3,000,
Total service points 2014: ± 1,500 location

Average number of Delivery in 2014:

± 400,000 / month

Average number of scheduled flights in

2014:
From Jakarta ± 298 flights / day
To Jakarta ± 100 flights / day

Average number of scheduled truck

departure 2014:
From Jakarta ± 100 trips / day
To Jakarta ± 80 trips / day
Employee 2014: ± 5,000
60% of the overall sales turnover comes Car Courier: ± 250 Vans
Motorcycle Courier: ± 800 Motorcycle
from e-Commerce retail sales.
Already Adopted Online system
±15% e-Commerce sales turnover
growth y-o-y

Source: Interview with JNE person, (Sales Division), Spire Data & Analysis 20
 Case Study: JNE – Largest Nationwide Network in
Indonesia (2)

Trace & Tracking

One of JNE Transit Warehouse

Comprehensive JNE Web Portal

JNE Truck JNE Motorcycle

One of JNE Sales Office

Source: Interview with JNE person, (Sales Division), Spire Data & Analysis 21
 Tel: (62) 5794 5800
Fax: (62) 5794 5808
Wisma 46, Kota BNI 25th Floor,
Unit #07-09
Jakarta 10220
id.info@spireresearch.com
www.spireresearch.com

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