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The Rise of Express Courier in E-commerce Business
Prepared for :
Indonesia Supply Chain & Logistics SummitJakarta, 19 May 2015
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Topic
1 Indonesia’s Logistics Market & Growth Prospects
2 Why E-commerce? Why Express Courier?
3 E-commerce Supply Chain Best Practices
4 Challenge & Opportunities
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Indonesia’s Logistics Market & Growth Prospects
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Indonesia Logistic Market & GrowthOverall 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 market2 Only 920 companies are registered in INFA (Indonesian Forwarder and Logistic Service Provider Association)
Source: Spire’s Primary interview and analysis
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Indonesia Logistic Market & GrowthOverall 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
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Indonesia Logistic Market & GrowthOverall 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
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2009 2010 2011 2012 2013 2014 2015E 2016F0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
4.6%6.2% 6.5% 6.3% 5.8% 5.3% 5.5% 5.8%
6.5%
15.8%
19.2%
15.3%17.2% 16.8% 17.5% 18.0%
Economic Growth & Logistics Market, 2014
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
8Source: Biro Pusat Statistik (BPS), Spire Data & Analysis
Railroad Transportation1%
Sea Transportation6%
River Transportation3%
Air Transportation26%
Other Supporting Transportation (Incl.
Storage)12%
Indonesia’s Transportation, Courier & Storage Segment Distribution, 2014
Road Trans-portation
52%
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Why E-commerce ?Why Express Courier ?
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Indonesia’s E-commerce Market Development
Source: MENKOMINFO, Tech in Asia 2014, idEA, eMarketer 2014, Statista 2014, Spire Data & Analysis
+255MILLION
4th Largest Population in the world
POPULATION
3rd RankFacebook Users
5th RankTwitter Users
+90 MILLION INTERNET USERS
Online Retail Sales Figures
20132014
2015
2016
$ 1.8
BILLION
$ 2.6
BILLION
$ 3.5BILLION
$ 4.4
BILLION
2013
2014
2015
2016
Number of Online Shoppers4.6
MILLION
5.9MILLION
7.4MILLION
8.7MILLION
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Indonesia’s Best Selling e-Commerce Products in 2013
Source: velaasia.com, Euromonitor, Payvision, Spire Data & Analysis
FASHION
37%
TRAVEL20%
MUSIC & GAMES
20%ELECTRONICS
12%BOOKS
7%
OTHERS18%
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Types of e-Commerce in Indonesia (1)
Source: Tech in Asia 2014, Spire Data & Analysis
CLASSIFIEDS/LISTING C2C MARKETPLACE SHOPPING MALL
Example:
Characteristics: The sites do not facilitate
online transaction. Individual seller can use the
service for free.
How they gain profit: Premium ads
Example:
Characteristics: Every transaction must gone
through the website. Can be used by individual
seller.
How they gain profit: Premium ads Premium seller Commission
Example:
Characteristics: Similar characterization with
marketplace, with stricter verification process for the seller.
How they gain profit: Commission
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Types of e-Commerce in Indonesia (2)
Source: Tech in Asia 2014, Spire Data & Analysis
B2C ONLINE STORE SOCIAL MEDIA STORE
Example:
Characteristics: Selling their own products.
How they gain profit: Profit from sales.
Example:
Characteristics: Selling their own products
through social media platform.
How they gain profit: Profit from sales.
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Indonesia’s E-commerce & Logistic Providers
Source: KOMINFO, Tech in Asia 2014, idEA, eMarketer 2014, Statista 2014, Spire Data & Analysis
Famous Indonesia e-Commerce Platform
e-Commerce Logistic Provider
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Market Development Express Courier Service in Indonesia’s E-commerce business
Key Success Factors
Key Business Logistics Services Used*
On-time and consistent performance are crucial in e-commerce industry as these are the keys to customers satisfaction.
Land Freight
Air Freight
Sea Freight
1
2
3
1
2
3
Strong IT capabilities and integrated systems are needed to enable status tracking of shipped goods.
Broad network/geographical coverage is important to ship products to customers outside of Jakarta.
Breakdown of E-commerce Logistics Market Share (2014)
*Note: Based on limited sample size of respondents in the market
35%
20%
15%
5%
10%
5%
10%
TIKI
RPX
JNE
DHL
First Logistic Others
FedEx
Source: Spire Primary Interview with Players, Spire Data & Analysis
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Criteria of Express Courier Service in Indonesia
Close Custodial Control
Track & Trace
Technology
Door-to-Door
Service
High Level of
Reliability &
Coverage
Speed of Delivery
This delivery includes the seamless transfer across multiple mode of transport. This services also known as Pick-Up & Delivery Services
Using sophisticated information system will enhance package security to reduce risk of loss or damage
Shippers & consignee may track the precise movement of the package using track & trace technology
ECS company promises that the package will arrive at the required destination and on time. This is particularly important to create customer awareness
Most importantly, overnight and second-day express services reduce overall inventory and create effective supply chains. The average express delivery in Indonesia is about 1-2 working days.
Source: Spire Primary Interview with ECS Players, Spire Data & Analysis
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E-commerce Supply Chain Model in Indonesia
E-commerce Marketplace Supply Chain Model
Full e-commerce Supply Chain Model
Order Origin from Web Portal/ e-
Sales
MARKETPLACE
Vendors/Distributor
Retailer
Order Received to Customer
ECS Provider
take place to 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 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.
Order Origin from Web Portal/ e-
Sales ITEM PRESENT IN WAREHOUSE
Vendors/Distributor
Order Received to Customer
ECS Provider take place to
Deliver Order
YESWAREHOUS
E
Retailer
Delivery Hub
NO
Source: Spire Primary Interview with ECS Players, Spire Data & Analysis
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Marketplace gives better shopping experience and lower costs for both merchants and customers
Customer buys 3 products from 3 different merchants in a multi-brand site on one portal, or MARKETPLACE
Picks up “unpacked” items from 3 merchants
consolidates the individual items and assembles the order at the fulfillment center, all processed and fulfilled at the same day
Customer receives the order in one branded package next day via express delivery
Source: Spire Primary Interview with ECS Players, Spire Data & Analysis
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.)
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Challenges & Opportunities Express Courier Services in E-commerce
Source: Spire Primary Interview, Spire Data & Analysis
Challenges E-commerce Supply Chain
OpportunitiesE-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
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 warehousesAgent: ± 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 / dayTo Jakarta ± 100 flights / day
Average number of scheduled truck departure 2014:
From Jakarta ± 100 trips / dayTo Jakarta ± 80 trips / day
60% of the overall sales turnover comes from e-Commerce retail
sales.
±15% e-Commerce sales turnover growth y-o-y
Employee 2014: ± 5,000Car Courier: ± 250 Vans
Motorcycle Courier: ± 800 MotorcycleAlready Adopted Online system
Source: Interview with JNE person, (Sales Division), Spire Data & Analysis
21Source: Interview with JNE person, (Sales Division), Spire Data & Analysis
Trace & Tracking
Comprehensive JNE Web Portal
One of JNE Transit Warehouse
One of JNE Sales Office
JNE Truck JNE Motorcycle
Case Study: JNE – Largest Nationwide Network in Indonesia (2)
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Tel: (62) 5794 5800 Fax: (62) 5794 5808
Wisma 46, Kota BNI 25th Floor, Unit #07-09
Jakarta [email protected]
www.spireresearch.com
