Indonesia Last

Mile Delivery
Market
Draft for Discussion

Prepared by: Yudie Siswanto

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 This section will provide insight into the last mile delivery market in
Indonesia which consists of seven sections
Section Overview

1 Market Overview 4 Regulation & Legal Framework

DRAFT FOR DISCUSSION

2 E-Commerce Trends 5 Indonesia’s Top 2 Last Mile Companies

3 Last Mile Delivery Challenges 6 Future Trends in Last Mile Delivery

7 How Does Frost & Sullivan Can Help

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 The last mile delivery market in Indonesia in 2028 is estimated to reach
$8.15 billion - growing at a CAGR of 8.95%

Indonesia Last Mile Delivery Market (‘in billion $) Several factors that support growth. . .

xx% CAGR
DRAFT FOR DISCUSSION

Indonesia has a population of more 278 million people (ranked

4th in terms of population in the world), with a growing middle
+8.95% Population &
class in major cities like Jakarta, Surabaya and Bandung.
Urbanisation

The Government is improving transportation and logistics

infrastructure to facilitate deliveries e.g. new road segments are
8.15 Infrastructure constructed continuously to improve access to industrial areas &
Development encourage national economic expansion at the Trans-Java toll

5.31

In recent years, the e-commerce industry in Indonesia has been

growing rapidly, becoming one of the most dynamic and
promising markets in the world - where transactions in e-
E-Commerce
commerce will require last mile delivery support to deliver
Boom
goods to customers
2023 2028

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Source: Mordor Intelligence
 On the other hand, the growing e-commerce phenomenon has also
driven the growth of the last mile delivery market in Indonesia. . .
E-Commerce growth is driving the last mile delivery market in Indonesia

E-commerce transactions require last mile delivery

support to send goods to customers 1 E-Commerce Market in Indonesia
DRAFT FOR DISCUSSION

Indonesia is ranked 11th in the eCommerce sector, with a reach of $44.8 billion in
2023. E-commerce growth in Indonesia is projected at 10.4% and reach $66.7 billion
in 2027. In 2023, Indonesia’s 4.5% growth contributed to the global 9.6%
eCommerce growth.

2 Consumer Trends in Online Shopping (E-commerce)

Indonesian consumers, spanning from major urban centres to remote villages, are
progressively adopting online shopping. This trend resulted in Indonesia becoming
the most active online shoppers, with 26% of respondents purchasing a product
or service online via e-commerce platforms

E-commerce contribution to JNE's business (one of the largest

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companies in last mile delivery in Indonesia)
JNE Express, one of the leading courier companies in the country, has captured a
big opportunity in an e-commerce business, which accounts for almost 60-70% of
its business.

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Source: Mordor Intelligence
 . . . Beside that, Indonesia’s vast archipelagic geography & complexities
present obstacles for last-mile delivery operations
Last Mile Delivery Challenges in Indonesia
Cause

Effect
Meeting Customer
Geographical Complexity Expectation
Indonesia comprises over 17,000 Customers often expect their
DRAFT FOR DISCUSSION

islands, and delivering to remote orders to be delivered very quickly

and outlying locations, challenging and they may not be willing to wait
terrains, often with limited Weather Conditions
if there are delays Indonesia’s tropical climate
infrastructure
introduces a degree of
unpredictability with heavy rainfall,
Security Concerns flooding, and other weather-
Theft during last-mile deliveries related disruptions affecting
are concerns, particularly in urban delivery schedules.
areas
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Traffic
Significant cities like Jakarta and
Surabaya have extreme traffic
congestion,7 leading to delayed
deliveries and escalating Addressing Issues
operational costs In many parts of Indonesia. It
compels delivery companies to Cost
rely on landmarks and local Getting goods from the
knowledge for precise deliveries. distribution centre to the final
destination involves multiple
steps, adding to the overall cost
Legend
Sumatra Island Java Island Kalimantan Island Sulawesi Island & Irian
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Source: Consultant analysis
 But from a regulatory perspective in Indonesia, the requirements for
the last mile delivery business are quite clear to obtain it
Regulations and Legal Framework in Indonesia

Last Mile Delivery Business

DRAFT FOR DISCUSSION

Import & Customs

• Minimum capital of IDR 500 million, where • Import Restrictions

Things foreign investment max 49% • Customs Duties
to Consider • Business Permit (business actors, business fields • Documentation for customs clearance
and services offered) & Location permit

• Tax ID
• Taxable employers (PKP), has a gross
Taxation
circulation in 1 year more than IDR 4.8 billion
• Value Added Tax (VAT) & Income Tax

• General Importer Identification Number (API-U)

Licensing • KBLI 53201/2 - courier agent activities • Specific Importer Identification Number (API-P)
and Permits • Location permit • Importer’s Registered Number
• Customs Registration Number

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Source: Consultant analysis
 In the Indonesian market, JNE and J&T are the 2 largest companies for
last mile delivery with deliveries per day reaching one million & above
On-demand
Last Mile Delivery Companies Comparison
2 largest companies by scale Companies

Parameter

Si-Cepat JNE J&T Ninja-van Antaraja Tiki Pos Indonesia Lion Parcel Go Send Grab Express
DRAFT FOR DISCUSSION

Year founded 2014 1990 2015 2014 2018 1970 1746 2013 2010 2012

E-com/ Express
Business Focus Express, Logistics E-com, Express E-com Express, Logistics SOE Postal Service Express Same day delivery Same day delivery
social commerce (next day service)

Pricing Weight / Distance Weight / Distance Weight / Distance Weight / Distance Weight / Distance Weight / Distance Weight / Size Weight / Distance Distance Distance

Outlets Self-owned Agent Agent Self-owned Self-owned Agent Self-owned Self-owned N.A N.A
The highest productivity
per outlet reaches 400
deliveries per day

No of outlets 800 8,000 3,000 400 120 4,000 24,000 N.A N.A N.A

E-commerce Tokopedia, Shopee, Tokopedia, Shopee, Tokopedia, Shopee, Tokopedia, Shopee, Tokopedia, Blibli, Tokopedia, Tokopedia, Shopee, Blibli, Bukalapak, Tokopedia, Shopee, Tokopedia, Shopee,
Platform Blibli, Lazada, Zalora Blibli, Lazada, Zalora Bukalapak Bukalapak, Lazada Shopee Bukalapak Bukalapak Zalora Blibli, Lazada Blibli, Lazada

E-commerce
70% 70% 60% N.A 80%-85% 5%-10% 45% 10% N.A N.A
Contribution

Shipment/day
650K 1,000K 1,200K 300K 200K N.A N.A N.A N.A N.A
(Scale)
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Source: Consultant analysis
 Just for illustration, Not Exhaustive

At the end, the last mile of delivery has become a crucial component of
the logistics process & the future trends in this sector are very exciting
Future Trends in Last Mile Delivery
DRAFT FOR DISCUSSION

01 02 03 04
Sustainability and Green Delivery Lockers and Storage Hyperlocal Delivery and On- Automation and Robotics
Logistics System Demand Services —
— — — Automation and robotics are being
Companies are constantly exploring Delivery lockers and storage systems Hyperlocal delivery and on-demand incorporated into the last mile delivery
new ways to reduce their carbon are being installed in densely services are also gaining traction, process to reduce costs and improve
footprint while simultaneously populated areas, making it more allowing customers to receive their efficiency
ensuring timely deliveries convenient to pick up packages at any orders in a matter of hours
time of the day

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Source: Consultant analysis
 Just for illustration, further assessment is needed consisting
of capabilities, digital solutions/assets and alliances

At F&S, We help create a bold solutions to solving your business’s

biggest challenges – maximising impact & extracting new value
Potential offerings that Frost & Sullivan can consider in relation to the last mile

Delivery routing isn’t just about finding the shortest path from point A to point B, it’s about finding the most efficient route
Route
for many different variables. Effective route optimization helps businesses maximize completed orders/deliveries
Optimisation
DRAFT FOR DISCUSSION

while incorporating many criteria including driver schedules, available hours, total stops and fulfilment estimates.

Customer Customer experience is the impression your customers have of your entire brand throughout all aspects of the journey.
It results in their view of your brand and impacts factors related to your bottom line, including revenue. A remarkable
Experience (CX) customer experience is critical to the sustained growth of any business. A positive customer experience promotes
Excellence loyalty, helps retain customers, and encourages brand advocacy.

Last Mile The integration of digital technology into all areas of a business, fundamentally changing how businesses operate
Digitalisation – and deliver value to customers. Empower employees and customers with digital solutions that enable direct access to
Tech Led people, information, resources and help them meet their needs more effectively.

Typical benefits that can be generated (based on our experiences)

Reduce costs up to 20%
Source: Consultant analysis
20 to 50 Protect your most Ability to charge up to a
25% Productivity Savings
point increase in NPS Loyal Customers 10% price premium
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Appendix

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 Last mile is the final delivery process to customers and contributes 53%
of total logistics costs
The scope of research
Focus of this study
DRAFT FOR DISCUSSION

Cost 47% 53%

Breakdown

Motorcycle

Cost
Breakdown 3 key activities in Last Mile delivery
33% 16% 41%-51%
1 2 3
Ordering Processing and Routing Order fulfillment and Packaging Dispatching and Delivery
Processing and grouping orders based on the customer’s location Picking, packaging and labelling the goods based on the Dispatching the packaged goods to the delivery truck and
to determine the optimal delivery route. customer’s specifications ensuring timely delivery to the customer’s location

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Source: Consultant analysis
 Only for illustrative purposes by mapping JNE's capabilities
into the e-commerce value chain

JNE is one of the largest last mile delivery companies in Indonesia with
a distribution area covering more than 83,000 cities
Profile: JNE
Overview
JNE is an Indonesian last mile delivery provider established in 1990, famous for its end to end logistic service covering all areas in Indonesia.
DRAFT FOR DISCUSSION

Platform Development` Inbound & Warehousing Platform Operation Last Mile Delivery Customer Service
https://www.jne.co.id/en

Solution Overview Brand Managed Differentiator

Provide importation from some warehousing partner in China, Taiwan and • Provide end-to-end
Importation logistic service to the
Singapore
customers
Warehousing
JNE has 600+ small, medium, and big scaled warehouses in Indonesia with • Tailored the logistic
approximately thousands of square meter capacity solution to the customer
They provide B2B & B2C delivery from warehouse in other countries to Indonesia needs
B2B Delivery
with their own transportation mode Pricing Model
Able to deliver goods from their own warehouse (consignment based) to • Price will be charged
B2C Delivery based on following
customers in Indonesia.
factor: speed, weight,
Order Processing & and distance
Packaging
They can tailored the packaging and order processing as what the customer need • Insurance fee: IDR.
5000 + 0,2% x product
Provide various last mile delivery options to 83,000 cities in Indonesia with price. Covering 100% of
Last-mile delivery
multiple options e.g : JNE express (for same-day delivery) product price
Note: Analysis is based on consultant understanding of the market 12
Source: Consultant analysis Legend: Not capable : Partially capable : Capable
 Thank you.

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