Growing Middle Class Population Coupled with Higher Internet and Mobile Penetration Rates to Drive Growth for Indonesia E-Commerce Logistics Market: Ken Research

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Government of Indonesia has declared infrastructure development by increasing the allocation for infrastructure up by approximately 50% to the value of 290 Trillion IDR. The infrastructure development include construction of 3,600 km of new roads, 15 new airports, 24 new seaports and railway network expansion by 3,258 km.

Government introduced new measures requiring online sellers- estimated over 10m to secure government permits in order to sell their products as well as mandating sellers to store information in local data centers. Stringent rules for handling of data, development of cloud computing and data centers is expected to boost e-commerce growth.

Alibaba: the Chinese e-commerce giant is planning to invest USD 3 Billion in Grab which would ensure large base of delivery fleet in Indonesia as well as in various other regions of South –East Asia.

Google and Temasek Holding Private Limited, an investment company owned by Singapore government is planning to invest in e-commerce company Tokopedia.

Impact of COVID-19: In order to ensure social distancing, the Pandemic has ensured e-commerce firms to register high online traffic for purchase of necessity goods. Online transactions are increasing by four folds, in order to capitalize the increase demand small firms are partnering with the existing e-commerce logistics partners and the large firms are outsourcing to support in-house delivery services. The effect of COVID-19 is transforming the retail sector and is facilitating substantial growth in e-commerce market of Indonesia.

Java is a major contributor in Indonesia for the growth of the market: Java is classified as a major business hub of Indonesia as Jakarta, Bandung and Surabaya are home for large number of manufacturing companies. Major proportion of goods are produced here and shipped to other parts of the country. In addition to this, Jakarta is expected to retain its position of largest contributor in terms of demand of e-commerce products.

Changing Customer Preferences: Due to growing trend of consumer preference towards fast delivery and with players expanding their market to other cities, the market for E-Commerce logistics is expected to significantly improve in future. Moreover, the growing trend for online food delivery and grocery is also anticipated to augment the demand for fast delivery. The improving lifestyle of people and growing young population in the country is expected to transform the demand of these products.

Analysts at Ken Research in their latest publication ” Competitive Landscape of Top 8 Indonesia E-Commerce Logistics Companies and Leading 5 E-Commerce Marketplace Platform: Basis GMV, GMV Split, Order Volume, Shipment Profile, Logistics Cost, Network, Fleets and Customer Profiles” observe that E-commerce Logistics Market of Indonesia is to grow at decent pace which is backed by emerging e-commerce players in the country. Covid-19 outbreak has further accentuated the growth of the market by shifting major retailers on online platform for sustenance in the market.