Jeffrey Bahar, Deputy CEO of Spire Research and Consulting, highlights the strong growth and market opportunities for express courier service in Indonesia driven by the booming e-commerce logistics demand. Presented at Indonesia Supply Chain Summit, 19 May 2015

1. 1
The Rise of Express Courier in E-
commerce Business
Prepared for :
Indonesia Supply Chain & Logistics Summit
Jakarta, 19 May 2015

2. 2
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

3. 3
Indonesia’s Logistics Market &
Growth Prospects

4. 4
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

5. 5
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

6. 6
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

7. 7
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%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2009 2010 2011 2012 2013 2014 2015E 2016F
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

8. 8Source: Biro Pusat Statistik (BPS), Spire Data & Analysis
Railroad
Transportation
1%
Sea Transportation
6%
River
Transportation
3%
Air Transportation
26%
Other Supporting
Transportation
(Incl. Storage)
12%
Indonesia’s Transportation, Courier & Storage
Segment Distribution, 2014
Road
Transportation
52%

9. 9
Why E-commerce ?
Why Express Courier ?

10. 10
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 Rank
Facebook Users
5th Rank
Twitter Users
+90 MILLION
INTERNET USERS
Online Retail Sales Figures
2013
2014
2015
2016
$ 1.8
BILLION
$ 2.6
BILLION
$ 3.5
BILLION
$ 4.4
BILLION
2013
2014
2015
2016
Number of Online Shoppers
4.6
MILLION
5.9
MILLION
7.4
MILLION
8.7
MILLION

11. 11
Indonesia’s Best Selling e-Commerce Products in 2013
Source: velaasia.com, Euromonitor, Payvision, Spire Data & Analysis
FASHION
37%
TRAVEL
20%
MUSIC &
GAMES
20%
ELECTRONICS
12%
BOOKS
7%
OTHERS
18%

12. 12
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

13. 13
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.

14. 14
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

15. 15
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

16. 16
Criteria of Express Courier Service in Indonesia
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

17. 17
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
YES WAREHOUSE
Retailer
Delivery
Hub
NO
Source: Spire Primary Interview with ECS Players, Spire Data & Analysis

18. 18
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.)

19. 19
Challenges & Opportunities Express Courier Services in
E-commerce
Source: Spire Primary Interview, Spire Data & Analysis
Challenges
E-commerce Supply Chain
Opportunities
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
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.

20. 20
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
60% of the overall sales turnover comes
from e-Commerce retail sales.
±15% e-Commerce sales turnover
growth y-o-y
Employee 2014: ± 5,000
Car Courier: ± 250 Vans
Motorcycle Courier: ± 800 Motorcycle
Already Adopted Online system
Source: Interview with JNE person, (Sales Division), Spire Data & Analysis

21. 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)

22. 22
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