Q1 2022: State of E-Commerce in Indonesia
With an e-commerce revenue of 43 billion dollars, Indonesia is home to one of the biggest e-commerce markets in the world today. In 2021 alone, an estimated number of 30 million people in the country purchased goods online through various e-commerce platforms.
Today, Indonesia’s digital economy remains an overlooked e-commerce market with plenty of potential. Made up of nearly 20,000 islands, e-commerce delivery in Indonesia requires unique strategies that combine marine and land transport systems. E-commerce companies offering their services on a business-to-customer (B2C) basis stand to gain a lot from investing in the country.
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As part of our annual state of e-commerce series, this article presents the major delivery performance factors of the Indonesian market in Q1 2022. How is the country's e-commerce logistics measuring up this year? Are home deliveries – as opposed to the usage of collection points – still the preferred method of parcel delivery amongst the populace? Let’s find out!
Parcels in Indonesia Had an Average Transit Time of 1.46 Days in Q1 2022
The average transit time for domestic packages in Indonesia decreased from 2 days in Q1 2021 to 1.46 days in Q1 2022, made possible by the many improvements made in the country's logistics system. First and foremost, the country has recorded a significant boost in its road network in recent years. As a result, goods are now being transported across the country more quickly and efficiently than ever before. This trend would predictably continue in the future as the authorities have ambitious plans ready to continue improving its road infrastructure.
Moreover, the Indonesian logistics services environment is particularly competitive with various companies, both state owned and private, jostling for a better market share. This has made it all the more critical for companies to innovate and increase their operating capacities for improved customer experience and higher patronage.
DHL, for instance, commissioned a 40,000-square-meter warehouse in Java in March 2022. Meanwhile, many local logistics delivery companies have also continued to implement a number of innovative logistics solutions including the use of online apps to find available delivery drivers and transport equipment. It is possible that all of these aforementioned factors have contributed to the decrease in average transit times of domestic parcels in Indonesia during the past year.
96.8% of Indonesian Parcels Were Successfully Delivered on First Attempt in Q1 2022
A successful logistics delivery at first attempt improves customer satisfaction and saves logistics companies the cost of having to make subsequent attempts at delivery. In Indonesia, the amount of parcels successfully delivered on the first attempt decreased from 97.5% in Q1 2021 to 96.8% in Q2 2022. The reason for this phenomenon may well be linked to the effects of the COVID-19 pandemic on Indonesian e-commerce.
The outbreak and spread of the coronavirus saw the imposition of various pandemic control measures by various countries around the world on their citizens. These often included movement and gathering restrictions or total lockdowns. While most industries suffered as a result of these restrictions, the e-commerce industry experienced an increase in patronage in most countries. As people were unable to leave their houses to purchase supplies, they relied increasingly on online purchases.
In Q1 2021 which spanned from January to March of that year, the government of Indonesia had imposed movement restrictions on various parts of the country. With the reduction in vehicular traffic on the roads and with most people having to stay at home as a result of COVID restrictions, it was only natural that first attempt delivery successes would increase. Importantly, the first quarter of 2021 would also see the mass importation of the COVID vaccine Sinovac from China which Indonesia would come to heavily rely on in its fight against the coronavirus.
Conversely, in Q1 2022, the Indonesian government lifted lockdown restrictions, declaring the country open to foreign tourists from January 2022. With normalcy restored in the country, citizens were able to move around for work or for other reasons. In these conditions, the chances of first attempt success in parcel delivery naturally reduced as clients could not be in at delivery times.
Collection Point Usage in Indonesia Increased by 13.2% Over the Past Year
Collection points are designated places where people can pick up goods ordered from e-commerce platforms. In practice, the use of collection points helps prevent failed attempts at delivery as ordered products can be dropped off at a collection center and the clients who purchased them can go and retrieve the goods whenever they wish.
In Indonesia, statistics reveal that the usage of collection points has increased from 1.90% in 2021 to 2.15% in 2022. Upon further analysis, 43.75% of these parcels were found to be collected by customers within the first 24h of being delivered to the collection points, underlining the flexibility and efficiency that these collection points offer.
A number of factors have led to this development. Most importantly, there has been a steady rise in the number of warehouses and collection centers in Indonesia. This is especially the case in Jakarta, the country’s biggest city. Several companies have built and opened more warehouses which have served as collection points for clients to pick up goods from.
Some of these facilities are made available for leasing and hiring to logistics companies based outside the country. This provides additional bandwidth for these companies that otherwise would have had to establish local bases of operations, thereby further facilitating cross-border e-commerce in Indonesia. The proliferation of product warehouses has meant that more collection points were accessible to a larger number of people in 2022.
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