Growing Middle Class Population Coupled with Higher Internet and Mobile Penetration Rates to Drive Growth for Indonesia E-Commerce Logistics Market: Ken Research
Ken Research Pvt. Ltd
7 min read
Indonesia being the mobile-first economy with 56% of the population connected to the internet2 is contributing to the growth of the e-commerce market leading to a surge in demand for logistics services. Indonesia's e-commerce industry has been witnessing large investments from companies such as Expedia, Alibaba, Tencent, JD.com, and others, which has supported industry growth.
Gurugram, India, Oct. 18, 2021 (GLOBE NEWSWIRE) --
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.
The E-commerce Logistics sector in India is in late growth stage and has evolving as an organized market structure. The Industry has flourished due to changing Consumer shopping preferences from physical stores to online market places from the comfort of their homes. The E-commerce Logistics Industry has grown at a CAGR of 24.3% on the basis of revenue and a CAGR of 27.4% on the basis of number of shipments over the period FY'2015-FY'2020. Major growth drivers of the Industry are higher internet penetration, increase in number of Smartphone users, increasing propensity to purchase online, growing demand from Tier 2 and below cities, new technological innovations, rising consumer expectations for fast delivery services and more.
Philippines Logistics Market has witnessed an average CAGR during 2014-19 due to favorable laws from CTAP, Investments in Bridges to promote Inter-island transportation through RORO, and development of ports both by the government and with Public-Private Partnerships. The Current logistics cost comprise 27.16 % of sales in the Philippines which is very high in comparison to other SEA countries. The influx of foreign players, increasing consolidation, Green freight policies by the Government, and investing in innovative technologies has stimulated the growth in the market.
The industry is dominated by Sea and land freight Movements considering the strong position in Oil Exports and import Dependency for all the Essential Products too. The country has strong trade relations with Asian countries, European countries, and the US. Land freight is usually common with UAE, Bahrain, Jordan, and Egypt. Air freight is quite expensive than any other Mode and is usually used for Express Shipments. The KSA also has a strong warehousing market segment where the real estate players are leasing out their space to logistics companies and Captive players for longer durations. Warehouses are concentrated in areas of Riyadh, Jeddah, Dammam, Al Khobar due to the high population and presence of Seaports. The Courier, Express, and Parcel market is driven by growth in Last-Mile deliveries and the E-Commerce segment in the country.
The industry is home to an extremely strong Freight Forwarding segment, driven by the UAE's position as a key facilitator for global re-exports. Moreover, given its high dependence on Imports for Consumer Products and Technology, the UAE has strong trade relations with far-Eastern countries, European countries and the US. Given its oil-producing capabilities, the country relies heavily on Sea Freight as a mode of cargo transport, with the service being almost a common feature amongst freight forwarding companies in the country. The UAE also has a strong warehousing market segment, driven by players that lease warehousing space for long durations of time. Warehousing operations near to the Jebel Ali Port and Dubai Airport are considered most favourable to reduce the transportation cost from port to mother-hub. The Courier, Express and Parcel market is driven by growth in Last-Mile deliveries and the E-Commerce segment in the country.
Contact Us:-
Ken Research Ankur Gupta, Head Marketing & Communications Support@kenresearch.com +91-9015378249
CONTACT: Contact Us:- Ken Research Ankur Gupta, Head Marketing & Communications Support@kenresearch.com +91-9015378249
