Ecommerce logistics: Digitalising businesses and building sustainable growth in Indonesia

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With the growth of online commerce in the past year, it has become apparent that a reliable eCommerce logistics network and system is critical in helping Indonesian businesses to transform digitally and achieve sustainable growth. As businesses develop, they will need a system of storing goods (warehousing) and first-and-last-mile delivery services that are trustworthy and cost-efficient.  

However, given the country’s sprawling geography and untapped rural areas, logistics remain a key challenge. A 2018 World Bank report ranked Indonesia fifth in Southeast Asia on a logistics performance index, behind Singapore, Malaysia, Thailand and Vietnam. 

In a Lazada's study, "Acceleration of Indonesia's Digital Economy through eCommerce," which was conducted in late 2020, 65% of respondents from micro, small and medium enterprises (MSMEs) who had not been digitalised stated that logistics was one of their biggest challenges. Meanwhile, 92% of the respondents who have been digitalised indicated that eCommerce platforms and services provide logistics support that can help them overcome this hurdle.

Closer collaboration between the government and industry players can encourage a faster structuring of the logistics ecosystem, particularly in relation to the provision of resources, infrastructure and technology. Recognising the importance of the logistics system in supporting business growth, the Indonesian government established a National Logistics System (Sislognas) in 2012, as part of a presidential blueprint.

The success of Sislognas will depend, among others, on the availability of smart and adequate infrastructures that can connect tens of thousands of islands in Indonesia. To encourage innovative solutions in this area, the government can look to provide incentives to logistics service providers.