Lalamove Expansion Plan and the Demands of the Logistics Industry in Indonesia

Hong Kong logistics startup Lalamove recently announce Series C funding of US$100 million (more than 1,3 trillion Rupiah) from an investment company created by Xiaomi Lei Jun's Founder and CEO, Shunwei Capital. One of their agenda with this funding is expansion and Indonesia is one of the destinations.

DailySocial contacted the Lalamove expansion team to discuss this move. The Lalamove team informed that the plans for expansion in Indonesia are still being finalized, so there is no specific plan that can be submitted. However, expansion in various countries in Southeast Asia is indeed one of the priorities. For Lalamove, Indonesia is said to be a very important market.

What Lalamove offers is actually similar to what Deliveree offers in Indonesia. They allow business owners to order freight transport, such as trucks, to deliver goods to buyers.

"As you know, Lalamove is trying to facilitate consumer needs through technologies that traditional delivery hasn't been able to achieve, such as speed of delivery, fulfilment and scalability. The big problem that Lalamove helped solve was shipping costs last mile delivery, namely the delivery of goods to the final consumer. This fee accounts for up to 28% of the total shipping costs," said the Lalamove expansion team.

One of the case studies that would also like to be offered at the expansion site is about job opportunities. Just like service on-demand that already exists, the presence of Lalamove provides the opportunity for owners of goods transport vehicles to become driver partners.

"In Southeast Asia, logistics accounts for 15% of GDP of all industry lines. The reason why this figure is so high is usually due to inefficiency, especially in last mile delivery. This is where Lalamove wants to come into play," they added.

Challenges and opportunities of the logistics business line in Indonesia

Responding to Lalamove's planned presence in Indonesia, DailySocial chat with CEO and Founder Irun Yan Hendry Jauwena. Iruna is a fairly new e-logistics platform provider in Indonesia. In his statement, Hendry said that the presence of Lalamove in Indonesia would not significantly disrupt the existing logistics industry structure. Not to the point of being disrupted. On the other hand, Hendry conveyed the challenges that might be encountered in its operations.

One of them is related to quality and service guarantee. Model on-demand indeed cannot be fully controlled by the company, related to the performance of its partners, even though there is a system like rating etc. For logistics itself, in addition to accuracy, speed will also be needed to ensure customer satisfaction. In addition, Hendry also touched on legal issues. There is still a lot of PR that needs to be consolidated in this regard.

Basically Hendry said that the cake in the logistics industry is still very big to be explored. The fact is that the fulfillment of logistics needs is still far from sufficient in Indonesia, especially to keep pace with business developments E-commerce. According to Hendry, one of the factors is that most logistics companies still focus on infrastructure, while technology development is still quite slow. On the other hand, business acceleration E-commerce very fast thanks to technology optimization.

DailySocial also contact Deliveree which has a service similar to what Lalamove is about to bring. Deliveree Indonesia Country Director Nattapak Atichartakarn explained that the logistics market in Indonesia is the largest in Southeast Asia. However, logistics costs in Indonesia can also reach 20% of the price of goods, making Indonesia's logistics costs the highest in Southeast Asia. There is an efficiency that can be done with the help of technology.

His party sees this as an opportunity that can be solved by creating more efficient and reliable logistics solutions for business owners in Indonesia. Deliveree creates a technology platform that provides business owners not only access to marketplace/market, but also provides dashboards delivery management with features like live tracking or driver's choice.

Although using a partnership model with fleet owners, there are efforts to ensure service quality. To play in the Indonesian market, Nattapak explained several challenges. One of the biggest challenges is road infrastructure. Jakarta is ranked as the city with the highest congestion rate in the world. In this regard, Deliveree regularly monitors traffic and ensures that drivers are spread throughout the city.