1. Startups

5 Exposure to Digital Adoption in Indonesia's Logistics Industry

Learn from Shipper Co-founder and CEO Budi Handoko and AWS Startup Account Manager Nicolas Tjioe in the #TuesdayStartup session

The Covid-19 pandemic has forced many business people in Indonesia to adopt digital services, including the logistics industry, both in Indonesia first mile, mid mile, nor last mile. With the current situation, how is the digital ecosystem's efforts to support future logistics trends?

An interesting discussion in the #TuesdayStartup session with Shipper Co-Founder and CEO Budi Handoko and Amazon Web Services Startup Account Manager Nicolas Tjioe tried to understand efforts to accelerate the pace of the logistics industry towards digital during the pandemic and post-pandemic.

Logistics challenge

The Indonesian logistics market is estimated to be worth $221 billion, of which e-commerce is one of the drivers of growth. Meanwhile, the value of the Indonesian e-commerce industry in 2020 reaches $40 billion and is predicted to skyrocket to $88 billion in 2025. Even this is only the contribution from e-commerce which is predicted to grow 4-6 times.

By looking at the trend of logistics services in Indonesia, logistics startup actors are trying to reach the coverage of logistics chains in Indonesia considering that geographical conditions are still one of the big challenges for business people.

Budi Handoko assesses that the government is currently boosting infrastructure development and internet access throughout Indonesia. Logistics players in Indonesia are also starting to adopt digital-based technology and solutions with the aim of providing easy access to partners and consumers.

"One way is through solutions cloud which can make it easier for partners and consumers to access our products. That way, all distances can be eliminated both in terms of main infrastructure and products," said Budi.

The momentum of the pandemic and holidays

To give insight Another interesting thing that was caught by Shipper and AWS was logistics trends during the pandemic and Eid holidays. According to Budi, the pandemic has given blessing in disguise to the logistics industry as a whole, including Shipper. Demand for the delivery of food, goods, and medical equipment has triggered an increase in logistics services during the social distancing period.

During this situation, Budi admitted that he did not develop new innovations because Shipper had already built infrastructure and technology before the pandemic, including preparing strategies to reduce the possibility of cost the greater one. With this readiness, his party claimed to be able to accommodate the high demand spike.

"Pandemic to turning point for us because logistics services are increasing as more shipping requests and sellers turn to medical devices. The technology we built earlier became useful during the pandemic," said Budi.

In terms of digital adoption, Nicolas Tjioe admits that the pandemic poses efficiency challenges for business people. From this situation, AWS plays a role in accommodating the needs of logistics players who are mostly struggling with manual business processes.

"So far, many logistics businesses use invoice Manually. To solve this, they don't really need to build an IT or data team because they can use solutions managed services from AWS. This solution helps digitize data into softcopy. There are many managed services which can help the logistics team focus on business growth without the need to take care of operations," said Nicolas.

Likewise in the Idul Fitri momentum which can trigger an increase in shipments by 5-10 times. The solutions that AWS offers are still relevant to the momentum. In his experience helping business people, Nicolas mentioned that the solution autoscaling can predict trends scalability. 

This means that every time there is a spike in traffic, this solution can automatically read the trend of needs that are needed by logistics actors accurately. With this solution, time to market be faster and customer experience to customers is not disturbed.

Technology for logistics

In terms of technology, Budi also shared about the innovations developed by Shipper. First, innovation for the retail segment. According to him, this technology can read logistics trends in certain areas and help business people to find logistics delivery services that suit their needs, but are still affordable.

Second, technology for warehousing facilities. His party developed a solution that could help deliver goods from long distances, from Makassar to Jakarta, for example, at a lower cost. Third, develop technology forecast to the merchant when the stock of goods in the warehouse is running low.

Seek funding from investors

In any industry, including logistics, investors will always think about return on investment (ROI). In the case of investors who have invested in logistics companies and made a profit, of course there is a high chance that investors will be interested in reinvesting.

However, Budi views that looking for investors should not be limited to domestic only. According to him, it is important to look for outside investors because the scale of the logistics business is not only in Indonesia, but also globally. This means that when they want to expand overseas, business people can take advantage of their global network of investors.

"The entry of Shipper to Y Combinator made us known globally. However, at this time we are still focused on Indonesia because our country is very large. Even the scope of logistics in Indonesia may still be like a pyramid, there are still many above," he added.

When he gets investors who are new to logistics, he says that open communication become an important key to run the business going forward.

Starting a digital transformation

For logistics players who want to start digital transformation, there are now many services cloud that accommodates this need. At AWS, Nicolas provides examples of three program options that logistics actors can consider to kickstart digital adoption.

First, options portfolio founder or is intended for business people who are just building minimum viable product (MVP). Second, the VC option portfolio or intended for business people who have received funding from investors. And third, the SaaS program factory which offers solutions for business people who have entered the product diversification stage.

"Efficiency and increasing competitiveness are benefits that can be obtained from digital transformation. In the context of the logistics industry, this transformation can reduce costs and build long-term growth. What we want to emphasize, not everything has to be built from scratch because of AWS support in terms of innovation," he concluded.

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