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Courier services buzzing from online-shopping frenzy

The bustling trade in online businesses is proving to be a boon for courier firms, which experienced rapid growth last year, as they scurry around town delivering goods purchased online to buyers

The Jakarta Post
Mon, April 23, 2012

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Courier services buzzing from online-shopping frenzy

T

he bustling trade in online businesses is proving to be a boon for courier firms, which experienced rapid growth last year, as they scurry around town delivering goods purchased online to buyers.

“JNE (Jalur Nugraha Ekakurir) experienced 76 percent growth in revenues in our retail section between 2010 and 2011. A factor behind this increase has been the impressive growth in online businesses,” said Visi Firman, corporate communications for the courier company.

Similarly, Tiki, another courier service that has merged with JNE to form PT Tiki Jalur Nugraha Ekakurir, has experienced a 15 percent increase overall, with a strong performance coming from their corporate market.

“The plethora of online businesses has had a positive impact on us because the majority of online sellers choose to utilize courier services over hiring employees to send their goods,” Tiki’s marketing manager, Ferry Wirasaputra, remarked.

“Meanwhile, traffic jams make people reluctant to transport things themselves, causing a rise in intra-city delivery services,” he added.

Marketing analyst Rhenald Kasali pointed out that online business in Indonesia was worth US$4.18 billion a year. He added that this sector would grow up to 30 percent this year as more middle-class consumers spent their money online via websites.

“Those in business must observe the shifts taking place among consumers. They must then implement these shifts in their business activities, as well as maintaining open communication with them [consumers],” he said.

Another courier service company, ESL Express, also partly attributed the 34.9 percent business increase in 2011 to the need among online sellers for distribution-network support.

Johannes MA Silalahi, ESL Express’ managing director, said the majority of online transactions involved retail sales of goods weighing between 1 and 5 kilograms.

“Retail packages generally sent through ESL Express are commodity goods, such as mobile phones, wrist watches, clothes, foodstuffs like fruit, accessories and home-industry products,” he said.

He added that Jakarta, Surabaya, Bandung, Pekanbaru, Yogyakarta, Surakarta and Medan were the cities where the company had seen most significant growth in business.

Meanwhile, RPX, the licensed local partner of FedEx, said that 10-15 percent of their revenue was derived from online-shopping logistics. The company grew by 18 percent last month.

“Twenty percent of our clients are individuals, while 80 percent, or 35,000, of those on our database are corporate clients,” Andry Adiwinarso, RPX sales and marketing vice president, said.

The potential found in online stores has driven courier companies to partner with large trading websites, such as the cooperation between JNE and Multiply, one of Indonesia’s largest community websites, where members buy and sell a wide range of goods including clothing and gadgets.

According to Visi, JNE had decided to join forces with e-commerce hubs to improve the quality of and control over online shopping, given that the e-commerce sector still needed much upgrading.

“There’s still a great deal of fraud going on, where the items sent out are not in accordance with the specification and so on,” she said.

Besides distribution issues, e-commerce also faces challenges in payment gateways due to the lack of an efficient online-payment system.

Although issues within the e-commerce world persist, courier companies are expecting increased growth as Indonesia’s overall economy strengthens.

“JNE sees the e-commerce market as one of the indicators of the real economy, especially in the small- and medium-enterprise sector, which has tremendous potential thanks to the penetration of mobile phones in Indonesia,” Visi said.

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