Express Ambition
    Category: E-Conomy By : Ardian Wibisono Read : 469 Date : Friday, February 09, 2018 - 14:11:40

    Ahmad Zamroni / Forbes Indonesia

    The Indonesian government had set a tremendous growth target for the domestic e-commerce market, aiming to reach $120 billion in 2020 from an estimated $25 billion in 2016. With that in mind, logistics firm PT Global Jet Express, which operates as J&T Express, sees a huge growth opportunity since e-commerce must be supported by logistics. Despite growing competition, the company claims to be the second largest player in the express logistics service despite being started only a few years ago, with hopes to be number one soon.

    “The logistics business is an e-commerce supporting business, so we feel that we have the same growth potential. There are many competitors in the business but few are really serious, only a few big ones like JNE or Pos Indonesia, and it’s not an easy play,” says J&T Chief Executive Robin Lo at the company’s new office in Pluit, North Jakarta.

    Government figures showed that the logistics industry itself is a huge business, valued Rp 2,400 trillion in 2016. The delivery service part is relatively small, with an estimated market of just Rp 50 trillion in the same year. Robin says J&T prefers to focus on the express delivery service where the goods are shipped by air and in relatively small packages, which fits the typical shipments from e-commerce firms.

    J&T cofounders are the former chief executive of cellular phone firm Oppo Indonesia and Tonny Chen, who is the founder of Oppo International. The name J&T is said to be the abbreviation of the two founders first initials. The Chinese cellular phone brand is known for its aggressive marketing and promotion in key markets such as India, Indonesia and Thailand. Globally, U.S. researcher Gartner placed Oppo in the fourth place in global sales units after Samsung, Apple and Huawei with 8% global market share as of the end of third quarter last year, and in Indonesia, Oppo ranked number two after Samsung. Thus, J&T is piggybacking on Oppo’s well built network nationwide.

    “Even before J&T started, Oppo already had branches across Indonesia. We are two different companies, with different management teams, but we are using the same network as our strategic advantage. Oppo has a retail business model reaching even the smallest cities in the country and we have had that network since we started, which other players don’t,” Robin explains. Thus, J&T now has 55 sorting centers in major cities and 4,000 drop points with 16,000 employees across the archipelago. Each day the company delivers 400,000 packages.       

    Because logistics is a capital intensive business, the company has been pouring capital into the business. Last year Robin says the company injected $103 million in capex, adding to a previous $440 million, giving the company a valuation worth over $540 million. Robin says the funding was financed internally and will be used to improve service and efficiency, such as implement robotic automation in the main sorting center to cut delivery time. With the investment the company will also add more sorting centers, and plans to improve delivery capacity to one million packages a day. The investment is also aimed to meet the company’s target to grow e-commerce logistics contribution to 80% from the current 60%. The investment has also been used to improve the company’s IT system to provide more efficiency.

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