Since its first inception, e-commerce has taken the local retail industry by storm.
Boosted by the rapid development of the internet and mobile technology, the sector has seen tremendous growth over the past decade. Generally, e-commerce requires much more logistics space compared to traditional retail as most retailers’ inventory is stored in the warehouse, rather than spaced out between warehouse and stores. In addition, online retailers tend to have a larger array of products in their inventory, thus requiring relatively bigger and more comprehensive storage that can accommodate and easily adapt to the changing business trends.
Despite the tremendous growth of e-commerce
The current supply-chain ecosystem in Indonesia is still poor and the sector lacks a number of key factors to support the ongoing growth. A World Bank report in 2018 mentioned that Indonesia’s Logistic Performance Index scored only 3.2 out of 6.
Major issues that gave Indonesia the low ranking are lack of transportation infrastructure as well as red tape and complicated regulations, which result in a high-cost environment.
As such, the country’s logistics sector is still behind its neighboring countries, such as Malaysia, Thailand and Vietnam, in terms of the sector’s competitiveness and efficiencies.
On the other hand, the highest-ranked country in ASEAN, Singapore, scored 4, with the highest score being timeliness and logistics competence.
