We start the year 2024 with a recap of the journey of Shipper, an Indonesian technology company simplifying logistics and supply chain for all types of businesses from ecommerce to offline retail, helping them across a range of services from first-mile to warehousing and inventory management.
With the significant developments in Indonesia’s ecommerce landscape this past year, we take a look at how this company has been maturing logistics and supply chain management in Indonesia, and it has a lot to do with the people behind this company.
This recap comes from five On Call with Insignia podcast episodes from 2020 to 2023.
2016-2018: The Origins of Shipper with an Ecommerce Seller’s Pain Points
We start this recap back in 2016, when Budi, a serial tech entrepreneur returned to Indonesia from his time in Australia and spent time as an ecommerce seller.
Budi: So, 2016 is almost six years ago. It seems to be [so] long ago. But, as a matter of fact, I think we have grown so much in terms of the way logistics works. During that time, 2015, 2016, I had problems actually in shipping my own products. I was trying to sell online to ship a particular product. It took me ages then to go to a particular logistics agent and offline store where I need to line up, because there’s actually a long queue. And I believe that there was a [time] even earlier that I had to fill out the paperwork, like just a manual form, just like when you go to the bank and make a deposit or withdrawal.
So imagine that was the situation at that time, and I had to line up for about an hour before I got served, then not to mention the travel time to go back to my house. The whole shipping process actually takes a while. And at that time ecommerce was still growing. It was just getting started, and imagine, if the logistics in Indonesia, if they had to grow 10x or 20x or 100x from there, imagine what will be the logistics backlog or bottleneck, for that to happen.
So, because of that, I believe there is a real problem here that we need to resolve. How do we make sure that all the people who actually sell online don’t have any problems in dealing with logistics companies, especially the first mile? And I’ll explain a little later why the first mile is very important as well. And then how can we actually have a single platform because we are selling from multiple locations? How do we actually track or look at all of the orders from one single platform, which is very important as well? And that’s how Shipper started. We believe that there’s actually something we can build, something meaningful here to solve all those problems.
2018-2019: Expansion of Shipper into Warehousing and Enterprise
A critical point in Shipper’s growth as a company was going beyond first-mile and SMEs, expanding into warehousing and serving enterprise customers and national brands. Budi explains how this naturally evolved from their initial product-market fit.
Budi: And obviously, in terms of the broad e-commerce logistics, we can see that warehousing has become a solution for some people, because as you expect, people grow their business in ecommerce sales where they used to fulfill from the house, and obviously when [the business] grows, the house cannot fit the products anymore. So then they have to find a solution.
So one of the solutions is actually to lease your own warehouse and actually manage everything, which can be costly because well, you have to focus on the marketing, you’ve got to still operate a warehouse and normally with warehouse lease or rental, you’ve got to pay a full year ahead. You gotta put on a lot of CAPEX and also manpower and there’s also the risk of losing items as well. And not to mention the management of the fulfillment: when you have errors, the impact is not only in money, but also in trust and level of loyalty to customers.
So the second way is actually to let [Shipper] do it. So we have shared warehouses. We have everything, all the systems integrated to our metabase as well. When we receive orders, we just pick [them up] and pack them for you. And the cost is only chargeable per order So it doesn’t really cost you a lot of money to do that. These have been I think the most [apparent] changes in e-commerce logistics.
So I think besides serving these small to medium enterprises, we also serve the larger customers which require warehousing. These businesses also have two kinds of businesses: ecommerce fulfillment, which is normal traditional ecommerce, but they also have their other fulfillment, which is a B2B business. So that is also another sector where we add value to our customers, so that they actually don’t need to rent big, full warehouses for their B2B businesses. They can run a small portion at our shared warehouse, but they can still run their B2B businesses, while using our service too.
2018-2019: Bringing in leaders to scale Shipper
Foundational to Shipper’s expansion into warehousing and serving bigger customers, as well as fundraising and scaling their engineering teams, has been the introduction of key leaders, including Phil who became co-founder and CEO, and Marvin who became CTO. They share how they decided to join Shipper.
Phil: Yeah I spent a significant time in the Bay Area. I grew up in Thailand but moved to the Bay Area pretty early in my childhood. I finished my undergrad there at Stanford, moved on and through all the way to working at Floodgate. It was transformative in many ways. My biggest takeaway, there was simply anything’s possible. And to give you a little light on the Bay Area and my time there, it’s an environment where it really promotes entrepreneurship and crazy ideas.
There aren’t many places in the world where college dropouts and fresh grads can raise millions of dollars, right, to try new things. They’re also not many places in the world where you talk about technology 24/7 because that’s where the majority of the workforce works. So being submerged in that environment did help a lot, but I think the inspiration and confidence really came from my time at Floodgate and investing in crazy entrepreneurs.
We were investing seed, pre-seed very similar to you actually Yinglan where you invest in entrepreneurs before anyone else believes. I think even in Southeast Asia, they are not many like that. And I think Insignia is one of the true ones who do that.
…The first reason is coming to Indonesia or Southeast Asia broadly, my family’s from Southeast Asia. They’re right around the corner in Bangkok. I spent significant time here during my childhood. So that was definitely a push for me. But speaking of family, I think, Budi Handoko, who is my partner on this journey to build Shipper. You know I consider him family and he was also a big push as well in that kind of family bucket. You see, I had the support from my family, including Budi as well, people who I trust, people who I can really trust in embarking this journey so that gave me the confidence in doing this.
Second is I think it’s a world where a lot of impact can still be created. It’s still so early in the emerging markets. And there’s so much that technology can do, even for many technology companies in more mature markets, the next billion users are right here. They’re not in the mature markets anymore. If you go to these big technology companies and ask where’s your next source of revenue, it’s the next billion users, Indonesia being a big part of that. And it’s extremely difficult to crack. So I think it’s important to be in the region to try to solve those problems.
The third piece is going back to the ecosystem and support and knowing that there was an ecosystem and there are folks like Insignia who supported entrepreneurs was a big draw for me, you know, I felt like there are always people who I can rely on and lean back and get support from if anything ever happened.
Marvin: I joined Shipper in 2019. Before that, I was in Tokopedia as an architect where I got exposed to logistics in the e-commerce industry. And one thing that got my interest was [seeing] the millions of packages delivered every day across Indonesia, and that number has been still rapidly growing till today.
Since then, I’ve always viewed the logistics industry as really compelling and a [market] that offers tremendous potential. But having said that, logistics has had its own challenges, which have not been easy to solve, and back then tech disruption in the logistics was fairly minimal, [such that] it left us huge opportunity to craft technology solutions to improve the overall logistics operations, as well as to reduce the logistics costs.
With that in mind, I think that was a good time for me to start my journey in logistics. And then my friends introduced me to Phil and finally here I am.
Paulo: What was that first meeting like? What was your first impression?
Marvin: It was good and Phil pitched a lot of things, and shared his [thoughts] about logistics. And I thought that that makes sense because I handled logistics in Tokopedia, and I know the numbers. So I think that was an opportunity for me.
Marvin: My very first day was a fascinating experience. I could work together with Budi, Phil, and the founding team, discussing the problems we face and we gathered in a small room to tackle these problems, with a limited amount of resources.
As far as can remember, there were only less than 30 people in the room, and 12 of them were the engineers who built the entire Shipper software. I worked closely with them by reviewing their code, patching some bugs, help them deploy the app to production. I think it’s been interesting to see the details of the [challenges] in Shipper and try to solve it one by one. That’s something that I miss, you know. I cannot do that today, especially when we have more than 150 plus people in engineering.
2020: Expanding Shipper’s Ecosystem
2020 was a year that saw Shipper grow as an ecosystem amidst the pandemic, expanding business lines and making key acquisitions that also led to more key leadership additions to Shipper’s management.
Phil: Yeah, I think in the early days of COVID-19, I mean, number one thing that we had to worry about was how are our team and our network partners impacted. So the first thing we did was we implemented everything we can think of to make sure our team and the network partners are safe. Everything from medical equipment to, you know, changing working hours to changing manpower planning, everything there, we implemented.
And then next we started thinking about how would this impact the business? So we, of course, did everything we could to make sure that the company had enough runway. I think that’s the number one thing for a business to sustain is to have runaway, which fortunately we were able to create for ourselves. And then the second piece was how do you continue to grow?
So for how do you continue to grow part, you have to be open to trying new things. A lot of the trial and error has to come from the team. You know, it can come top-down, but it has to be bottom-up. So I think we’ve been fortunate to create a culture where trial-and-error comes from bottom-up and we were able to come up with a few amazing ideas that have helped sustain the growth of the company.
I mean, through COVID, we grew probably about 4-5x and you know, a lot of that is a result of new ideas and new revenue, new business opportunities, all within our infrastructure though. Of course, we don’t want to build new infrastructure or build new technology. So we weathered it well and still a long period for us to kind of weather through. So we’re still on the ground remaining, hustling and listening to our customers.
Budi: We would trial warehousing beforehand ourselves. The challenge for that would be actually to have the know-how and also the tech stack that we need to run that operation. When we looked at Pakde, we were working together at the beginning where we helped them with the shipping. Then we realized that we could actually work together tighter to actually do fulfillment. We could see there’s a lot of synergies there. And I think that’s how the conversations started. We actually met the Pakde founders through the introduction of people that we met on a plane. I think it was destined to be for us to work together.
And for Porter, we see that they had actually very strong shipping and because they were building the same thing — building shipping networks and agent networks. Instead of us building the same thing — it’s a waste of time and resources, we thought, “Hey, we should just work together to build that agent network. So, we can save some time and win the market faster.” That was the whole idea around the acquisition.
Jess H: It’s actually almost exactly three years ago. So I actually started in another logistics tech startup called Porter; that’s back in 2018. Our mission then was to widen access to logistics infrastructure in Indonesia. So we wanted to reach not just the first-tier cities, but also remote areas in Indonesia, enabling them with proper logistics infrastructure.
So we did that by decentralizing post office management and growing a network of mom-and-pop shop agents to 12,000 across Indonesia in just one year. That’s when I met Budi and Phil from Shipper in 2019. We’ve been talking a lot about how to digitize logistics in Indonesia. And finally, in February 2020, which is exactly two years ago, Shipper acquired us, we joined forces and it was really the right timing because it was right before the pandemic.
Right before the pandemic was the right timing because fortunately, due to the pandemic, the demand for logistics increased significantly, not only for the e-commerce space but also for the enterprise and B2B space.
I clicked with [Budi and Phil] right away because our visions were aligned. What we want to do is pretty much aligned. We share the same values as well for the company. So everyone at Shipper is very entrepreneurial and always pushing to innovate and contribute to society. So that’s how I joined Shipper.
2021-2023: Becoming an Established Supply Chain Partner for 4000+ Indonesian Businesses
Fast forward to 2023, Shipper has been establishing itself as a go-to supply chain partner for Indonesian businesses, enabling them to ride the various changes in the Indonesian commerce landscape, from the pandemic to inflation, from the country’s maturing infrastructure to the entry of new players like TikTok Shop.
Jess H: So Shipper’s vision, as I mentioned, is moving society forward. Our mission is to make the supply chain accessible to everyone. Indonesia itself is a very entrepreneurial country. So as you know, we have 62 million SMEs and they contribute slightly over 61% of Indonesia’s total GDP. So that’s a lot. So this is a big opportunity that we believe in.
We want to make sure that we enable these millions of SMEs to grow and contribute more to Indonesian economic development. During the pandemic, this was especially important. So this is where Shipper can help them the most — to continue their day-to-day operations, despite them stopping their offline business.
So as CMO, my goal is to make sure Shipper is on top of every business owner’s mind, especially in Indonesia. Just like any marketing [effort], brand awareness is definitely what we aim for and from there, also customer acquisition. Because we believe in the service that we offer to SMEs, this is something that can help them grow exponentially, especially during the pandemic and even today. So we want to make sure that everyone knows us and eventually uses our service.
So we are a tech-enabled business and as we all know, historically, logistics has had very conventional and complex business processes. It’s also very expensive to have a robust logistics infrastructure. So this is a luxury that only big businesses can have. So usually enterprises have multiple warehouses across Indonesia or really reliable partners across Indonesia. Again, this is a luxury that only big businesses have.
So what we do at Shipper is we aim to make sense of these complexities and implement technology to streamline these processes and make it easier for any business owner to access the robust supply chain infrastructure that wasn’t available to them before. So it is to them now.
Shipper partners with logistics 3PL companies in Indonesia. So the major ones are already connected to our API. We also work with hundreds of transport partners, and we currently manage over 300 warehouses across Indonesia. So this is the supply chain network that all these small SMEs can tap into and use to grow their business.
We believe in our service, in our business model, and hopefully SMEs can grow with us as well, and that’s our message. We are their partner in growth.
…So when it comes to sales, I think brands are still limiting their scope of sales channels in the major cities. But the opportunities are massive in Indonesia, not just in first-tier cities or the major cities. There are more people outside of Jakarta, Medan. We have the largest population in Southeast Asia, and we haven’t tapped everyone yet.
That’s definitely an opportunity that all these brands, legacy or new ones, need to tap into, especially during the recession. The ones that have purchasing power are no longer the only ones that live in first-tier cities. The ones living in second and third-tier cities have purchasing powers but don’t know how to buy. So the question is how to enable that, right? So I think that’s a massive opportunity.
Phil: There’s a few questions there. I’ll start off with what are some of the trends that we see in terms of brands coming in and out of Indonesia and who are doing well and why. And then the second question is our role in that journey.
On the first question, I think historically, building domestic brands and growing domestic brands were difficult because manufacturing and local supply chain capabilities were not so strong in Indonesia. But I think over the last few years, there has been a lot of investment and a lot of push from regulation to get local manufacturing and supply chain capabilities up.
So you see a lot of customers and businesses beginning to set up local manufacturing capabilities. One of our most recent customers is going to set up a large phone case manufacturing plant to produce all the phone cases domestically rather than import from China.
So I think number one is, we’ll continue to see a lot of the rise of brands that manufacture and build their supply chain domestically.
Second is, over the last 12 months, there has been a rise in an influx of brands coming in from overseas, especially with the entrance of TikTok.
So with the entrance of TikTok, the ROI on selling online on that specific channel, at least when they were still live over the past 12 to 18 months, was quite competitive, while the ROI on selling in other markets or selling on other channels domestically was not growing as well.
As a result, folks who knew how to sell on TikTok, the majority coming in from China, quickly all came in at the same time and started leveraging their ability to sell on TikTok and grow with TikTok.
So we saw a huge influx of sellers over the last 12 to 18 months who knew how to do that type of business really well, come in and do well really quickly.
So those are the two kinds of seller trends that we’ve seen that have helped our business do well and think about our business differently over the last 12 to 18 months in terms of how our business helps these brands.
Essentially, the way we think about it is we want to help our customers to lower down the barriers to entry to build a brand and build their business, and the way we think about it creates competition for our customers’ competitors. It makes their life harder.
So our goal is to continue to do that. We want to continue lowering down the barriers of entry for these businesses. We help them to drop down their fulfillment cost from something that they had to invest in large capex before to something that they can pay per unit and come in and start on day one.
So it’s our entrepreneurship package, and we help them to continue to grow and optimize their supply chain. And some of the biggest customers that we work with, the largest shoe brand, the largest F&B brand, the largest paper brand, some of these are some of the largest companies who we help to digitize their supply chain and help them to optimize their logistics.
Our goal is to make it as easy as starting within a week so that any entrepreneur can start a brand today, and we want to be there and continue to grow with them as they grow.
Ultimately Shipper is not just maturing their own company, but also maturing the way businesses do logistics and entrepreneurs think about their supply chain.
Phil: Yeah I think the biggest opportunity is what we spend our time thinking about, which is inventory management for our customers.
And the reason why that’s such a big problem is on a good day, of course, inventory management is not as important because everything sells and everything’s all good.
But on a bad day, that’s when you know poor inventory management can really kill businesses. On average when we take over our customers’ inventory and help them with their fulfillment and logistics, about 20 to 30 percent of the information that they give us is wrong or the products are lost.
When I say the product information is wrong, that means they say it’s a blue shirt, when in reality, it’s a pink shirt. So that’s already 30 percent that is not sellable because it’s either wrong or lost.
And then another 10 to 20 percent of inventory is just stuck. Stuck means it doesn’t move, and doesn’t move means it’s just sitting in their warehouse. Some have already expired. If it’s not expired, it’s already out of date or out of fashion. Immediately almost 50 percent of our customers’ inventory is not creating value for their business.
So for us, the most important thing is, how do we make sure that 50 percent of inventory creates value for our customers? So how do you make sure that the inventory information is correct, transparent? How do you make sure nothing is getting lost along the value chain, which is very complex, especially with larger supply chains?
And how do you make sure that for the 10 to 20 percent of inventory that’s stuck our customers have transparency over that information, so they don’t make that same mistake or that stuff is flushed out so that the customer can continue to have good cash flow.
So for us, that problem statement is still very fresh for the market that we serve, and we think that’s the biggest way we can help our customers today.
…I think number one is don’t do it yourself. Use a third party. If you guys want to enter Indonesia or Thailand, call us. Let us know, we’re here to help and we’re here to serve.
I think second is where I see some of our customers get hurt is around how they concentrated their supply chain on imported products only, especially in the recent days. Or in the recent last couple of months, I’ve seen a few businesses go from a lot to very little overnight because of that.
I guess from a brand owner’s perspective, you are not thinking too much about how to de-risk your supply chain, but you’re constantly thinking about how to sell more. But I think there’s something around de-risking the concentration in your supply chain so that you have different suppliers, different ways to get products, in case of a rainy day or in case of any regulatory changes.