GlobeAsia’s Eko Prasetyo interviewed Iruna eLogistics CEO and founder Yan Hendry Jauwena at the company’s warehouse in Tanjung Priok, North Jakarta, to discuss integrating and digitalizing the marketplace and logistic sectors.
As the first e-logistics company in Indonesia, Iruna eLogistics has been aiming to optimize online business platforms by providing a simple system, various services, safe storage systems, packing of goods and direct delivery to customers.
As an integrated back-end platform to boost the e-commerce industry, it offers end-to-end solutions and a trustworthy technology partner for its clients. Excerpts of the interview:
GlobeAsia: Where did you get the idea for Iruna eLogistics?
Yan Hendry Jauwena: The idea emerged in 2013 when I was still working for a multi-national Danish company as managing director. It was the second year of e-commerce blasting into Indonesia, and people were wondering whether the business model would end in a bubble or not, similar to the dot-com businesses back in the early 2000s.
Many people in the market were shocked, including logistic companies, as they had no clue what to do. At that time, the market was still trying to figure out what e-commerce was: a platform that provides ease, convenience, fast-pace and more options in one swipe of the screen.
This was when the logistics sector came into the business, where I came up with the idea of adding more value. It was interesting to see everything start to evolve into digital technology: the e-stores or e-commerce and the electronic transactions or e-payments, completed by the electronic logistic sector in an ecosystem. Without e-logistics, it would be difficult for the e-commerce sector to grow and create a new model of economy, the digital economy.
We have tried to find a way to fit into the ecosystem, since the logistics industry was perceived as old-fashioned. It can also be said that we were always at the back-end and were considered to be a cost center by business people.
What did you try to improve?
We are trying to shift the perception of the market. E-commerce is one of the strategic vehicles that we observe, because without e-logistics, the ecosystem cannot accelerate to create good application programming interface (API) or protocols used by programmers to develop software for certain operating systems. A paper-based system will not be capable of handling the demands of e-commerce, where goods delivery may reach up to 10,000 items per hour. If we do not utilize technology and still rely on paper-based systems, there will be lots of issues. Meanwhile, multinational logistics companies cannot easily penetrate into the market with their established structures, business models and procedures.
E-commerce was something new and unconventional, which demanded us to become future-oriented to discuss new innovations in this ecosystem.
How did you put the ‘e’ into e-logistics?
We see it as easing the market in terms of connecting people who understand the logistics industry and those who are familiar with the e-commerce market in general, since technology is unavoidable and needed to sustain businesses in the future, including e-commerce, e-trading and e-payments. The logistics sector is inseparable from electronic payments in the context of the ecosystem. This is where we define faster and more sophisticated processes, or the automation and integration of industries.
Iruna works by building its own digital platform or a mobile application instead of getting it from a third-party technology provider. We were confident of building it on our own since we came from the logistics sector and understood the needs. It is very simple: we receive orders from multiple platforms that connect to us and we execute everything from A-Z to customers’ hands, paperless.
We no longer use receipts with customer signatures, as we utilize the digital proof of delivery (POD), such as photos or digital signature. We also offer a certain period of storage for POD to our clients to help them prove that the goods have been delivered to their customers.
Our goals are to save a lot of clients’ time by delivering their goods on time and providing them with credible delivery reports. This way, they can save lots of resources. If we make our clients’ growth faster, our growth will also be automatic. In my perspective, e-logistics is very simple: automating and integrating with our clients, since the integration between logistics and producers had been very difficult in the past.
Iruna wants to do more than just complete the ecosystem, we want to be the face of the logistics sector. We want to put the sector at par with e-commerce and e-payment within the electronic trading ecosystem, just as Amazon and Alibaba put the equation on equal ground.
We want to establish logistics as a strategic component in retail businesses. We cannot underestimate the logistics sector and try to enhance businesses without including it in the equation. It is not as simple as delivering and sending the goods from point A to B. Strategically, it is way beyond that.
How long did it take to prepare Iruna as the first e-logistics company in Indonesia?
The set-up took us six months, and we have been ‘live’, or operational, for six months. In these six months of operating, we have received more than 75,000 orders both to domestic and international destinations, as well as having over 60 companies as our clients. However, this number of clients is still small in comparison to the vast transitioning or newly established companies that want to go digital and step into the e-commerce segment.
Our set-up also includes 75 delivery vans and 75 motorcycle riders including in Surabaya, as well as two warehouses — dubbed Fulfillment Centers — in Jakarta and Surabaya as our first phase. In phase two, we will collaborate with other companies to ensure that we remain a light-asset-based company.
Iruna’s warehouse in Jakarta will become the center of our tech development, as all developments made by our tech team will be directly applied to the goods we store here. As an example, storing one of our clients’ goods, which are worth more than Rp480 billion, with certain security measures to ensure they are safe and insured. We also have a cold-storage system to place fresh and frozen goods for our clients.
What makes Iruna different from Go-Jek or other courier services?
It’s very simple. Go-Jek is an on-demand hyper-local model, whereas on-demand is surely more expensive, whereas hyper-local means the delivery time is less than four hours, and their model is also one-on-one but not one-to-many.
Our service level agreement, or SLA, ranges around an eight-hour window, because we have a moving hub system that replaces the conventional hub-and-spoke system used by the post office or couriers. Our price automatically becomes cheaper as we consolidate it in our multiple points pick-up services and disburse it to our riders in certain areas in less than the eight-hour window.
Are we competing with them? The answer is no, because there are certain needs that can be facilitated by Go-Jek, but there are those that they cannot facilitate where we can enter. In the future I see it as complementary, because Go-Jek or other similar services may cooperate with us by picking up the items that we have picked up from our clients and packed for delivery.
In 2018, we are setting up our fulfillment center in Kuta in Bali, which will accelerate our urban dispatches. We are going to adopt this model into our partnership agreements, adding the name of those logistics companies with “Powered by Iruna.”
Have you received any help from the government?
We have been assisted with ministerial regulations, especially from the Transportation Ministry, as they have included e-logistics as part of their Ministerial Regulation 40/2017. This is also aligned with President Joko Widodo’s goal of a digital economy program, where everyone is urged to step into the digital era and we need to be protected by the regulations as the first-ever e-logistics company in Indonesia.
Additionally, we have established partnerships with the Forwarders and Logistics Association of Thailand, as part of our innovation, which was only recently established and first revealed to GlobeAsia.
The Forwarders and Logistics Association of Thailand observed the model’s blueprint and they were really interested to wire in idle infrastructure and fleets and the capability to carry out orders. It will be placed first in one of the logistics companies in Thailand to become a showcase, before expanding more. The partnership itself may also serve as an ambassador to carry our e-logistics model into regional and global scope, as it is expected to run in the first quarter of 2018 with a plug-and-play e-platform.