As the fourth most populous country in the world, Indonesia has 272.1 million people spread across 14,752 islands. Its e-commerce market is booming as more Indonesians shop online via their smartphones. With its huge domestic market, revenue from e-commerce is projected to grow from US$9.13 billion in 2018 to US$16.86 billion by 20221.
In Indonesia, the Greater Jakarta metropolitan region, also known as Jabodetabek, is densely populated and has fairly developed infrastructure and logistics facilities which are conducive to online shopping. As a result, plenty of online shopping tends to happen within this region according to Google and Temasek’s 2019 e-conomy report2. Jabodetabek is a portmanteau of Jakarta and its surrounding areas: Bogor, Depok, Tangerang, South Tangerang and Bekasi.
Guide to International Shipping to Indonesia
As an online merchant, you may want to jump at this opportunity to expand your e-commerce business and start a customer base in Indonesia. However, figuring out how to ship to Indonesia for the first time could feel daunting. You'll need to find a logistics provider who can reach your Indonesian customers, know what you can and cannot ship into the country, and how to collect payment for your products.
While your shipping experience may vary from carrier to carrier, this article aims to outline the general shipping procedure you need to follow and explain various processes that occur in cross-border shipping.
Generally, you’ll want to look out for partners who have the following:
Has local expertise
Knows what you can and cannot ship into the country
Knows how to collect payment for your products - Cash on Delivery is still an important payment method in Indonesia.
In cross-border shipping, the journey a package undergoes involves multiple stages:
First Mile - The shipment moves from the merchant’s warehouse to the port
Origin Customs Clearance - Clearing goods for export from your country
Freight - The shipment moves from the home country’s port (origin) to the destination port (destination).
Destination Customs Clearance - Clearing goods for import in the destination country
Distribution - Parcels arrive at a warehouse or distribution centre to be sorted and assigned to the right vehicles before the last mile delivery stage.
Last Mile - The shipment moves from the destination port to the customer’s home
As an example, goods could be shipped by truck from the merchant’s warehouse in Singapore to Changi Airport (SIN) where it is cleared for export. From there, the goods are shipped via air freight towards Soekarno-Hatta Airport (CGK) in Jakarta and go through Indonesian customs clearance. After that, the delivery is distributed via van or motorcycle to the customer’s office or home.
One way to save money on shipping is to use multiple smaller shipping partners at different stages of the delivery, but this may prove hard to manage for many merchants. On the other hand, there are shipping partners with strong networks in Malaysia who manage these logistics network partners for you at a similarly competitive rate.
With regards to freight, there are multiple types of freight options for you to ship goods into Malaysia. Each of them has varying levels of speed and cost. The methods and their pros and cons are:
For many eCommerce merchants, air freight is the transport mode of choice as it provides fast and reliable deliveries but tends to be the costliest freight option. Considering Indonesia’s geography, it has major airports to service various parts of the country. The primary airport for the Jabodetabek is the Soekarno-Hatta Airport (CGK).
Sea freight is cheaper but slower than air freight. During times when air freight supply is tight and air cargo space isn’t guaranteed, sea freight may be a more economical, or even faster option compared to air freight delays caused by supply crunches.
Consider your delivery deadlines and shipping model before picking this option. Jakarta’s main port is the port of Tanjung Priok (IDTPP).
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2. Packaging your products
Appropriately packaging your products for shipment is important in international shipping. There are many ways to package your products for shipment: boxes, envelopes, poly mailers, and mailing tubes. Including additional packing materials, such as bubble wrap and packing peanuts, helps to prevent your products from bouncing around within the package during shipment.
Thinking about expanding your online store to Indonesia? Get the latest tips and tricks in our latest Indonesian e-book, now updated with Ramadan-related info!
Carriers usually offer multiple tiers of service in shipping. These delivery options mainly differ in the features they offer, such as:
Whether they offer track & trace
Free pick-up at origin address
Compensation in the event of loss of shipment
Typically, the more features offered, the higher the shipping fee is. Choose one that best suits your shipping needs and budget.
4. Provide package details
Carriers will need merchants to provide package details to generate the documentation required by Indonesia’s customs. The type of information carriers most commonly require are:
Sender’s details and address
Recipient’s details and address
Country of manufacture
Declared value and the currency
Harmonised System (HS) Code of Item3
Item weight and dimensions
Always check that this information has been entered accurately. An invalid recipient's address will incur additional costs in customs and shipping charges if the shipping company sends the packages back to you. Under-declaring the value of the items of your shipments on the commercial invoice could result in a fine if the custom clearance agencies suspect that the declared value is below actual price. The courier may also charge you additional fees for undervaluing your goods.
5. Print the shipping labels and documents and attach them to your package
Paste the shipping label, which contains the information you’ve entered in the previous step, securely onto the parcel. The addresses and bar-codes on the shipping label must be in clear view for the scanning of details during the shipping process. Place all supporting documents inside a clear plastic pocket and tape it onto the package. Do note that some of these documents, such as the Customs Declaration and commercial invoice, will require your signature.
6. Passing the shipment to the carrier
Depending on the delivery option selected and service level the carrier offers, they will collect the package from you either at the sender address you specified or at one of their drop-off points in the origin country.
Once your package is in the carrier’s hands, you'll be given a tracking code to track your package on their tracking platform, unless the delivery option you chose does not offer tracking services. Your customer can also use this tracking code to find out if the package is still in the origin warehouse, transiting via air freight, or en route to their address.
Understanding More About the Shipping Journey
While actions required of the sender usually ends once the package is in the carrier’s hands, the shipping journey involves many more processes that your shipping partner carries out on your behalf. The following are two examples of key processes that occur when shipping to Indonesia:
Indonesia’s customs requires extensive documentation prior to clearing goods for import. For this, most carriers engage local customs brokers who are accustomed to the standard procedures and required format of documentation. Minimally, the carrier must present a pro-forma invoice, commercial invoice, airway bill, packing list, and insurance certificates. Certain categories of products, such as food and pharmaceuticals, may need additional certificates to be submitted to the relevant regulatory agencies.
Additionally, they will charge an import duty for incoming goods based on the goods classification from Indonesian Customs Tariff Book or Harmonized System Code4. In 2020, Indonesia recently updated its de minimis ruling which impacts duties and taxes on many goods, garments, shoes and bags included. To find out more, check out our article on the recent Indonesia 2020 de minimis changes.
The process of providing the documentation is as follows:
1. The carrier will notify the customs office prior to the arrival of goods and submits import documents electronically through electronic data interchange in a standardised format.
2. The customs office will conduct a physical inspection of imported goods.
All imported consumer goods must have a label which identifies the importing agents. The Indonesian customs requires information on product labels to be clearly written or printed so that it can be easily seen and understood. Product labels should be written or printed in the Indonesian language, Arabic numbers, and Latin letters. The use of other languages will only be permitted when there are no matching terms in the Indonesian language, or if the goods are to be subsequently traded abroad.
Additionally, the following are prohibited on labels:
Claims on the effect of the product on health, whether preventative and/or curative
Incorrect or misleading information
Comparisons to other products
Promotion of certain similar products
Any additional information that has not yet been approved
Besides the above, there are many more processes for controlled items. Different controlled items each have their own individual permit application process. Different items are subject to different tariff rates, which in turn are affected by various trade policies or free trade agreements between countries.
When your customers choose to pay for their purchases via cash on delivery, the last mile fulfilment stage of your supply chain becomes more complicated.
The following happens if cash on delivery is used:
1. Online merchants will specify the amount to be collected in cash upon delivery when they pass the parcel to the logistics provider.
2. The logistics provider generates an invoice-cum-delivery challan, which indicates delivery details as well as the value of goods delivered, and attaches it to the parcel for easy retrieval.
3. The deliveryman is authorized to collect the cash payment from the recipient immediately upon the successful delivery of the parcel. While it may be called ‘cash on delivery’, some logistics providers accept card payments and hence, the deliveryman may also carry a card swiping machine.
4. The deliveryman deposits the collected cash in his office. The logistics provider will hand over the cash to the online merchant, usually in the original currency paid i.e. rupiah, after deducting applicable handling charges. Some logistics providers offer additional currency conversion services which convert the rupiah collected into the currency of the merchant’s country before transferring the money.
In Indonesia, 49 per cent of online consumers5 paid for their e-commerce purchases via cash on delivery in 2017. While that number has dropped lately, more than 1 in 106 eCommerce transactions are still paid via cash on delivery. Offering cash on delivery in your payment options is recommended when venturing into the Indonesian market because it will help facilitate your e-commerce sales. However, not every logistics provider supports cash on delivery because some don't have the additional payments infrastructure and processes they need to implement to offer the payment method. Should you decide to offer cash on delivery on your e-commerce site after weighing the pros and cons, find a logistic partner who is able to facilitate it.
Cross-border shipping, especially the back-end processes, might sound very complicated. Fortunately, merchants can engage logistics providers who offer fulfilment services that will manage the packing, labelling, shipping and customs clearance of parcels on the merchants’ behalf. Having a reliable and proficient shipping partner can help solve the troubles you may encounter and ensure seamless cross-border shipping to Indonesia.
If you'd like to find out more about how we can solve your SEA eCommerce cross-border delivery needs,come and have a conversation with us.
Interested in eCommerce in Indonesia? Find out more about Indonesian eCommerce scene here: