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Can location data help reshape Indonesia’s eCommerce industry?

On top of that, three-quarters of countries don't have a correct address system in place.

Addresses, once just seen as the place a person or organization is situated, have now become an essential part of customer identity. No matter what type of organization, the collection and management of address data is tightly linked to the quality of services provided, depth of business insights, and customer satisfaction.

With the potential that developing countries such as Indonesia, India, and Malaysia offer for cross-border commerce, comes significant challenges.

Address data challenges in Indonesia

Addressing challenges in Indonesia

Parts of an address can differ widely depending on where you are in the world. These variations per country or locale can make it difficult for corporations to launch their business beyond borders. Especially in hard-to-address locations, where areas with unnamed roads and unmarked buildings can lead to inaccurate address data collection and low accessibility.

The vast majority of global addresses look different from one another, making structured verification and address formatting an intricate process. In Japan, people start their addresses by entering their postal code first. Ideally, address form fields should be presented in the order in which the user is most familiar.

In Indonesia, a report titled: Issues and challenges in developing geocoded addresses in Indonesia stated that the country has ‘yet to develop national standards on addresses’, with vast differences in format seen when comparing rural locales to urban areas.

For rural areas, addresses follow this format: Rukun Tetangga (RT) number; name of kampong and village name; sub-district name. For urban areas, this format is altered to just use the street name and house number as the main component of an individual’s address. While this may seem like a small change on paper, this can have a big impact on whether or not an individual’s parcel arrives at the right location based on how the address has been formatted by the courier.

Currently, in some rural areas, parcels aren’t delivered to the recipient’s home, but to a central postal repository where the individual can then visit to collect the parcel. This setup, although a good workaround in a rural location, isn’t ideal, and should be changed to seek out the best customer experience for Indonesian citizens as they use the internet more and more to reach a global product database from other countries.

The potential

Tailoring a business to its overseas audience can boost customers' overall customer experience (CX). But 240+ countries and territories, 3,000+ languages, and 139-character scripts mean that access to the global marketplace is not straightforward. Janio have stated they expect the revenue from Indonesia’s eCommerce sector to grow by over $7 billion by 2022, from $9.13 billion in 2018 to $16.86 billion.

This fact is substantiated by the fact that Indonesia has been enjoying consistent growth over the past years, which has been stoked by a rise in incomes, leading to a rise in disposable income.

In the first quarter of 2020, the Central bank of Indonesia reported a rise of 122.16% in their e-payments from the previous year, taking their totals to IDR 46.09 trillion, equivalent to $3.05 billion.
 

McKinsey says that the average Indonesian spends four hours a day accessing the internet on their mobile device, which is twice the USA average. They continue to report that 60% of sales are done through online commerce, while the remainder are done through social commerce.

The need for technology

For companies hoping to appeal to this burgeoning eCommerce market, they must consider this fact: CSA Research shows that 40% of global consumers will not buy in other languages, and 72.4% of consumers prefer to make purchase decisions in their native tongue.

Offering to convert your checkout into local formatting shows a commitment to understanding, trust, and a winning CX for the cohort of a growing number of consumers in areas such as Southeast Asia.

Many emerging market consumers rely on mobile technology and devices to access the internet. This is especially the case in rural areas, where traditional, ground-based technology is not available, meaning that transactions are commonly made from a small screen browser or mobile phone.

Herein lies the propensity for mistakes as a result of miskeyed information, as well as the lack of a standardized address or the consumer not knowing the local equivalent of their zip code.

Whereas standardized addresses are easier to come by in the US, with the USPS having a standardized address format and database matching and verifying a US customer's address in one simple operation, in emerging markets, the quality of data might not necessarily be the same.

The challenge

When viewed through a commercial lens, it's easy to see the opportunities the postal service provides. Every transaction, whether commercial, public, or humanitarian, will require an address to anchor it.

The quality of the data stored by each department or service will determine how well it can be delivered to the public. A real change will be needed to deliver adequate (let alone exceptional) user interactions, where addresses and other information can be submitted and then verified against accurate stored data.

When it comes to physical deliveries, the case for exact address matching is absolute. Vitally important events such as getting emergency aid to the right place are not simply a matter of a missed delivery if things go wrong.

Any business breaking into the global market will need to fully prepare for the diversity of postal services, which will depend on the type of transaction or enterprise being delivered. The lack of standardization and level of quality in postal services across the world will mean that there is a single pain point that needs to be addressed – unreliable location data.

The challenge is to take unstandardized location data in its myriad of formats and create a single source of truth, and like any good practice, this requires curation, not simply processing. The difference between the two is staggering, and the net effect is that the curated data can give the chance of a positive outcome – whether that be emergency aid reaching the intended destination or simply sending a parcel to a customer.

What this means for Indonesia

Kartik Challa, Banking and Payments Senior Analyst at GlobalData, says that ‘online shopping is gradually becoming mainstream in Indonesia with more consumers preferring due to the convenience it offers … as Indonesia continues its digital transformation, the use of electronic payments, including cards and alternative payment solutions for e-commerce purchases, will rise as consumers are moving away from cash due to fear of getting infected.’

J.P. Morgan’s 2020 E-commerce Payments Trends Report for Indonesia states that a potential barrier to entry lies in couriers. While they may be a way to provide prompt delivery, this will drive up costs for the end user.

They continue to show that the state-owned national postal service, PT Pos Indonesia, has struggled with a lack of local infrastructure, which will undoubtedly have an impact on the postal service in the region, and the return of satisfied customers.

This all means one thing - the success of digital companies vying for Indonesia’s eCommerce custom lies in having sound location data to ensure the last mile of delivery is as accurate as the first hundred.

Addressing in Indonesia is Complex

Why an address specialist can help:

Loqate’s Global Partner Program can ensure that your data contains correct address information no matter where your customers are located. By cross-referencing, combining and consolidating data from multiple trusted data suppliers across the globe into a single best record, we are able to provide our customers with access to the world’s most comprehensive and detailed repository of address data.

Address verification standardizes each captured address, detecting validity of the address while correcting spelling errors, adjusting abbreviations, and adding missing information (such as ZIP code), as per country standard. 

After parsing and matching engines discover incomplete or inaccurate data in your contact records, our Verify solution enriches it with data from our global databases, for example, adding U.S. County or U.K. Dependent Locality.

This allows for the removal of duplicates and deletion of files that are incorrect, in the wrong jurisdiction, or are no longer valid.

Our solutions can also enrich any address with latitude and longitude coordinates, allowing professionals to gain another key variable for pinpointing location.

Enhance your data to ensure correct address information globally. Learn more about Loqate's Global Partner Program and our address verification solutions here.


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