Spire participated as a speaker for Global Supply Chain Council’s (GSCC) live webinar held on Wednesday, 20 December on diversity among Southeast Asia cross-border e-commerce shoppers.

1. By
Jeffrey Bahar
Deputy CEO
Spire Research and Consulting
Retail, Distribution and
Logistics Forum
Jakarta, December 20, 2017
ADDRESSING CHALLENGES
OF CROSS BORDER
E-COMMERCE LOGISTIC AND
PAYMENT IN ASEAN-6

2. 2
CUSTOMERJOURNEY
Online Consumer
(Ronnie is looking to buy the
newest edition of Nike Golf
Shoes. Unfortunately, it is not
available in Indonesia)
Nike
Lunar
Control
Vapor 2
1
2
3
37%
Clothing, Accessories and Footwear
22%
Cosmetic, Health and Beauty Product
17%
Books, CDs, DVDs, and Video Game
13%
Computer Hardware, Software, and Peripherals
12%
Toys
Top 5 Products Purchased by ASEAN Countries from Abroad
Check Out
(Once he checked out and
made a payment, the E-
Commerce platform will
proceed the order).
The costs include cost of
goods, shipping cost, and
import duty
Get it Online
(He then decided to search it
on many websites, and found it
in the US e-commerce
platform)
Occurs domestically Occurs internationally
Customer journey starts when the need of particular product is not offered domestically
PAYMENT
Source: Google Consumer Barometer, n=8750
Source: SP Commerce,
Various Sources and Spire Analysis
Paypal / Alipay
Others
Bank Transfer
Cash on Delivery
Credit Card
Most Preferred Domestic Payment
Methods in ASEAN-6
Paypal / Alipay
Others
Credit Card
Most Preferred Cross-Border
Payment Methods in ASEAN-6

3. 3
CUSTOMERJOURNEY
4
5
6
Occurs domestically Occurs internationally
Warehouse at Origin Country
(The e-commerce platform will
give notice to dispatch goods
for delivery to destination
country) – fulfillment process
International Shipping
(The International logistic will
take care all of the delivery
processes and the custom in
destination country)
Custom Clearance
(In this case, the import duty
for “Nike Lunar Control Vapor
2” to be shipped to Indonesia
will be charged 25% of import
duty and 10% of VAT)
North
America
South
America
Europe Africa Asia Australia
North
America
1-2 2-9 2-9 3-4 3-4 3-4
South 2-3 2-3 3-4 6-7 6-7 6-7
Average Cross Border Shipping Time (in Days)
USPS
EMS
UPS
EMS (Post)
DHL
FEDEX
TNT
Worldwide Logistic Players
From
To
LOGISTICANDCUSTOM
The challenges of SEA cross border e-commerce include geographic, economic, lingual and
regulation.
Source: Various Sources and Spire Analysis

4. 4
CUSTOMERJOURNEYLOGISTICANDCUSTOM
USD 204.75
USD 192.5
USD 202.99
USD 187.25
USD 258.67
USD 231
3
1
2
4
5
6
A pair of golf shoes (USD 175) through cross border e-
commerce from the United States to ASEAN-6 may vary
depends on the import duty, VAT, STLG and income tax. In
this case, the costs does not include shipping and
insurance cost.
Custom
(Lead Time Needed)
Additional
No. of Days
North America 1-2
South America 2-3
Europe 1-2
Africa N/A
Asia 1-4
Australia 2-3
Custom Time (in Days)
*The Average (WORLD) Number of Days needed for custom clearance is 3 days
*Rates based on the calculation of golf shoes as a product.
Each product may have different rates.
Custom affects as one of the hurdles purchasing from cross border e-commerce
Source: Various Sources and Spire Analysis
Country
Import
Duty
VAT STLG
additional
Tax
Singapore 0% 7% - -
Thailand 5% 7% - -
Custom Rate

5. 5
CUSTOMERJOURNEY
7
8
9
Occurs domestically Occurs internationally
Warehouse at
Destination Country
(Order is Ready for Delivery)
Local Delivery
(Order is Delivered by Using
Local Carrier)
End Customer
The delivery received by clients
LOGISTIC
The rate of logistic effectiveness and efficiency is affected by the development of infrastructure
within the country. However, infrastructure for archipelago countries such as Philippines and
Indonesia are still underdeveloped.
Source: Various Sources and Spire Analysis
The Development of Infrastructure in ASEAN 6
SG
MY
TH
ID
PH
VN
LALAMOVE
NINJA VAN
DELIVEREE
The Emergence of ASEAN
6 Cross-Border Logistic
Players
Decent
Less Decent
Note:

6. MARKETOVERVIEW
416
538
696
900
25
34.5
47.5
65.3
0
1,000
2,000
3,000
4,000
5,000
6,000
2017 2018F 2019F 2020F
Global & Cross Border E-Commerce Market
(in Billion USD)
Global E-Commerce Market Global Cross Border E-Commerce Market
Cross Border E-Commerce Market in ASEAN 6
>
Global&CrossBorderE-CommerceMarket
Contribution 2017 2018F 2019F 2020F
Global Cross Border E-Commerce Market to Global E-Commerce Market 18.17% 19.39% 21.06% 23.20%
Cross Border E-Commerce Market in ASEAN 6 to Global Cross Border E-Commerce
The trends of cross border e-commerce higher than the growth of global e-commerce
itself, particularly in ASEAN 6 which the growth is reached 37.58%
Source: Various Sources and Spire Analysis
2,290
2,774
3,305
3,879
Total of Global E-Commerce Market
25
416
34.5
538
47.5
696
65.3
>90
0
6

7. MARKETOVERVIEWASEAN-6E-COMMERCE
7
Number of Internet User (in Million)
4.71 46 22 60 50.5 132.7
30.34
2.9
24.74
33.26 13.98
11.58
29%
17%
35%
45%
51%
9%
E-Commerce Penetration
(Number of Purchases Compared
to Total Population)
The e-commerce market has an extensive potential to grow owing to significant growth of total
internet user in ASEAN 6.
Source: Various Sources (2016) and Spire Analysis
18%
25%
66%
64%
62%
17%
Conversion Rate
(Number of E-Commerce Purchaser
to Internet Users)
1
2
3
4
Number of People Purchasing Product
Through E-Commerce (in Million)

8. MARKETOVERVIEW
8
67%
49%
48%
38%
33%
4%
Number of People Did Cross Border
E-Commerce
ASEAN-6CROSSBORDERE-COMMERCE
Source : Google Consumer Barometer, n=14174
Notes : the percentage is based upon the e-commerce users Source: The Consumer Barometer Survey 2014/15. N=8750.
The challenges faced in cross border e-commerce transaction involved logistic and payment issues
36% 39% 46% 53% 47% 73%
I Prefer to Buy Products Within My Country
Source : Google Consumer Barometer, n=18587
Notes : the percentage is based upon the internet users
Delivery time takes too long30%
Website seems insecure28%
No international shipping offered26%
Supply issues when conducting cross-border transaction:
Demand side: why SEA customers do not purchase cross-border
e-commerce?
Perceiving product is more expensive31%
Assuming delivery time will be longer29%
Perceiving the return procedure will be difficult and costly
27%
24%
23%
It wasn’t convenient
I worry about paying in a foreign currency
No suitable or convenient payment methods24%
23% Process for ordering wasn’t clear
Notes:
Logistic Issue
Payment Issue

9. RECOMMENDATION
Current Situation
Current Challenges Need
to be Taken Care of
Possible Recommended
Actions
Focusing on last mile delivery
alternatives to guarantee service
and to adapt the challenges
Numerous payment solution
providers available, such as: Paypal,
Alipay, etc. to facilitate cross-border
transaction
Notes:
Logistic Issue
Payment Issue
Expensive shipping cost owing to
limited number of logistic
provider for cross-border delivery
Poor transport infrastructure &
warehouse readiness
Available logistic providers that can
accommodate cross-border delivery.
Increase the number of local
transhipment warehouse to reduce
shipping cost
Insecure transaction owing to
inconsistency of conversion rate,
import duty and tax clearance
No single payment system that
ensure safety and trustworthy
one single integrated platform to
remove complexity of international
payment
(to cooperate with PSP)
Integrated trade information for
regional ASEAN by ATR (ASEAN
Trade Repository)
provide clear return procedure,
available contact for customers and
engage omnichannel
Clarity on return, payment
procedure
and delivery process.
9

10. Tel: (62-21) 5794 5800
Fax: (62-21 5794 5808
Wisma 46 Kota BNI, 25th Floor, Unit 07 & 09
Jalan Sudirman Kav. 1, Jakarta 10220
INDONESIA
indonesia.info@spireresearch.com
www.spireresearch.com