How Open Network Can Solve Indonesia Logistics Last Mile Puzzle

JAKARTA, Investortrust.id — For the 64 million micro, small, and medium enterprises (MSMEs) scattered across Indonesia’s 17,000 islands, the promise of the digital economy has often been stalled by the physical reality of the archipelago. At the 12th annual Indonesia Economic Forum, the launch of the Indonesia Open Network (ION) signaled a structural shift intended to bridge this gap.

During a panel titled “Delivering Digital Commerce: The Logistics Layer,” industry experts argued that while digital payments and buyer apps are essential, the success of the network ultimately rests on the ability to move goods reliably and affordably. Ratnesh Verma, founder and CEO of Pidge, set the stakes early during his keynote, noting that in fast-growing economies, “commerce fails for lack of reliable delivery”.

The fundamental architecture of ION represents a departure from the "walled gardens" of traditional e-commerce platforms. While traditional platforms operate as closed-loop systems where a single entity controls the end-to-end experience—from discovery to delivery—an open network is a decentralized protocol designed to "unbundle" these components.

T. Koshy, the Founding Managing Director CEO and Managing Director of India’s Open Network for Digital Commerce (ONDC), explained that in the platform-centric model, the "intermediary has become the controller of the business not the producer or the consumer". By contrast, ION’s open architecture allows buyers, sellers, and logistics providers to connect through standardized protocols, ensuring that a seller can "onboard once and be visible for everybody".

Moderator Shoeb Kagda, Co-Founder of the Indonesia Economic Forum, opened the discussion by highlighting that logistics currently accounts for a staggering 36% to 40% of costs for Indonesian companies.

Kagda observed that while Indonesia’s e-commerce sector is projected to reach $130 billion, many of the 30 million micro-enterprises remain excluded because they lack the scale to negotiate with major carriers.

"Logistics is a major driver of e-commerce in Indonesia," Kagda said, adding that ION offers the hope of making the sector more inclusive by helping "smaller micro-enterprises" that primarily need "sustainable income" rather than just massive scale.

The challenge of inclusivity is particularly acute in rural areas. Guruprasad Deshpande, founder and CEO of ZAAPKO, shared the difficulties of penetrating markets beyond Java, noting that his firm has reached 20,000 villages but lacks solutions for eastern Indonesia.

Deshpande described a "fundamental problem" in the current system: the lack of transparency in capacity. "I call up a logistics player and say I want to take these cartons... and the logistics player tells me that he needs about five trucks," Deshpande said, noting that without better data, "I don’t have a clue" if that is accurate.

He believes ION will benefit stakeholders by providing visibility to buyers on distant islands like Ambon or Sulawesi who "would not even know today who ZAAPKO is".

Technology can provide this visibility, but it must overcome human hurdles. Alfons Tefa, CEO of Automa, argued that "if the goods is already departing from your warehouse everything is mystery".

Tefa’s firm uses IoT and AI to track shipments, yet he noted that 50% of the market's problems are "social problems," such as drivers who find GPS trackers make their lives "harder" because they cannot take unmonitored breaks.

He emphasized that for digitalization to work, developers must "invent tools that are like WhatsApp for the people" so that technology becomes a passive assistant rather than an administrative burden.

Building trust in an open system requires shifting the focus toward the end-user experience. Verma argued that "trust at the business level can only be built if there is trust at the consumer level".

To reduce costs, Verma suggested attacking "the biggest evil in logistics," which is "idle time". He noted that idle time costs the industry an average of 36% and argued that interoperability allows for better capacity utilization, much like a "Star Alliance" for delivery.

Rushel Moan, Co-founder and CPTO of Pidge, added that the goal is to empower even the smallest operator to become a delivery company "in a matter of minutes" without "tech heavy lifting".

The transition to this open model requires a mindset shift regarding competition. T. Koshy pointed out that a truly efficient network must integrate "the big and small in a seamless fashion". He noted that when a logistics player is part of an open network, they no longer need to worry about landing ten massive clients; instead, they can serve "thousand small ones" where "yields are better".

This spirit of collaboration is what the speakers believe will ultimately turn a "protocol to prosperity". As the session concluded, Kagda reiterated that if Indonesia can solve these logistics frictions, it will provide a "huge advantage" for the national economy and ensure that MSMEs act as the true backbone of the digital archipelago.