The keys to J&T Express’ rapid global expansion

Indonesia’s logistics firms have scaled new heights as the country’s ecommerce space continues to thrive. But one company appears to be separating itself from the pack: the China-connected J&T Express.

A report from venture builder Momentum Works found that J&T processed 2 million shipments per day in 2020. Not only did it outperform fellow startups like SiCepat Ekspres and Ninja Xpress, but it also outpaced legacy company JNE – perhaps a more impressive feat.

But unlike its Indonesian peers, J&T has loftier ambitions. Apart from expanding to other parts of Southeast Asia as well as China, it’s also eyeing the Middle East and Latin America.

That has led to some eye-popping numbers. The company raised US$2.5 billion at a valuation of US$20 billion in November 2021 as it plans an IPO in Hong Kong sometime this year.

However, a global expansion remains a tough task. In China, for instance, J&T has to deal with fierce competition from incumbents and a price war that it had ignited.

The co-founder of a J&T competitor observes that there’s little that separates logistics players from each other – at least from an operational or business model standpoint.

“For J&T to keep growing, maybe the only way is to keep expanding to new countries,” says this source, who asked for anonymity.

Timing and the Oppo factor

There are several key elements driving J&T’s rapid expansion.

The first one is timing. When J&T was launched in 2015, Indonesia’s ecommerce gross merchandise value (GMV) was at US$1.78 billion, according to research from Google, Temasek, and Bain & Company. But partnering with industry heavyweights  such as Shopee and Tokopedia early on arguably gave J&T a solid foundation once the ecommerce pie grew.

By 2021, the country’s ecommerce GMV was at US$70 billion – an increase of more than 30x over six years, according to the Google-Temasek-Bain report.

The second factor is J&T’s China roots, which can be traced to smartphone maker Oppo. Jet Lee, J&T’s founder and first chief executive, was the Indonesia CEO for Oppo. On the flipside, Oppo founder Tony Chen is a J&T co-founder. This could also explain why the company’s name reportedly stands for “Jet and Tony.”

In fact, J&T Express was initially set up as a logistics company to help Oppo’s ecommerce operations in Indonesia. Lee previously said that Indonesian logistics was prone to delays and the quality of services was subpar, which is why he and Chen invested 400 billion rupiah (about US$28 million) into J&T.

An uphill battle