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CHAPTER I

INTRODUCTION

I.1. Background

Indonesia has enjoyed a significant economy growth for the past 10 years and

become one of the biggest economies in the world. This success is marked by

Indonesia’s status and participation in G20 Summit. The tremendous economy

growth itself has changed the face of Indonesia’s capital city, Jakarta. As the

biggest city in Indonesia, Jakarta has more than 9.6 million populations. Together

with the surrounding metro area or called Jabodetabek (Jakarta, Bogor, Depok,

Tangerang, Bekasi), the total population exceeds 28 million people. The

population density in these areas is considerably high. It is around 14,464 people

per square kilometer in Jakarta and 4,383 people per square kilometer in the

metro area (BPS, 2010).

Regions 2000 2010 Change %Change Areas Core Jakarta 8.36 9.59 1.23 15% Inner city

Inner Suburbs (Municipalities) 4.94 7.23 2.30 47%

Tangerang, Tangsel, Depok, Bekasi

Outer Suburbs & Exurbs 7.30 11.20 3.90 53%

Bogor (Municipality & Regency), Tangerang & Bekasi (Regency)

Jabotabek Total 20.60 28.02 7.42 36%

Figure 1. Jabotabek Population 2000-2010 (BPS, 2010)

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Figure 2. Jabotabek Population Growth Rate & Density (BPS, 2010)

For many years, the economic activity is centralized in Jabodetabek. While on

one end Indonesia has a growing number of productive age and middle class

population, the fact that Jabodetabek is the main stage for the country’s economy,

the high price of property, especially landed house, in this area becomes a new

challenge for many people to own a proper place to stay. The reason for this is

because the growth rate of people’s income is not as fast as the increasing rate of

property price as shown in the graph of properti price and income ratio below.

Figure 3. Jakarta price/income ratio going up (DBS Vickers, 2014)

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In the past few years, the development of apartment complex in Jakarta and

Government subsidy landed house in metro area has been very massive. By

considering the expensive cost of land and material, the property developer tends

to reduce the size of the apartment unit that they build to enable them to keep the

selling price low so that they can targeting the new home owner who mostly is

coming from the growing middle class. Today, apartment is becoming an ideal

option for many people who want to still live in the downtown considering its

strategic and convenient location to their work place. This trend is supported by

the fact that occupancy rate of lease apartment market stables at around 75%-

80%, indicating a constant growth of apartments demand in Jakarta. On the other

side, it was estimated 10,701 apartment units were built in Jakarta in 2014,

brought total apartments unit of Jakarta to 143.000 units, followed by additional

6,095 units entered the market during 1H2015. Overall take-up rate of apartment

market is about 87%. This numbers represents figure of all existing and under

construction projects (Colliers Research and Forecast Report, 1H2015).

I.2. Problem Statement

Capturing the situation of the high occupancy of apartment in Jakarta and its

surrounding metro area, family living in apartment normally will not have a

spacious and commodious room and space to put their stuff and belonging.

Family put priority based on their needs such as primary needs clothes,

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electronics, baby equipment, and following the secondary needs such as hobby’s

equipment, seasonal stuff, holiday stuff, travel’s equipment.

Like normal family, family living in apartment would like also to have all the

stuffs or items to be stored and easily accessed and used during the period/season.

But they will normally clear the stuff or do not buy the stuff.

People living in the apartments or landed houses could potentially be harboring

up to the equivalent of a spare room in their homes without knowing it. The

accumulation of belongings for the average family comes at a higher cost than

most people think. The main problem is how to smartly kept and manage

underutilized personal or household items, and at the same time improving its

usability by allowing people to share each other, as well as gain access to its

functional value. This would encourage every household and family to live in a

more positive, less cluttered environment.

I.3. Importance of the Study

The study contribution would serve as useful reference to the society, particularly

urban communities who live in dense metropolitan area such as Jakarta, and

reside in relatively small space apartments or housing flats. Sooner or later

property price in strategic zone or central business district will significantly

increase. As society are improving their wealth, most of them will buy or bring

new stuff to their premises, with the ever changing need to expand their place to

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life, one stop service to solve their underutilized stuff might become practical

solution of their life.

The solution approach will be built on the basic concept of self storage business.

This common concept is relatively known to the majority of business community

in Indonesia with the emerge of some conventional self storage player in

Indonesia such as rajapindah.com. However, finding the right business

opportunity to attempt has become major concern for them. With the fact that self

storage business has evolved over the years in the other part of the world and has

been proven to gain profitable return for its stakeholders, it’s just a matter of time

that its influence would come to Indonesia. This situation will become a trigger

to unlock potential business investment and lead to local economy benefits such

as solution to unemployment problem and generating tax income. Furthermore,

since the barrier to entry of this business is relatively low, the opportunity would

empower small medium size of enterprises, considering that the business plan is

feasible enough to be managed in a small scale of operation. This study explores

the advantages of such business model to raise awareness among people who are

uninformed with its potential applications and benefits within their business

setting.

The findings of this study will also draw business interest from other adjacent

industries, such as property and local courier services. Some apartment

management services who already know about the advantages of this service for

their residents, might provide them with this type of service as a value added

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facility to their current daily life residential service such as security, laundry

service, parking service, and home improvement. In cooperation with certain

established businesses, they could provide the service with ease in the leanest

possible operation.

Self storage business essentially utilizes an idle space to store goods in some

properties. Therefore, the emerge of self storage business would drive the quest

of property spaces. either by providing warehouses, building storage facility in

some industrial zone or renting houses, shophouses or underutilized office

buildings.

Knowing that the stored items need to be moved from the customer premises to

the storage facility and vice versa, some self storage companies would employ

their own transportation fleet to perform this task. Nevertheless, as part of the

strategy to keep their operation simple and lean, other companies might opt to

oursource the task to local couries service such as DHL, Fedex, POS Indonesia

or even GoJek. It will become interesting opportunity for current courier

companies since it could increase the productivity of their fleet.

Last but not least, this study will become important resource to educate end user

of this service, which consist of private customers, families and business users as

well. Private customers and families living in the apartment might have enough

information on how to transform the apartment into roomy space and increase

their urban quality of life. In the middle and long term period, as self storage

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business become widely known, business users especially small and medium

enterprises might turn into the flexibility of this service to store document

records, supplies and excess inventories as their cost leadership strategy to

maintain their business operation optimum .

I.4. Business Idea

Incorporating best enabler from current market situation and several related

industries, which already being part of consumer trend in Indonesia.

• Indonesia’s growing middle-income population. According to DBS

Vickers Securities in their 2014 analysis report, the growth in the

economy was driven by growing middle-income population. Households

earning more than US$7,500 p.a. grew at 27% CAGR from 2009 to 2013

to reach 40% of total households; this is amazing compared to only 17%

in 2009.

Figure 4. Mid to upper class HH grew rapidly (DBS Vickers, 2014)

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McKinsey Consumer Insights Indonesia (2013), has revealed that as part of

growing middle class, 55 million of urban consuming class today in

Indonesia, which expected to reach 86 million in 2020, are commercially

the most attractive segment, with high familiarity with digital platform, and

beginning to save and consume.

Figure 5. Indonesia’s Demographic Bonus (McKinsey, 2013)

• Indonesia among top countries likely to share from others.

In 2013, Nielsen conducted a Global Survey of Share Communities, the

survey has revealed some interesting facts:

o More than two-thirds of global respondents (68%) are willing to

share or rent their personal assets for financial gain.

o Two-thirds of global respondent (66%) are likely to utilize the

products and services from others in a share community

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o Electronic, lesson/services and power tools are favored properties

for sharing

o Indonesia among top countries likely to share from others (87%)

with China as the first rank (94%)

• Indonesia rank highest globally in term of impulse shoppers and early

adopters.

This emergence of a strong consumer appetite provides a promising outlook

for consumer goods manufacturers and service providers.To accompany

this strong wave of consumerism, new infrastructure will provide stable

platforms (Nielsen ASEAN, 2015).

Figure 6. Asian Consumer Fast Track (Nielsen Global Survey, 2014)

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• Technology evolvement from “push” to “pull”. Technology-enabled

society evolving from “push” to “pull” with the people deciding what,

when, where and how (FinTech Indonesia, 2014)

Figure 7. Technology enabled society (FinTech Indonesia, 2014)

• Courier services gain benefit from the rise of ecommerce. The e-

commerce trend began growing during the popularity of the Kaskus online

community in 2000s. People were allowed to conduct online transaction

with preferable payment methods through bank transfer or cash on delivery

and shipped using courier services such as JNE and Titipan Kilat (Tiki).

Serving all kind of online transaction industries from Kaskus, online

marketplaces to Instagram and blogs, courier services have become a profit-

making industry to tap into, with the raise of Go-Jek as mobile application-

based courier services and online marketplaces who have their own fleet of

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courier services such as MatahariMall, Lazada. Basically they are the

people driving behind Indonesian ecommerce industry.

Figure 8. E-commerce Logistics Market Share (Spire, 2014)

Our objective is to smartly kept and manage the underutilized stuff in a single

solution that would also extend its usability by allowing people to share each

other, as well as gain access to its functional value.

Referring to the shift on Indonesia current market enablers and behaviours, we

have enough reason to redefine the basic concept of self storage service by taking

control of all the steps in the process, from moving to retrieval through a concept

called valet storage service, with some highlights in its operation:

• Storage by the box. Instead of renting out space or individual storage units,

we only provides boxes for small volumes. The customer fills these boxes

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before having them shipped off to a warehouse. The customers don’t need

to have and visit their storage unit. They can simply put in a request and the

storage company will deliver their boxes back to their premises. We also

offering the service for unstandardized size of items with the size that a man

can carry, such as bicycle, guitar, luggage bags or golf equipments.

• Utilizing an app to make life easier. The self storage business can benefit

from modern technology where the customers will be equipped with user

friendly mobile application. The customers open an app, requests storage

boxes, takes a photo of the items, and appoints the time for the boxes to be

picked up. On the other hand, should they need to use their things again,

they simply request to deliver the boxes through the app, and they are

delivered the next day.

• Providing the benefit of sharing economy. Allowing people to rent some

stored items which previously being considered as underutilized by the

owner, or permanently swap some useful items with other people stuff

based on mutual interest, while at the same time maintaining their

possession to their stored items.

• Partnering to provide space. Through this business model, we will also

be able to create beneficial partnership with the owners of less strategic

located property or the operators of outlived property who are looking for

some gains from these assets by acquiring or renting these assets/buildings

and transforming them to become storage area.

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• Partnering to perform lean and simple delivery. To keep our business

operation lean and simple, we also want to create strategic partnership with

some of the existing intra city transport/logistic companies (such as Gojek,

GoBox, Tiki etc) to complete our business model by utilizing them as our

main pickup and delivery service operators.

I.5. Theoretical Framework

Building a valet storage business model will require 4 stages of strategic

management process :

- First Stage: Strategic Situation Analysis including macro environment,

TOWS matrix analysis; and market analysis.

- Second Stage: Strategy Formulation, consist of business model creation,

idea generation, value proposition, and business model development.

- Third Stage : Strategy Implementation will include action plan and timeline

implementation

- Fourth Stage : Strategy Evaluation and Control

In the first stage of this framework, we have attempted to explore related macro

situations that strongly brought impact to the business occurance. Johnson (2008)

indicates that a PESTEL-analysis is a method often used to analyze the macro

environment. (Johnson, et al., 2008). Bryson (1988), Myers and Sacks (2003)

recommend that the PESTEL model could be improved by combining it with an

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industry specific analysis, such as Porter’s (1980, 2008) five forces model. In

term of market analysis, we have used industry analysis, market segmentation

analysis and quantitative survey as well as qualitative research regarding self

storage business.

To formulate our business strategy in the second stage, we have employed Value

Innovation of Blue Ocean Strategy (Kim & Mauborgne, 2005), and Business

Model Canvas (Osterwalder & Pigneur, 2010)

Following the previous stage, in the stage of strategy implementation as the third

part, we have utilized the Value Chain Analysis (Porter, 1985) to assist us in

designing action plan of business implementation toward operation excellence.

Ended with the last stage, Strategy Evaluation and Control to build feasibility

study.

Figure 9. Theoretical Framework

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I.6. Scope of The Study

The scope of this study is limited to create a business model of valet storage in

Jakarta Area. The study will describe about the business concept, financing aspects,

developing application to manage valet self storage business, marketing plan,

operational management, human resources requirements and feasibility study of the

business.