In recent years, Indonesia’s e-commerce market has developed vigorously and has become one of the important engines of Indonesia’s economic growth. However, with the rapid expansion of the e-commerce market, a series of problems and disadvantages have also been exposed. So, let’s take a look at the disadvantages of Indonesia’s e-commerce development in 2021.
1. Overview of the Indonesian e-commerce market.
The Indonesian e-commerce market has developed rapidly in the past few years. According to eMarketer’s forecast, the size of Indonesia’s e-commerce market will reach US$5.3 billion in 2021 and will further grow to US$12.3 billion by 2025. This has also made Indonesia one of the fastest growing e-commerce markets in the world. In the Indonesian e-commerce market, Shopee, Tokopedia and Lazada are the online retailers with the largest market shares. At the same time, due to the impact of the COVID-19 epidemic, Indonesian sales have reached an unprecedented peak.
2. Disadvantages of e-commerce development in Indonesia.
1. The competition on e-commerce platforms is too fierce.
The Indonesian e-commerce market is highly competitive, with an increasing number of large-scale platforms on the market, making it difficult for small and medium-sized e-commerce companies to gain a foothold in the market. In addition to traditional e-commerce platforms, transactions on social media platforms are becoming increasingly popular. The competition in the e-commerce market is too fierce, which requires e-commerce companies to invest a lot of funds in marketing, advertising and promotional activities. This also increases the development costs of emerging e-commerce companies, making it difficult for start-up companies to gain a foothold in the Indonesian e-commerce market.
2. High labor costs.
In the Indonesian e-commerce industry, due to intensified competition, merchants need to spend more funds to expand their business scale and often hire more manpower to support their business. At the same time, some large e-commerce platforms have launched low-priced products and services, which has forced some small and medium-sized merchants to reduce labor costs in order to keep up with market competition. Some merchants even have to employ very low wages to hire workers. Therefore, not only are small and medium-sized e-commerce companies unable to bear such costs, but the labor force will also face the adverse situation of low wages and few benefits, which has a negative impact on the job market.
3. Logistics and distribution issues.
A smooth logistics and distribution system is the key to the success of e-commerce. However, in Indonesia, the logistics and distribution system is not yet complete. Although the logistics field in Indonesia is changing, there are still many challenges, including high transportation costs, difficulty in reaching remote areas, and delivery delays. These problems not only affect consumers’ shopping experience, but also limit the expansion capabilities and sales growth of e-commerce companies.
3. Countermeasures to solve the problems of e-commerce development in Indonesia.
1. Develop more channels and markets.
The main way to solve the problem of excessive competition among e-commerce platforms is to explore more channels and markets. In addition to traditional e-commerce platforms, you can consider expanding social media platforms, search engine advertising and other channels to further expand market share and user base. On the other hand, e-commerce companies can adopt more personalized and differentiated operating strategies to better integrate into local culture and market needs.
2. Pay attention to labor issues.
E-commerce companies should pay attention to humane handling of labor issues. There needs to be certain guarantees in terms of personnel recruitment and salary benefits to avoid giving people a bad impression due to cost issues. At the same time, e-commerce companies can adopt more technology- and automation-based solutions, such as automated warehouse robot processing, to reduce labor costs and improve efficiency.
3. Strengthen logistics and distribution.
For logistics and distribution, e-commerce companies can seek third-party logistics service providers to establish a complete logistics system. Through better process management and collaboration, logistics costs can be reduced, distribution speed can be accelerated, user experience can be improved, and market demand can be better met.
The development of Indonesia’s e-commerce market has brought more choices and convenience to consumers, but also brought a series of problems and challenges, which require e-commerce companies to actively respond. In response to these problems, it is necessary to focus on strengthening marketing strategy innovation, human resources management, and improvement of the logistics and distribution system. At the same time, these measures should be used to promote the development and progress of the Indonesian e-commerce market.