As E-Commerce Slows Down: Time to Build a Healthier Ecosystem!
E-commerce once promised a simple equation: the easier it is for the public to shop, the wider the opportunity for anyone to sell. The era of massive discounts, free shipping, cashback, and aggressive platform expansion drove extraordinary growth in digital trade.
However, entering 2026, that equation is becoming increasingly complex. Consumers are becoming more price-sensitive, while merchants face competition, platform fees, promotions, advertising, logistics, and taxation obligations. Amidst these changes, e-commerce faces its next test: can digital growth continue to generate healthy economic value for consumers, merchants, platforms, and the state?
This does not mean Indonesia’s e-commerce is in decline. The e-Conomy SEA 2025 report by Google, Temasek, and Bain estimates Indonesia’s digital economy will approach US$100 billion in Gross Merchandise Value (GMV) by 2025, with e-commerce accounting for approximately US$71 billion.
Nevertheless, other estimates suggest a need for a more critical reading of aggregate figures. Momentum Works, using a different methodology and scope, noted that Southeast Asian e-commerce GMV grew by 22.8 per cent to US$157.6 billion in 2025. While Thailand and Malaysia surged by 51.8 per cent and 47.6 per cent respectively, Indonesia, despite remaining the largest market, grew by only 2.2 per cent to US$57.7 billion.
These differing estimates serve as a reminder that the health of e-commerce cannot be judged by a single figure. The strategic question has shifted: it is no longer about how much transaction volume grows, but rather who derives value from that growth and how sustainable that value creation is.
Large GMV, but whose margin?
GMV is important for understanding market scale. However, GMV is not GDP, nor is it a merchant’s net income. The one hundred thousand rupiah paid by a consumer does not all go into the merchant’s pocket.
Between the selling price and net receipts lie the cost of goods sold, platform service fees or commissions, promotions, advertising, logistics, returns, and taxes. This is where what can be called the ‘Merchant Margin Squeeze’ emerges: traders are squeezed between price-sensitive consumers on one side and rising costs of selling on the other.
From the consumer perspective, the room to raise prices is narrowing. The Consumer Confidence Index fell from 120.9 in May to 117.8 in June 2026. While the figure still shows optimism, the decline signals increasing household caution. Consumers do not necessarily stop shopping; they become more diligent in comparing prices, switching brands, seeking promotions, or delaying purchases. This is one facet of the ‘middle-class squeeze’.
From the merchant perspective, the cost of selling is no longer just about the cost of goods and shipping. Merchants must manage platform service fees, promotional programmes, advertising to gain visibility, returns, and various additional services.
The structure and magnitude of these costs vary by platform, product category, and the specific programmes joined. Therefore, the issue is not whether a marketplace is ‘expensive’ or ‘cheap’, but rather the total cost required to generate a single profitable transaction.
These pressures are now meeting changes in taxation mechanisms. Since 1 August 2026, Blibli, Shopee, Tokopedia, and Lazada have begun collecting Article 22 Income Tax (PPh Pasal 22) at a rate of 0.5 per cent of a merchant’s gross turnover, in accordance with PMK 37/2025.
It is important to underline that this is not a new tax, but rather a change in the collection mechanism to simplify administration and create a level playing field with conventional trade. Individual merchants with an annual turnover of up to Rp500 million are still not subject to collection, provided they meet the turnover declaration requirements.
However, from the perspective of merchant economics, the direct collection of tax makes the reduction in revenue more visible. A 0.5 per cent rate may seem small, but it is based on gross turnover, not profit.
For merchants with thin margins, the accumulation of platform fees, promotions, advertising, logistics, returns, and taxes can widen the gap between turnover and profit. This is the paradox of modern e-commerce: transactions can increase even as merchant profitability is under pressure.
A warning from China
China provides a warning signal. In the first half of 2026, the country’s retail sales grew by only 1.3 per cent, while online retail sales of goods and services still increased by 5.2 per cent. This means that digital channels continue to grow amidst much weaker aggregate consumption.
Indonesia is certainly not China. Economic structures, public income, and the stage of digital market development differ. However, the lesson is vital: high digital penetration does not make e-commerce immune to purchasing power pressures. When demand growth slows, competition may shift from creating new markets to fighting for the same consumers through price and promotion.
Indonesia actually possesses significant capital to avoid this trap. Digital payment infrastructure is developing very rapidly. In the second quarter of 2026, digital payment volume reached 16.07 billion transactions, growing by 36.88 per cent annually; QRIS transactions surged by 100.12 per cent. The challenge is ensuring that this ease of payment is accompanied by the ability of business actors to obtain adequate economic value.
Therefore, the digitalisation of MSMEs must move from onboarding towards upgrading and profitability. Having a marketplace account is not the end of digital transformation. MSMEs truly move up the value chain when technology improves productivity, product quality, market access, data literacy, financing, and ultimately, business margins.