One by One, SMEs Are Leaving E-commerce: Is It Really Just the Effect of Shipping Cost Issues?

Jakarta, CNBC Indonesia - One by one, Micro, Small, and Medium Enterprises (SMEs) are said to be starting to leave e-commerce platforms. The surge in logistics costs and commission deductions is suspected to be the trigger for this action by SMEs. However, Founder & CEO of Supply Chain Indonesia, Setijadi, stated that the problem is not that simple. Therefore, he said, the solution to this issue is not sufficient by merely suppressing shipping costs (ongkir). “The phenomenon of some SMEs reducing dependence on e-commerce needs to be viewed proportionally. This issue is indeed a symptom, but it is not yet accurate to call it a massive exodus from marketplaces,” he told CNBC Indonesia, quoted on Wednesday (13/5/202). Precisely, he continued, what is happening is a shift in sales channel strategies. SMEs, he explained, are beginning to seek a balance between marketplaces, social media, WhatsApp, offline stores, resellers, and independent sales channels so as not to be too dependent on one platform. “The main cause is not solely the increase in shipping costs. In practice, the pressure felt by SMEs comes from the increase in total selling costs on e-commerce,” Setijadi said. “Those cost components include platform commissions or administrative fees, service fees, free shipping programme costs, promotion and advertising costs, affiliate costs, order processing costs, return costs, and logistics costs,” he clarified. Therefore, he stressed, making “rising logistics costs” the source of the problem would divert attention from the main issue. “The term ‘rising logistics costs’ often becomes a simplification of the problem, which is actually more complex, namely the increasing total cost of selling in the marketplace,” he said. Setijadi acknowledged that logistics costs are one of the important components. Especially, he added, because Indonesia’s character as an archipelagic country makes inter-regional distribution relatively expensive and uneven. Shipments from and to areas outside Java, large-sized products, low-value products, or products with high return rates will be more sensitive to changes in costs. “However, in the e-commerce ecosystem, logistics costs are not always identical to pure courier rates. There are also logistics service costs related to processing, system integration, shipping subsidies, delivery management, and platform service schemes,” he emphasised. “For SMEs, this issue becomes serious because their business margins are generally limited,” he continued. Setijadi said that products that appear to be selling well in the marketplace do not necessarily provide adequate profits after deducting various costs. “If sellers have to bear commissions, promotion subsidies, advertising, voucher deductions, service costs, and part of the logistics costs, then net profit can be significantly eroded. As a result, some SMEs feel ‘busy with transactions but thin profits’, and in some cases, it is no longer viable business-wise,” he stated. “Therefore, the solution to this problem is not sufficient by suppressing shipping rates,” he said. According to Setijadi, what is more important is creating a more transparent, fair, and sustainable e-commerce cost structure for SMEs. “Marketplaces need to provide clarity on cost components so that sellers can calculate margins rationally. SMEs also need to improve their ability to calculate cost of goods, margins, channel costs, and promotion effectiveness,” he said. “At the same time, the government needs to encourage national logistics efficiency, equitable distribution infrastructure, and strengthening of the digital ecosystem that not only promotes transactions but also maintains the sustainability of SME businesses,” Setijadi stressed.