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UNAIR NEWS – Recently, an e-commerce platform from China announced its permanent closure as of March 31, 2023. This e-commerce closure added to the list of similar businesses that have decided to close their business services in Indonesia.

Lecturer in Strategic Management at , Mochammad Thanthowy Syamsuddin SE MAB, believes that the closure of the e-commerce business is closely related to the consolidation phase the company is currently experiencing.

“I see the phenomenon of the e-commerce business platform is currently in a consolidation phase to create profits for investors. In short, the e-commerce platforms are heading towards the profitability phase,” he said in an interview Tuesday, February 7, 2023.

In this consolidation phase, he continued, e-commerce companies respond to many external aspects, including the effect of reduced purchasing power due to the Covid-19 pandemic and other macroeconomic aspects, two things: cost-cutting and potential revenue stream optimization.

“It explains why there is a significant layoff in some business e-commerce platforms,” ​​he said.

On the other hand, e-commerce companies also increase admin costs, commission fees and even require internal logistics services without a third party. This condition brings several consequences where companies that fail to form a road map to profitability and run out of capital must go out of business.

Emergence of new competitors

The e-commerce business is getting new competitors from social media platforms such as TikTok and Instagram. These two platforms are very close to the life of the millennial generation and gen Z.

“There is a potential that buying and selling transactions or purchasing decisions for these two generations in the future will be dominated by these two platforms,” said the lecturer in the Management Department of the Faculty of Economics and Business (FEB) UNAIR.

Therefore, e-commerce business people must be able to optimize this phenomenon and continue to integrate their shop or outlet ecosystem. Moreover, Indonesian e-commerce consumers are highly affected by sales and discounts.

“There is free shipping for moving, there is a certain loyalty bonus for moving. We will rarely encounter offers like this from e-commerce platforms because of the phase above (the consolidation phase, ed),” said Thanthowy.

Online platform optimization

Given this phenomenon, Thanthowy recommends that sellers who have outlets in e-commerce build good credibility on the platform and social media to anticipate e-commerce platform policies that remove the flexibility of logistics selection and increase admin costs. In addition, to reach more potential buyers and customers.

In the medium and long term, he also recommends that sellers���Dz���e-commerce platforms have their own booth by building a website that contains all product offerings, including payment facilities.

“This must be done by business people and MSMEs, especially for those who have their own products, not just trading, so that all marketing channel activities both online and offline are directed to their own website,” he explained. (*)

Author: Agnes Ikandani

Editor: Binti Q. Masruroh