E-commerce platforms are expected to maintain focus on profitability over price wars over the coming years.
ndonesia’s e-commerce sector is expected to face slower growth over the coming years, as platforms dialed back discounts over a shift toward customer loyalty in 2023, while the year also saw fewer players in the competitive market.
The value of Indonesian e-commerce is projected to hover at US$82 billion in gross merchandise value (GMV) in 2025, up by 15 percent from this year’s $62 billion, according to a report by Google, Temasek and Bain & Company released in November.
That figure, however, was much lower than Google’s report last year that projected a value of $95 billion for 2025.
This is in line with the report’s projection that the country’s overall digital economy will see its value increase at a much lower rate to $109 billion in 2025 instead of $130 billion, as projected in last year’s report.
Experts say price-sensitive consumers may seek to reduce spending on online shopping or turn to other competitors, as platforms cut promotions, prioritizing profitability over price wars.
Read also: RI digital economy to grow on slower trajectory amid profitability push
Yongki Susilo, a retail expert said the shift may be necessary, as he warned against “a race to the bottom” fueled by discounts, such as the cash-back trend a few years back, which was unsustainable for the long term, as it encouraged consumers to prioritize price over loyalty.
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