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Understanding the misguided praise for platform matchmaking
The allure of quasi-employment belies the absence of insurance, pensions and significant fringe benefits.
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Wait and see: Drivers of on-demand transportation services Gojek and Grab wait for passengers on June 24, 2020 in Jakarta. The gig economy has contributed at least US$7 billion to the Indonesian economy and jobs for at least 4 million people, but falls short in offering decent work. (AFP/Adek Berry)
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hroughout the years, many people in Indonesia have glorified the platform matchmaking business. This is not the first time a developing country has vehemently adopted a concept from abroad that could lead to consequences at home as a domino effect caused by global culprits ends.
I managed to keep silent until recently in a managerial economics class, when someone hailed the platform matchmaking model as a triumphant exemplar of cost reduction and efficiency despite the inherent, and sometimes intentional, unprofitability of most platform matchmaking businesses.
What this person might have forgotten is that beneath the surface of its celebrated efficiency lies a labyrinth of stakeholders, each fulfilling a distinct role within the platform ecosystem.
Amid this intricate web, it is the supplier side – the often-overlooked micro, small, and medium enterprises (MSMEs) or the "mom and pop" ventures – that frequently bears the brunt of the challenges and shoulders the burden of the dog-eat-dog cost-cutting world.
This prompts a poignant inquiry: How can Indonesian MSME suppliers, already navigating razor-thin and precarious profit margins amid inundated super cheap goods originating from China, apply managerial economics to further cut costs?
The impacts are stark and paradoxical as these suppliers find themselves maneuvering within narrow confines. Devoid of the scale and resources of corporate giants, the MSME suppliers are ensnared by the ruthless cycle of cost-cutting and commoditization.
I will discuss those "uberized" platforms that exist within the "transaction platforms" nomenclature. The narrative unveils the challenges faced by these vulnerable entities and unravels the aftermath of cost reduction within an environment already teetering on cost sensitivity, exposing a disheartening example of what can aptly be described as a "strained balance”, fragile and under strain because of the complex and often conflicting factors at play within the platform matchmaking system.
