Wednesday, December 6, 2023

E-Commerce Still Beats Social Commerce in Digital Economy: Expert

The Jakarta Globe
January 30, 2023 | 1:11 pm
A photo illustration of people shopping online on e-commerce.
(Antara Photo/Septianda Perdana)
A photo illustration of people shopping online on e-commerce. (Antara Photo/Septianda Perdana)

Jakarta. An expert recently revealed that e-commerce still takes the lion’s share in the digital economy, despite the rising popularity of social commerce like TikTok Shop.

Prani Sastiono, a researcher at the University of Indonesia's Economics and Business Faculty research institute (LPEM FEB UI), said that while social commerce may be growing, the value of the digital ecosystem still largely comes from e-commerce. Compared to the “more mature” e-commerce ecosystem, the nascent social commerce might still need to work on its consumer protection.

“Social commerce might see problems from a consumer protection standpoint, or the types of businesses [on the platform]. While e-commerce already accommodates the need for formality and legality through its 'mall' or 'official store' features,” Prani was quoted by news outlet CNBC Indonesia as saying.

Social commerce’s rising popularity has sparked debates about whether the trend would lead to competition with e-commerce players such as Tokopedia, Bukalapak, and Shopee.

But according to Prani, the competition between social commerce and e-commerce might only take place in certain segmented products. People still favor going to e-commerce when shopping for high-value items as they have official stores, thus giving customers greater peace of mind when purchasing pricier products.

“People might not feel secure enough to buy high-value products on social commerce. They would likely go for e-commerce,” Prani said.

Youth largely represents social commerce users. And this would lead to a more segmented, lower-valued product purchase, according to Prani. 

Indonesian E-Commerce Association (idEA) said that e-commerce with a monthly total processing value (TPV) of over $1 million would continue to grow despite the social commerce trend. 

“Remember when back in 2016, people also bought and sold products via Facebook. And this did not interrupt e-commerce like Tokopedia or Bukalapak. So they are co-existing. And I am seeing a similar trend with the TikTok Shop phenomenon,” Rudiantara, the chairman of the association’s board of advisory, also told CNBC.

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