Martin Bagya Kertiyasa, Jakarta – Indonesian sellers are facing mounting pressure as rising marketplace fees collide with an influx of low-cost Chinese products, squeezing profit margins and intensifying competition across the country's e-commerce sector.

Local micro, small, and medium enterprises (MSMEs) say profits are shrinking under growing platform costs that range from sales commissions and service fees to advertising expenses, free-shipping programs, and affiliate cuts.

At the same time, Chinese products are increasingly dominating online marketplaces with significantly lower prices, supported by massive production capacity, advanced manufacturing technology, and highly efficient supply chains.

The pressure is particularly severe in highly competitive categories such as fashion, household goods, cosmetics, and accessories, where price wars have become common.

Tom Martin Charles Ifle, CEO and founder of Top Coach Indonesia, warned that higher marketplace fees could leave Indonesian MSMEs even further behind Chinese competitors.

"Why? Because China is no longer just exporting products. They now see Indonesia as a major sales opportunity," Tom told B Universe reporter.

According to Tom, China's advantage goes far beyond cheap pricing. He said Chinese companies now dominate in production scale, manufacturing efficiency, automation, raw material costs, and market data utilization.

"With their production scale, supply chains, speed, raw material pricing, automation, and even data capabilities, they are far more advanced," he said.

On the contrary, many Indonesian MSMEs are still struggling with basic business management issues, including poor financial reporting, inefficient production systems, weak inventory management, and limited human resource capabilities.

"Meanwhile, many of our MSMEs do not even have proper financial reports. Their production is inefficient, inventory management is messy, waste levels are very high, their human resources are weak, and leadership quality is still low. So when even a small problem occurs, the impact can snowball quickly," Tom said.

The situation has made it increasingly difficult for local sellers to survive amid relentless price competition inside major marketplaces.

Many online merchants say they no longer have full control over pricing strategies because they must constantly adapt to platform algorithms, discount campaigns, free-shipping incentives, and imported products sold at aggressively low prices.

Higher marketplace fees have also forced sellers to spend more simply to maintain product visibility on digital platforms.

Tom argued that local brands would struggle to survive if they continued competing solely on price against Chinese manufacturers.

"Therefore, when local brands are forced to compete through price wars against Chinese factories, it becomes nearly impossible for Indonesian MSMEs to compete," he said.

Instead, he urged local businesses to shift strategies by focusing on stronger branding rather than relying on low pricing alone.

Tom said that Indonesian MSMEs should build competitiveness through product quality, brand identity, loyal customer communities, and direct relationships with consumers.

He also encouraged consumers to support local businesses by purchasing directly through independent channels such as company websites, Instagram, or WhatsApp.

"And we as buyers, as consumers, need to create a movement to buy directly from MSMEs," he said.

Recently, social media discussions about sellers gradually leaving major marketplaces have gained traction, with many local brands starting to reduce dependence on large platforms and build their own sales channels to protect margins.

Still, marketplaces such as Shopee, Tokopedia, and TikTok Shop remain the largest traffic sources for most online sellers in Indonesia.

As a result, many MSMEs now find themselves caught in a difficult position: they need marketplaces to reach customers, but rising platform costs are steadily eroding profitability.

The trend highlights a new phase in Indonesia's e-commerce industry, where competition is no longer only about attracting buyers, but also about which businesses can survive mounting platform costs and the growing flood of low-cost imported products.

[This article is part of a special report on e-commerce administrative fees and Finance Ministry Regulation (PMK) No. 37/2025 regarding Article 22 income tax collection and reporting obligations, which will take effect in the second quarter of 2026.]

Source: https://jakartaglobe.id/business/china-products-rising-fees-hit-indonesian-online-seller