Lazada is the third-largest e-commerce player in Indonesia, after Sea Limited’s Shopee and Tokopedia, according to Momentum Works.
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Lazada, a Southeast Asian e-commerce marketplace owned by Alibaba, is actively seeking sellers impacted by Indonesia’s recent e-commerce regulation, said James Chang, the company’s Indonesia CEO, in a town hall meeting on Friday.
In response to the regulation, Lazada has waived fees for all sellers in Indonesia participating in livestream sales on its platform. This was revealed in a memo sent to employees after the town hall meeting, as reported by CNBC.
“For micro-, small, and medium-sized enterprises affected by the recent regulatory changes, we are assisting them by onboarding them to Lazada,” added Chang.
Indonesia has recently taken measures to regulate e-commerce facilitated by social media platforms like TikTok, aiming to protect domestic businesses. President Joko Widodo attributed a decline in domestic business sales to an influx of foreign imports made available through these platforms.
The Indonesian government issued a ban on social media purchases and set a one-week deadline for TikTok to remove its e-commerce feature or face closure.
TikTok Indonesia responded by promising to comply with local laws and cease facilitating e-commerce purchases.
In the town hall meeting addressing Indonesian employees, Chang expressed his belief that the regulatory changes would lead to “a more positive, healthy competitive landscape for our industry’s long-term growth.”
New sellers who sign up independently on Lazada will enjoy benefits such as zero seller commission for 3 months, zero free shipping fee for 2 months, and 300,000 Indonesian rupiah ($19.19) worth of seller solutions credit.
TikTok poses a growing threat to e-commerce players like Lazada and Sea Limited‘s Shopee in Indonesia and the rest of the region. Momentum Works, a tech research firm, reports that TikTok recorded a gross merchandise volume of $2.5 billion in Indonesia in 2022. Sachin Mittal of DBS Bank highlights that impulse buying influenced by TikTok is one of the platform’s advantages.
Lazada holds the position of the third-largest player in the Indonesian e-commerce market, with a market share of 10%. It trails behind Shopee with 36% and Tokopedia, now owned by GoTo, with 35%, according to Momentum Works. Indonesia was the largest e-commerce market in Southeast Asia last year, accounting for 52% of the region’s total gross merchandise volume.
Under the new regulation, e-commerce platforms in Indonesia are required to set a minimum price of $100 for certain items purchased directly from overseas. All products offered must meet local standards.
“While the immediate closure is positive for other existing players in the space (including Tokopedia, Shopee, Lazada, and others), we view the recently amended regulation as a means to limit the dominance of foreign e-commerce in Indonesia and restrict the import of foreign goods,” said Citi in a report.
“In the medium-to-long term, we believe that the government will continue to protect local champions by adopting policies similar to China, the U.S., and India,” added Citi analysts.
A Lazada spokesperson told CNBC that “local businesses and sellers make up the majority” on their e-commerce platform, catering to Indonesian shoppers.
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