Written by 11:53 am Science & Technology Views: [tptn_views]

Alibaba’s Lazada is courting sellers affected by Indonesia’s e-commerce ban on social media

Lazada is the third-largest e-commerce player in Indonesia, after Sea Limited’s Shopee and Tokopedia, in keeping with Momentum Works.

Matt Hunt | Lightrocket | Getty Images

Lazada, a Southeast Asian e-commerce marketplace owned by Alibaba, is courting sellers affected by Indonesia’s latest e-commerce regulation, its Indonesia CEO James Chang told employees in a town hall meeting on Friday.

Since Tuesday, the corporate has waived fees for all sellers in Indonesia specifically doing livestream sales on Lazada, Chang said, in keeping with a memo sent to employees after the town hall meeting seen by CNBC.

For micro-, small and medium-sized enterprises impacted by the recent regulatory changes, we’re supporting them by onboarding them to Lazada,” he added.

In recent weeks, Indonesia has cracked down on social media platforms facilitating e-commerce, equivalent to TikTok, in a bid to guard domestic businesses. President Joko Widodo recently said that an influx of foreign imports, made available by such platforms, contributed to a sales decline for domestic businesses.

Indonesia banned social media purchases and set a one-week deadline last week for TikTok to develop into a standalone app, with none e-commerce feature, or face closure.

In response, TikTok Indonesia said Tuesday that it should comply with local laws and stop facilitating e-commerce purchases.

In the townhall meeting addressing Indonesian employees, Chang said the recent regulatory changes led to “a more positive, healthy competitive landscape for our industry’s long-term growth.”

He added that latest sellers who enroll on their very own will enjoy zero seller commission for 3 months, zero free shipping fee for two months and 300,000 Indonesian rupiah ($19.19) price of seller solutions credit.

We're not banning social media sites, just trying to regulate them: Indonesia vice minister of trade

TikTok is a rising threat to e-commerce players equivalent to Lazada and Sea Limited‘s Shopee in Indonesia and the remaining of the region, recording a $2.5 billion gross merchandize volume in Indonesia in 2022, in keeping with tech research firm Momentum Works. Sachin Mittal of DBS Bank said that impulse buying from watching content is an advantage TikTok has.

Lazada is the third-largest player in Indonesia with a market share of 10%, trailing behind Shopee (36%) and GoTo’s Tokopedia (35%), in keeping with Momentum Works. Indonesia was the most important e-commerce market in Southeast Asia last yr, contributing 52% of the region’s total gross merchandize volume, in keeping with Momentum Works.

Under the brand new regulation, the Indonesian government requires e-commerce platforms within the country to implement a minimum price of $100 for certain items which can be directly purchased from overseas. All products offered should meet local standards.

“While the immediate closure is positive for other existing players within the space (including Tokopedia, Shopee, Lazada, and others), we view the recently amended regulation to ultimately limit the dominance of foreign e-commerce in Indonesia together with their imported goods,” said Citi in a Wednesday report.

“In the medium-to-longer-term, we consider that the federal government will proceed to guard the local champion, by reflecting the policies being made in China, U.S. and India,” said Citi analysts.

A Lazada spokesperson told CNBC that “local businesses and sellers form the bulk” on the e-commerce platform, selling their goods to Indonesian shoppers.

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