Admin Fees for Selling at Market Markets Rise Again, MSMEs Will Be Burdened

At some point, an increase in service costs to seller partners will cause transactions in the marketplace to fall.

KOMPAS/TOTOK WIJAYANTO

Gunawan wraps a customer's order of rattan food covers at his workshop in the Grogol area of West Jakarta on Tuesday (26/9/2023). Gunawan said that since he opened his shop in the local market in 2020, there have always been items sold every day. When face-to-face sales are slow, selling through the local market is very helpful.

JAKARTA, KOMPAS — Lokapasar is increasingly implementing increases in service fees, which are often called administration fees, to sales partners. Even though the implementation of the increase is not carried out simultaneously by local market companies, it is believed that this will burden the business of selling partners, especially micro, small and medium enterprises or MSMEs.

In the past week, news of an increase in service fees for Tokopedia marketplace sales partners as of May 1 2024 has been widely discussed on social media. Tokopedia's move follows Shopee and Lazada which have increased service fees in December 2023.

Based on a search by Kompas on the Tokopedia seller education center page, Friday (19/4/2024), Tokopedia announced that starting May 1 2024 there will be an increase in service fees ranging from 2 percent to 6.5 percent which applies to seller partners who are registered as Power Merchant and Power Merchant Pro members. Service fees will be calculated based on the product group category sold.

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Tokopedia categorizes its products into five groups, namely category A (increased to 6.5 percent), B (5.50 percent), C (4 percent), D (3.10 percent), and E (2 percent). These five groups are in each grouping of product types, ranging from electronic goods; fashion; mobile phones and electronic accessories, mother and baby; health, beauty, and body care; food and beverages; sports, hobbies, and lifestyle; automotive; kitchen, household, and carpentry; to other product groups.

One of the highlights of netizens on the X platform is that goods with fast and cheap sales turnover are subject to large sales partner service fees. For example, the @FKP_Indonesia account on "In fact, those that are fast(er) moving and cheap have higher service costs," he tweeted.

The account also uploaded screenshots showing an increase in the cost of group book services, stationery, and motor accessories. These three types of items fall under the A service cost group, which has increased by 6.5 percent.

The issue of air pollution is not a new matter. The condition of the community, which is threatened by air pollution, has long been happening. There are numerous research studies that show the threats of air pollution's impacts. However, this has not yet prompted significant efforts in controlling air pollution. As a result, residents are increasingly suffering under the burden of air pollution. On Tuesday (16/4/2024), the Twitter account @GerabahBookshop also tweeted about the matter in X. The tweet questioned why the service fee for book sales had increased to 6.5 percent. After all, books are crucial for literacy, and their profit margins cannot be as high as those of electronic goods.

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Other netizens on ”Shopee also has the same thing, admin fees. Use your own page thenpayment gateway Xendit/Midtrans also costs around 4.5 percent. "If you are looking for a low fee, use Paper.id invoice, the fee is still 1.5 percent and you can pay via Shopee and Tokped too," said the account owner @atenxdana.

KOMPAS/FERGANATA INDRA RIATMOKO

A housewife who works for the small and medium-sized enterprise Mustofa's Knitted Hats finishes making knitted hats at her home in Pleret Village, Pleret District, Bantul, DI Yogyakarta, on Tuesday (26/3/2024). The SME completes 700-1,000 Malaysia-style knitted hats per week to fulfill the increasing demand for Eid Al-Fitr.

Based on Kompas's search, Shopee has increased service fees for seller partners as of December 1, 2023. From the official Shopee page, it is stated that the increase in service fees applies to sellers in the non-Star, Star and Star+ categories. Star+ category sellers is a program with a higher level for selected Star sellers in terms of performance, sales and operations.

Just like Tokopedia, Shopee also divides the increase in service fees into five groups of service fees for each non-Star, Star, and Star+ seller group. As an illustration, for Star and Star+ seller groups, they are burdened with five groups of product service fees, namely group A products (increased from 4.7 to 5.5 percent), group B (increased from 4 to 5.5 percent), group C (increased from 4 to 5.5 percent), group D (increased from 3.3 to 4 percent), and group E (increased from 3.3 to 4 percent).

Shopee Mall sellers are also subject to increased service fees by Shopee starting December 1, 2023. Specifically, for group of items A (increasing from 6.5% to 8.8%), B (from 4.5% to 6%), and C (from 2.5% to 4%).

Meanwhile, at Lazada, the adjustment of service fees in December 2023 is also categorized into five groups of products. Group A experiences an increase of 6 percent, B 5 percent, C 5 percent, D 3.5 percent, and E 3.5 percent.

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MSME Capabilities

Regarding this matter, the General Chairperson of the Indonesian Association of Micro, Small, and Medium Enterprises (Akumandiri), Hermawati Setyorini, believes that the increase in service costs for partner sellers by local markets will burden UMKM partner sellers. UMKM will be faced with the choice of increasing the selling price of goods to accommodate the increase in service costs with the consequence of losing customers, or not increasing the selling price and experiencing losses.

"It seems that the online marketplace has made several adjustments to the service fees for seller partners. There are SMEs who have shared their stories about why the service fees keep changing even though production costs are currently increasing," he said.

Hermawati explained that the decision to adjust service costs often does not involve the voices of seller partners. They are usually only given cost information and the period of validity of the service fee.

"Supposedly, if the marketplace still insists on implementing service fees, the cost adjustments should not be based on item groups, but based on the classification of MSME capabilities following Government Regulation Number 7 of 2021 concerning Convenience, Protection and Empowerment of Cooperatives and MSMEs," said Hermawati.

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Similar objections were also raised by the Chairman of the Indonesian Publishers Association, Arys Hilman Nugraha. According to him, the categorization of the service fee increases carried out by lokapasar is unclear in its background composition. From the perspective of book publishing, such categorization indicates a misguided notion that books are merely printed products consisting of paper and ink alone. Books are undervalued, even though they contain creative value and inherent copyrights.

“Such categorization is not clearly structured. Is it based on value peritem? Apparently not, because most books cost under IDR 100,000. "Even though there are also sales of books worth millions of rupiah in one large quantity package," he said.

KOMPAS/PRIYOMBODO

Visitors are waiting their turn to be served at the Sukajadi cake shop in Jatinegara market, East Jakarta, on Tuesday (20/12/2022). Sales of dry cakes, from traditional markets to shopping centers and online markets, have increased.

Arys Hilman added that selling books through the marketplace platform has profits, but it is not the book owners and copyright holders who take a large portion. This is because a minimum of 20 percent of the price of books sold at retail has been allocated as a discount to buyers. Publishers must set aside another 10–20 percent for resellers, in addition to budgeting for digital marketing costs in various forms of content. Meanwhile marketplaces are constantly increasing their margins, even when the sales are within the scope of cooperation between publishers and marketplaces.

Aditia Grasio Nelwan, Head of Communications at Tokopedia, confirmed that Tokopedia is implementing a new scheme for seller membership status starting May 1, 2024. Under this new scheme, sellers with Regular Merchant membership status will be automatically upgraded to Power Merchant status.

With Power Merchant membership status, sellers can enjoy more convenience to develop their business, including Power Merchant badges to increase buyer trust, access to many exclusive Tokopedia features, including Shop Discounts, Shop Flash Sales, and benefits other things that can improve the performance of seller stores on Tokopedia.

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Along with the implementation of this new scheme, Tokopedia will also adjust service fees for Power Merchant and Power Merchant Pro, starting from 2 percent which will be applied after completing 50 transactions for each product sold. The service fees will be adjusted based on product categories, as stated by its spokesperson.

Shopee has not been able to confirm the recent buzz surrounding the comparison of service fee adjustments for seller partners this week. Therefore, it is not yet known whether Shopee will make another service fee adjustment for seller partners in 2024 or not.

Burn money

Nailul Huda, Director of the Digital Economy Center of Economic and Law Studies, believes that at a certain point, an increase in service costs for seller partners will cause a decrease in transactions. It is just a matter of determining at which point the peak of the increase occurs.

"I think the benchmark for the peak point could be Value Added Tax (VAT) of 11 percent. If it reaches 10-11 percent, it seems that many seller partners in local markets will rethink selling on the platform. They are likely to think it is better to sell on social media and instant messaging applications that are free of charge. Moreover, reviews on social media can already guarantee buyers to come and buy goods," he said.

Furthermore, Nailul believes that all categories of goods can be subject to sales service fees to maintain the price of goods not being significantly cheaper than physical stores. However, the categories of goods and the amount of service fees should be reviewed. He believes that it would be easier to use the price amount to implement an increase in service fees to seller partners.

"The era of money burning by local market companies has decreased. I actually believe there will be many transactions outside the Lokapasar platform when there is a continuous increase in service fees. Moreover, VAT is reportedly going to be raised again by the government," he said.

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