Online food delivery (OFD) services have accelerated the growth of food and beverage (F&B) micro, small, and medium enterprises (MSMEs) in Indonesia by 1.9 times compared to offline sales platforms.
“Food and beverage MSMEs make up one of the largest sectors in Indonesia, contributing approximately 41 percent to the total GDP (gross domestic product) within the creative economy sector,” CEO and founder of Alvara Research, Hasanuddin Ali, said in a statement received in Jakarta on Friday.
However, competition in the sector is quite tight due to the low barrier to entry. As a result, culinary MSMEs need to undertake various efforts to develop their business, such as improving operational efficiency and reaching a broader range of customers. Digitization by partnering with OFD platforms has become an effective solution, he said.
OFD platforms enable MSMEs to have wider reach whilst making their operations more efficient— both key drivers to ensuring sustainable growth.
These findings are reflected in the latest research conducted by Alvara Research Center entitled “Digitalization of MSMEs: The Impact of Digital Platforms on Culinary MSMEs.”
The research has revealed that on average, OFD platforms contribute more than half (56.8 percent) of the revenue of MSMEs partners.
To demonstrate the full benefits of partnering with OFD platforms, Alvara also carried out in-depth interviews with 11 culinary MSMEs, including Mie Ayam Yamin Pink Tebet (a chicken noodle merchant) and Siomay Abu Tebet Timur (a dumpling merchant), who were initially selling their food offline and then switched to online platforms, Ali informed.
“In the past, we only sold offline, then we went online, and since then our revenues have increased,” said Nur, the owner of Mie Ayam Pink.
Furthermore, as MSMEs ran their operations online, they began to understand that the commission fee typically charged by OFD platforms was needed to grow their business and to develop the OFD platform themselves.
Another interesting finding from the research has been that the majority of food and beverage MSMEs who have partnered with OFD platforms do not object to the partnership scheme and the payment of the commission or service fee.
“The MSMEs believe that partnering with platforms brings many benefits for their business and the commission fee is commensurate with the added value they receive,” Ali said.
The research has further shown that the majority of MSMEs partnering with OFD platforms find the commission fee acceptable (95 percent) and appropriate (92.4 percent).
According to Ali, the research has shown that partnering with OFD platforms has not depressed the merchants’ profits despite there being a commission fee per transaction that needs to be paid to the platform as the service provider.
Culinary MSMEs surveyed have continued to make financial profits (97.7 percent) and their revenue has still increased (93.3 percent).
“Contrary to the narrative that the commission fee is too burdensome, the food and beverage MSMEs we surveyed said that they received three main benefits by paying the commission fee, namely promotional programs, delivery subsidies, and platform development,” Ali said.
All three benefits have had a significant impact on increasing the revenue of the MSMEs.
The research looked further into which OFD platform is considered to provide the most benefits for culinary MSMEs.
The results showed that GoFood from Gojek ranked first, followed by GrabFood from Grab and Shopee Food from Shopee.
According to the merchants surveyed, GoFood has several advantages over other platforms, such as it being a better platform, offering the most efficient business process, providing entrepreneurship training programs, charging the fairest service fee (commission), and being the most frequently used platform for independent promotion.
In terms of providing service support for merchants, both GoFood and GrabFood were ranked highly by the MSMEs surveyed.
“Because they have directly experienced tangible benefits from partnering with OFD platforms, almost all of MSMEs (96.6 percent) surveyed said that they would continue partnering with OFD platforms. In fact, 1 out of 3 merchant partners will actively recommend the OFD platform to other culinary MSME owners,” Ali informed.
The research was conducted using a quantitative and qualitative approach. Data collection was undertaken from August to October 2022 through face-to-face interviews with 1,948 culinary MSME respondents who had partnered with OFD platforms, such as GoFood, GrabFood, and Shopee Food in Greater Jakarta, Bandung, Surabaya, Makassar, and Medan.
Source: Antara News