When Agnes Salyanty, Southeast Asia Research Lead for Women’s World Banking, interviewed Indonesian women e-commerce entrepreneurs on how they use online platforms, two respondents stuck out as representatives of the innovation, flexibility, and boldness of the sector.
“What impressed me was their willingness to experiment with both their products and e-commerce platforms to reach their customers and expand their markets. At the same time, this spirit is very typical of the 1,104 women we surveyed in Sumatra, Java, Sulawesi, Kalimantan and Bali.”
Ela, a 41-year-old micro-entrepreneur in Bandung sells cassava and papaya leaves for food preparation, and when developing her products enrolled her family and neighbors as testers. She uses Shopee, a popular e-commerce site, to market her goods.
Gladis, a 32-year-old housewife in Malang in Central Java, sells products ranging from dumplings to fried rice based on traditional family recipes, utilizing Facebook, Instagram, and WhatsApp.
As e-commerce entrepreneurs, their ages compare with an average of 33 for women when they start and 35 for men.
Women entrepreneurs, like Ela and Gladis, own 64.5% of the 65 million Indonesia’s MSMEs (micro, small, and medium enterprises), and the entire sector accounted for 61% GDP as of 2018. Gender issues – the unique circumstances of women, as distinct from men – get little attention from e-commerce platforms and the literature and training materials provided to micro and small entrepreneurs to run their businesses on these platforms.
For example, how their crucial family and social responsibilities can impact their business activities and schedule aren’t taken into account. Ela cares for one child and Gladis cares for two. In Gladis’ case, she combines the daily school drop-off with her purchases of the day’s materials. Participation in the e-commerce sector allows women more time for their non-business roles, however, exactly because of the latter, they also have shorter operating hours than men.
Furthermore, e-commerce training and the creation of literature should consider the generally lower education and digital technical capabilities and confidence levels of women in the sector versus men.
Other challenges abound. Ela’s online income averages IDR 6 million monthly and Gladis’ averages IDR 1 million. These are modest levels and highlight how the earnings of women e-commerce entrepreneurs are far less likely to exceed IDR 10 million (~USD 642) than men (32% vs 48%), and that they earn 22% less than men with similar characteristics.
“One of our key findings is that an average potential market loss of USD 11 billion will occur annually if the e-commerce sector’s gender earnings gap is not addressed,” says Salyanty.
“As an indication of the opportunities, Indonesia is one of the largest digital economies in Southeast Asia and ranks fourth in the number of people who make transactions via e-commerce sites. Our findings further show that Indonesian women e-commerce entrepreneurs are more likely than men to only have online stores (30% vs. 26%) and to use a greater number of e-commerce platforms than men (three vs. two).”
Ela and Gladis’ achievements are encouraging. Ela established a registered business in the form of a limited company in 2022 and began accepting investors. Her goal is to grow faster without the worry of funding. Meanwhile, Gladis aims to expand outside Malang. Ela is now in her fourth year, while Gladis started in 2020, coinciding with the pandemic and her husband’s loss of his job.
For the sector as a whole, only 44% of women entrepreneurs successfully reach the start-up phase, however, and even fewer sustain operations for more than five years, representing a low 23% success rate vs. 31% for men.
“Another point to recognize is the importance of the income these businesses generate. Our survey shows that 50% of women-run businesses contribute to the monthly incomes of their households. In the instances of Ela and Gladis, they have become the main breadwinners, and in Ela’s case, her husband quit his day job to help out,” says Salyanty.
As the government aims to onboard 30 million MSMEs into digital commerce by 2024, more data on the needs and preferences of women e-commerce entrepreneurs is required. As such, they must be able to express their perspectives as well as concerns about certainty and trustworthiness.
“Being considered as partners of e-commerce platforms and being heard are important to them,” says Salyanty. “In this context, our research seeks to help close the gap by encouraging equal economic participation and contribution, specifically within micro and ultra-micro businesses, the categories with the largest representation of women owners.”
Our recommendations include building the digital capability and self-confidence of women entrepreneurs to use available services and features both within e-commerce platforms and digital financial services and products.
Steps include women mentorship programs with women mentors developing the training programs. Progress can be measured through metrics such as the numbers graduating and receiving certification as mentors.
In addition, there must be a rise in the availability and use of gender-disaggregated data to develop evidence-based and gendered-focused policy and strategy. Finally, we call for exploring the use of alternative credit initiatives and the expansion of financial products and services offerings to create more business opportunities for women.
“Ela and Gladis show what women e-commerce entrepreneurs can do. Ela does her research, tests her products, and now wants to improve her packaging to sell to a higher-value market segment. Gladis wants to strengthen her brand, expand her market and optimize e-commerce platforms besides those she is currently using. She’s participated in MSME community activities. For both, they are important gains,” says Salyanty.