Platform Competition and Small Merchant Margins: Evidence from Indonesian E-Commerce

A Difference-in-Differences Approach

Abstract

We study how commission changes on two major Indonesian e-commerce platforms affected the gross margins of small merchants between 2022 and 2025. Exploiting a staggered fee revision that applied to some product categories but not others, we estimate a difference-in-differences model on 61,300 merchant-month observations.

A one percentage point increase in commission reduces merchant gross margin by 0.62 percentage points on average, implying that roughly six-tenths of the fee is absorbed by the merchant rather than passed to consumers. Pass-through is markedly higher for merchants selling differentiated goods and near zero for commodity categories.