The Role of E-Commerce in Improving the Community's Economy During the Covid-19 Pandemic
Ihsana E l Khuluqo1*, Ade Hikmat1
1 Post Graduate, Muhammadiyah University of Prof. DR. HAMKA, Jakarta, Indonesia
*Corresponding Author: [email protected]
Accepted: 15 February 2022 | Published: 1 March 2022
DOI:https://doi.org/10.55057/ijaref.2022.4.1.10
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Abstract: The purpose of this study is to find out and analyze the role of e-commerce in improving the community's economy during the Covid-19 pandemic. The existence of restrictions and quarantines during the Covid-19 pandemic caused market disruption, trade, as well as access to food sources. E-commerce services have also become a trend in Searching for food needs of residents during the COVID-19 pandemic. The analytical method used in this study is a descriptive quantitative method. The use of this quantitative descriptive approach is coordinated with research variables that focus on real problems and phenomena that are currently occurring in the form of research findings in meaningful numerical form. The sample identified for this study was 200 people directly affected by the Covid 19 pandemic. Data sampling using the Google Forms platform. The results of the study found that e-commerce facilitating public access to reach their needs by adaptive to health protocols (maintain physical distance); and play a role in making the distribution of the necessities of life more efficient, so that it can be used to increase community economic activities.
Keywords: E-Commerce, Economic Community, Covid-19
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1. Introduction
The coronavirus (COVID-19) epidemic was first reported on December 1, 2019 in Wuhan, Hubei Province, China in 2019 and declared a pandemic by the World Health Organization (WHO) on March 11, 2020. Based on Worldometers data, as of December 8, 2019, September 2020 there have been 27,479,194 confirmed positive cases in the world, with a total of 896,421 people who died and 19,573,079 people declared cured. Indonesia itself is a country with a number of positive patients reached almost 200 thousand people in the second week of September 2020 (www.kompas.com, September 2020).
Covid-19 has affected several people sectors and areas of life, including the economy and business. Covid-19 has created an economic shock affecting Even individuals, households, micro, small and medium-sized enterprises influence national economies at local, national and even global levels (Taufik and Ayuingtyas, 2020). Some parts of economics believe that: are feeling the impact and influence of Covid-19 are trade. investment, transportation, and tourism.
Although on the one hand the economy is weakening, on the other hand, the economy is also experiencing an increase, namely in the field of electronic commerce (electronic commerce or e-commerce). The revenues of several world retail websites have shown significant growth during the Covid-19 pandemic. The highest ranking was occupied by the Amazon.com website
which was able to record sales of US$ 4.059 billion, followed by Ebay.com with sales of US$
1.227 billion (Andrienko, 2020).
The same thing happened in Indonesia where many companies engaged in e-commerce posted an increase in sales volume during this pandemic. The reason is because people avoid shopping offline and carry out social and physical distancing as an effort to prevent the spread of the Corona virus.
According to the Head of the Payment System Policy Department of Bank Indonesia (BI), during the pandemic e-commerce sales increased by 26% with new consumers by 51%. Digital payments are also increasing with the use of technology. More than 70% of Kredivo's transaction portion comes from e-commerce (mediaindonesia.com, September 2020). In addition, economic activity in e-commerce recorded an increase of up to 40.6%. According to the Covid-19 Impact Big Data 2020 study conducted by the Central Bureau of Statistics (BPS), online sales also increased during the pandemic. (m.liputan6.com, July 2020).
Shopee says it processed 260 million transactions in Q2 2020, averaging more than 2.8 million transactions per day. This record shows an increase of 130% compared to the previous year (mediaindonesia.com, September 2020).
Bukalapak, which is one of the unicorn startups in Indonesia in the second e-commerce sector after Tokopedia, to meet the needs of consumers who stay at home, has for the past few months expanded basic food products and sanitation products. Blibli also shows an increasing trend in Sale of essential foods, cleaners, hygiene equipment, health masks and vitamins. People who are starting to adjust to staying at home also have an impact on the increase in sales of the e- commerce company in terms of cooking equipment products, video games, and sports equipment (Sudaryono et al, 2020).
E-commerce actually appeared long before the Covid-19 outbreak and brought major changes to the company's business patterns and influenced people's transaction patterns. During the world recession of 2008-2009, e-commerce was a relatively stable retail company. Online sales have even continued to increase since 2012 until now where the Covid-19 outbreak occurred, and is expected to continue to strengthen after the pandemic.
The e-commerce business was originally an opportunity. But like it or not, in the current pandemic situation, many companies are expanding their online and e-commerce stores to ensure business continuity. Most vendors make rapid changes, such as changing the types of products they offer, but many seek to build on past performance. Although it is impossible to predict when the Covid-19 pandemic will end, many changes have taken place in human life.
The pattern of online transactions has become a social trend and will continue for years to come. Seeing the above phenomenon, the author is interested in analyzing it in the form of a paper. This article aims to analyze The Role of E-Commerce in Indonesia's Economy During the Covid-19 Pandemic. Without an introduction, your audience can sometimes have a hard time figuring out what you're trying to say (Harrington, 2005).
2. Literature Review
E-Commerce
Many businesses use or are based on digital networks called e-business and e-commerce today.
E-commerce (e-commerce or e-commerce) is a business process that utilizes the use of digital
technology and the internet in its main operations. E-business includes internal management activities of a company as well as coordination activities With suppliers and other business partners (Laudon & Laudon, 2014). E-commerce is the part of electronic commerce that deals with buying and selling goods/services online. E-commerce also includes activities that support operations such as advertising, marketing, consumer protection and security, shipping and payments (Laudon & Laudon, 2014). E-commerce will transform all marketing activities while reducing the operational cost of trade activities. E-commerce began in 1995, when Netscape.com, one of the earliest Internet portals, received its first advertisements from large corporations and popularized the web as a new medium for advertising and sales.
Unexpectedly, that's what makes sales increase two to three times from before. E-commerce continued to grow until the 2008-2009 recession where economic growth was very slow. In fact, e-commerce is the only relatively stable retail business. In 2012, e-commerce continued to climb, as evidenced by the number of online shoppers increasing by 5% and the number of online transactions increasing by 7% (Laudon & Laudon, 2014).
There are three main categories of e-commerce looking at the nature of the participants (Laudon
& Laudon, 2014). First, Business to Consumer (B2C) E-Commerce. Business to consumer is carried out by business people and consumers. These e-commerce transactions occur like ordinary buying and selling, involving the Retail sale of products and services to individual consumers. Consumers get product offers and make purchases online. An example is Alibaba Selling books, software and music to individual consumers. In Indonesia, there are Bhinneka.com, Berrybenka.com, and Tiket.com. Second, Business to Business (B2B) E- Commerce. This e-commerce business involves selling goods and services between businesses.
Transactions It is carried out by two parties who have a commercial interest in both parties.
The two parties know each other and understand the business they run. Typically, e-commerce When purchasing goods and services, this is done via EDI (electronic data interchange) and email. Bizzy and Ralali are examples of B2B ecommerce sites. Bizzy offers solutions for companies with problems sourcing supplies and services to meet business needs. Meanwhile, Ralali sells MRO (Maintenance, Repair and Operations) products to other companies.
The third category, Electronic consumer commerce (C2C). Online shop business in the form of C2C involves consumers who sell directly to consumers. Generally, these transactions are carried out online through third parties who provide online platforms or marketplaces to carry out these transactions. So C2C becomes an intermediary between the seller and the buyer.
Examples are Bukalapak, Tokopedia, Shopee, OLX, and the like. Quoted from www.jurnal.id (December 2019), there are other types of e-commerce besides the three types above, namely:
1) Consumer to Business (C2B) E-Commerce, is a buying and selling transaction of e- commerce carried out from consumers to company. Individuals who provide a product or service to a company that need them and are willing to buy them. One example is freelancer.com, a website that offers independent professionals from a variety of fields. 2) E- commerce between business and management (B2A), also known as Business to Government (B2G), is e-commerce that sells goods or services to government agencies by submitting tenders and filling out a number of requirements before receiving services.
(C2G) is the process of electronic transactions made by individuals to government agencies.
Examples of areas that use this type of e-commerce are Jamsostek, education, tax, and health.
4) Online to Offline (O2O) E-Commerce, is a new type of business where sellers use two channels, both online and offline. Sellers will use online networks to carry out promotions and find consumers, then continue to make purchases at offline stores. Examples of this type of business are Gojek, Grab, and Airbnb.
Some of the e-commerce business models that exist in the world include the following (Laudon
& Laudon, 2014) (1) Portal, is a gateway to enter the Internet content such as digital videos, music, photos, text and illustrations, such as Yahoo, Google. Facebook. (2) E-tailers or online retail stores, available in various sizes, from the very large Amazon to small local stores with websites. (3) Content providers, providing and distributing informational, including the iTunes Store and Disney.com. (4) Transaction intermediaries are sites that process transactions for consumers which are usually managed by one person using telephone or post. The largest businesses using this model are financial services and travel services. (5) Market creators, e- commerce businesses that Create a digital environment where buyers and sellers meet, showcase products, find products, and set prices. Examples are eBay and Amazon sites. (6) Service providers, namely e-commerce businesses to sell online services, such as Google Apps, Google Sites, and Gmail. (7) Community provider is a site that creates a digital community where you can make buying and selling transactions, share interesting things, photos, videos, and communication. Examples are Facebook, Twitter, Tumblr, Google+.
Indonesian economy
The Indonesian economy includes all economic activities and conditions in Indonesia. The economic system adopted by the Indonesian state is the Pancasila economic system, which is an economic system inspired by the Pancasila ideology, which is a joint effort based on kinship and national cooperation. This economic system is also known as economic democracy. The philosophical basis of Indonesia's economic system is Pancasila and its constitution is the 1945 Constitution articles 23, 27, 33, and 34 (Rintuh,
1995).
An economic system is the system that a country uses to distribute its resources among the individuals and organizations within that country. According to Dumairy, the economy is a system that functions to regulate and establish cooperation in the economic field, carried out through human and institutional relations. According to Anthony B. Kim in his analysis in The Daily Signal, the Indonesian economy is referred to as one of the great powers of the Asian economy. Indonesia has high economic potential and has a number of characteristics that make it capable of rapid economic development. (www.indonesia-investments.com). However, Since Covid-19 pandemic, Indonesian economy enters recession due to the impact of the pandemic. The Finance Ministry forecasts the Indonesian economy will fluctuate between - 2.9% and -1% in the third quarter of 2020. (finance.detik.com, September 2020).
Covid-19 pandemic
A pandemic is a contagious disease that usually affects different countries or continents. a large number of people. The term pandemic is used to refer only to the extent of the spread, not to the severity of the disease. The Covid-19 pandemic is the event that spread the coronavirus disease (Covid-19 for short) around the world in 2019. The disease is caused by a new coronavirus called SARS-CoV-2. The outbreak of Covid-19 was first identified on December 1, 2019 in Wuhan, Hubei Province and was declared a pandemic by the World Health Organization (WHO) on March 11, 2020. (id.wikipedia.org, September 2020).
SARS-CoV-2 is believed to be transmitted to humans primarily through coughing. In addition, the virus can be spread through contact with a contaminated surface and subsequent contact with a person's face. general symptoms of exposure to this virus include fever, cough, and difficulty breathing. There is no vaccine or specific antiviral treatment for this disease..
Suggested precautions include washing hands, covering coughs, staying away from others, and
isolating yourself. Efforts to contain the spread of the coronavirus include travel restrictions, quarantines, airport delays, and cancellations and closures. (id.wikipedia.org, September 2020).
Previous Research
Although the Covid-19 outbreak did not appear until the end of 2019, numerous studies have been conducted on the impact of Covid-19 on the economy and development during the 2020 pandemic and the evolution of e-commerce during the pandemic. Research by Hanoatubun (2020) and Taufik and Aywingtyas (2020) concluded that Covid-19 has affected Indonesia's economic stability, particularly public transport, tourism, hotels, shopping malls and offline trade. This is intended for direct user visits only. Hadiwardoyo's research (2020) also shows that Covid-19 causes economic losses nationally. Seeing the impact of the declining economy due to this pandemic, many business actors have turned to online business or what is called electronic commerce (e-commerce). E-commerce is proven to be able to encourage Indonesia's economic growth as in the research of Sudaryono et al. (2020). Alfonsius' research (2020) concludes that e-commerce is a solution for business people to meet consumer demand during the pandemic. In line with the research of Bhatti et.al. (2020) who found that e-commerce grew rapidly during Covid-19 and served as a substitute source and was considered the top economic driver in these conditions.
3. Methodology
The methodology of this study is descriptive with a quantitative approach. The selection technique is a random sample of 250 alumni from 2019 and 2020, who have personally witnessed the COVID-19 pandemic. The data collection technique begins with a Likert scale with alternative responses. Positive scores from 1 strongly agree, 2 disagree, 3 disagree, 4 agree and 5 strongly agree. The negative score starts with 1 strongly agree, 2 agree, 3 disagree, 4 disagree and 5 strongly disagree. Collected data are analyzed using a percent formula that has been tested for reliability and validity.
The data analysis technique used by the researcher is a questionnaire or questionnaire. The researcher uses a closed questionnaire directly, which consists of questions with a number of answers as options, in other words those who are subject to the questionnaire must have the answers provided in the questionnaire. Regarding the questionnaire model used is a multiple choice system.
4. Discussion and Conclusion
Based on the results of the online questionnaire data collection that has been distributed, it can be seen in table 1
Table 1
No Type of Product Amount
1 Books and Stationery 8
2 Electronic 39
3 Fashion and Accessories 29
4 Handphone and Accessories 7
5 Health 3
6 Computer and Accessories 9
7 Foods and Drinks 87
8 Sports and Outdoor 4
9 Automotive 2
10 Beauty Care 35
11 Home Appliances 18
12 Lainnya 9
13 Total 250
It is undeniable that the COVID-19 pandemic has caused major changes in people's values and lifestyles, such as a decrease in activities outside the home. A significant decline was seen in various big cities in Indonesia, especially cities with a large number of cases. this is added to the factor of government regulations regarding activity restrictions, especially for recreational activities and eating out. (Parady et al., 2020). Because of this, there is a shift in the shopping behavior of Indonesian consumers, many consumers choose to shop at e-commerce instead of visiting physical stores.
Based on the diagram, many people make sales transitions from physical stores to online sales through E-Commerce. This can be seen from 92% of people selling online or as many as 229 sample people. Meanwhile, people who still maintain sales through physical stores are 8% or a total of 21 samples.
Industry reports and consumer surveys show that the Covid-19 pandemic is driving the e- commerce trend among the public (Kim, 2020). The reduced activity outside the home also affects economic actors about the economic Advantages of e-commerce platforms (Tran, 2021). Some authors have suggested that the digitization of habits and markets acquired during the pandemic, as observed in China in 2002, could cause structural changes in consumption as individuals maintain their adjusted behavior after the pandemic is over (Kim, 2020; Sheth, 2020). -2003. during a pandemic. SARS (Clark, 2018).
92%
8%
SALES
E-Commerce Sales
Physical Store
Based on the diagram, there are several sellers who have started to switch to marketing their products online on the E-Commerce platform after the pandemic. Although it can be seen that more sellers already have online stores before the pandemic. This can be seen from the diagram where 38% of sellers already have an online store, 32% of sellers just started leaving physical stores and switching to online stores after the pandemic and 40% of sellers have both.
Despite the global increase in online buying since the start of the pandemic, uncertainty surrounding online buying remains. Further research proves that there is a decrease in sales turnover as an effect of this pandemic (Barnes, 2020; O'Leary, 2020; Peji´c-Bach, 2020).
Based on the diagram, it can be seen where 58% of sellers agree that their sales have decreased as a result of the Covid-19 pandemic, 17% of sellers have not experienced a decline in sales, this is because the goods sold are quite stable and in accordance with the needs of the community. then 25% of sellers choose not to answer.
Based on the results of this study, the researchers concluded that the COVID-19 pandemic had an impact on the economic activities of the community, which is one of the factors that led
15%
23%
40%
12%
10%
Doing online sales after the Covid-19 pandemic
Very not agree Disagree
Undecided Agree
Strongly agree
6% 11%
25%
29%
29%
Sales drop due to Covid-19
Very not agree Disagree
Undecided Agree
Strongly agree
people to conclude that economic actors or sellers started selling online compared to physical stores.
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