The untold story behind the GMVs of Southeast Asia’s ecommerce titans

YouTube is flooded with video ads on how to make money. Follow the method, work hard, and you’ll make a decent living in the comfort of your own home. Sounds familiar?

In Indonesia, such videos feature a unique twist. Instead of teaching you how to be a “digital marketer,” they preach the wonders of dropshipping.

In simple terms, dropshippers are middlemen who resell goods from suppliers at marked-up prices. Once a consumer places an order, the dropshipper buys the item from the supplier, who then ships it directly to the consumer.

The low-cost business model doesn’t require holding inventory. However, it has low margins, which means dropshippers need to take orders at a high volume to make a decent income.

Indonesia is ground zero for dropshipping, just like how it’s ground zero for ride-hailing scams. The country has become the largest and fiercest ecommerce battleground in Southeast Asia. Everyone wants a piece of the action, from big-money investors to housewives earning extra bucks.

Of course, dropshipping is a legitimate business activity that provides income to many people. Major consumer-to-consumer (C2C) marketplaces like Shopee, Bukalapak, and Tokopedia acknowledge and encourage certain kinds of dropshipping.

However, industry insiders are observing that automation tools, combined with the convenience of online shopping and the promotion battles between marketplaces, are causing people to game the system in increasingly sophisticated, organized, and boundary-pushing ways.

Southeast Asia’s ecommerce companies are dealing with the issue, they tell Tech in Asia. If left unchecked, the trend could distort marketplaces and in the process hurt legitimate buyers and sellers. And if history is any indication, dropshipping is just the beginning.

A community of resellers

Dropshippers congregate on YouTube and Facebook, as well as many other forums. Various videos, groups, and pages promote the virtues of the business model, and many of them have an audience that number in the thousands.

Instructors have started classes and support networks to guide newbies. There’s dedicated software to scrap product information for dropshipping purposes in ways that avoid detection. One of them, called Dutchbot, claims to be compatible with Tokopedia, Bukalapak, and Shopee.

Tips on how to be a better dropshipper abound on YouTube, and many of those tricks involve taking advantage of loopholes in various marketplaces.

The size of dropshipping

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The situation in Southeast Asia