Identifying Growth Barriers of MSMEs in E-Commerce: Experimental Evidence from Indonesia
We conduct a randomized experiment with MSMEs in Indonesia to examine several important growth barriers facing online businesses. First, to identify the importance of search frictions, we boost visibility of randomly selected newly-onboarded firms by exposing their products to consumers and evaluate the impact on sales. Second, to test the information barrier, we compare the benefits of alleviating the search barrier between new sellers (for which consumers have very limited information) and established sellers. Third, to shed light on the logistical barrier, we test whether remote sellers benefit less from the search barrier treatment, and whether offering shipping subsidies can help them grow.