Beyond the City Limits: Platform livelihood in Rural Indonesia

With a growing body of literature on social commerce and platform livelihoods around the world, research has mostly ignored rural regions under the premise that there is no digital economic activity beyond city borders. 

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Our report tells a different story, challenging the widely held belief that digital commerce is only found in metropolitan areas. We present detailed data on the activities, perceptions, challenges, and experiences of sellers on four different types of rural platforms including e-commerce and social media platforms as well as sector-specific marketplaces in the agriculture and fisheries sectors in rural Indonesia. Our research, produced as part of a two-year research programme in conjunction with RISE Indonesia and sponsored by the Bill & Melinda Gates Foundation, investigates the rising platform economy in rural Indonesia.

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The results are based on 430 respondent surveys and 80 qualitative interviews who report that platform participation has significantly improved various aspects of participants' lives, including social status, work-life balance, safety, income levels, and financial management. The perception of positive impact is nearly universal, contrasting concerns raised by other researchers that platforms are exploitative or result in a “race to the bottom”. Notably, 93% reported increased income, 90% reported greater income stability, and roughly 50% of those who were unbanked before joining platforms reported using bank accounts when they joined.  

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While both men and women participants report benefiting from platform-based livelihoods, women face specific barriers to participation, especially in agriculture and fisheries where we found almost no women platform sellers. The report emphasizes the need to address gender disparities and encourages direct interactions between farmers/fishermen and their platforms (most currently use them through intermediaries which appear to mute the benefits of platform participation). The study suggests opportunities to accelerate platform adoption, including transitioning women from social to formal e-commerce where reported incomes are higher, training business owners to engage with platforms directly rather than through intermediaries, and promoting the adoption of digital payments.

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The study also suggests boosting integrated financial services, building private-public collaborations, overcoming logistical difficulties, enhancing internet access, and diversifying product offerings to maximize platform livelihood advantages in rural 

Indonesia. The emphasis is on formalizing participation while recognizing some informal intermediaries will have an ongoing role. Similarly, with a focus on Africa, we authored a piece, Build Cyborgs not Androids in Africa, speaking to the need to keep informal systems in mind to reach the market.

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Talking to the many rural platform sellers who were part of our study, we began to see the outlines of a virtuous circle where joining platforms led to digitization and business growth, which led to financial services adoption to access capital and reach more customers. Oftentimes, accessing those financial services pushed business towards  formalization, and eventually, led to more growth. We think the nuances of this cycle should be further understood and accelerated with policy interventions as a key way to drive digital financial inclusion and business formalization.

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The research emphasizes the potential for platforms to have a beneficial influence on Indonesia's rural economy and proposes concrete initiatives to increase these benefits focusing on critical issues such as digital inclusion, gender equality, formalization and financial services. We see these initiatives dramatically accelerating platform adoption in our focus sectors, extending the variety of benefits of platform participation to more rural Indonesians.

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We are thankful to our research partners RISE Indonesia and Jonathan Donner (Senior Director, Research at Caribou Digital), as well as the Bill & Melinda Gates Foundation (which funds this program), for making this research possible.

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Download the report here!