https://dinastires.org/JLPH Vol. 2, No.

4, August 2022

e-ISSN: 2962-2816, p-ISSN: 2747-1985

DOI: https://doi.org/10.38035/jlph.v2i4
Received: 22 July, 2022, Revised: 27 Agust 2022, Publish: 4 October 2022
https://creativecommons.org/licenses/by/4.0/

Literature Review: Competitive Strategy and Competitive

Advantages on E-Commerce Shopee Indonesia

Muhammad Reza Putra

Ph.D Student, Universiti Kebangsaan Malaysia, Malaysia, email: mhd.rezaputra@gmail.com

*Corresponding Author: Muhammad Reza Putra

Abstract: Facilitated all economic and business activities globally in the 4.0 Industrial
Revolution era. Moreover, buying and selling activities that are usually offered conventionally
are now made digitally, which is called E-commerce. E-commerce began to develop in
Indonesia in 1999 with a buying and selling platform, namely Kaskus. The public could not
entirely accept the emergence of e-commerce due to various factors, such as the quality of the
products offered. Until 2009, different e-commerce platforms in Indonesia began to develop,
one of which was Shopee. To deal with the existing Competitive Advantages, Shopee uses
several Competitive Strategies to analyze the advantages in the Marketing Performance, Cost
Leadership, Alliance, and Innovation strategies.

Keywords: Competitive Strategy, Competitive Advantages, E-Commerce Shopee Indonesia

INTRODUCTION
Along with the development of technology, people's lives have also developed. The rapid
advancement of technology has caused a shift in people's lives. Currently, people have
experienced changes in lifestyle, especially in terms of shopping. People prefer to shop online
rather than shopping conventionally. The emergence of various advanced technologies has
changed people's lives to be fast-paced and practical. Now people do not need to come directly
to the store to shop. Using a smartphone and internet connection can get what they want to buy.
The convenience of the public in shopping is supported by the emergence of e-commerce
businesses in Indonesia. E-commerce is a type of electronic business that focuses on individual-
based transactions using the internet to exchange goods and services (Surawiguna, 2010). E-
commerce in Indonesia has succeeded in overgrowing because a massive population of
Indonesia supports it, and most of them are connected to the internet.
Data from the Indonesian Internet Service Providers Association (2019) shows that the
number of internet users in Indonesia in 2018 reached 171.17 million users out of a population
of 264.16 million. This number shows an increase of 10.12 percent from the previous year.
Thanks to Indonesia's massive market share, many e-commerce have sprung up to enliven
online business in Indonesia. One of the e-commerce sites that has successfully dominated the
Indonesian market is Shopee Indonesia. Data from iPrice Group (2020) shows that Shopee has

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managed to become an e-commerce that occupies the top position in the first quarter of 2020
with the highest number of active visitors, 71.53 million visitors. Shopee is a mobile
marketplace application with a consumer-to-consumer (C2C) concept that is safe and practical
for buying and selling. Shopee offers a variety of products to support daily needs, such as
fashion, gadgets, cosmetics, electronic devices, home appliances, to shopping vouchers.
In addition, Shopee always provides various kinds of massive promos to attract
customers, such as one of the most popular ones being free shipping. Even though at the
beginning of 2020, Shopee has occupied the top position, various new strategies must continue
to be created to continue to dominate the market, considering that the e-commerce business
competition in Indonesia is very tight. This study aims to analyze what kind of competitive
strategy is applied by Shopee using the Competitive Advantages and Competitive Strategy
analysis models developed by Michael Porter. This research was conducted by looking at the
five Competitive Advantages.
Based on the background of problem that has been decribed, the formulation of problem
as follows:
1. Competitive Strategy on E-Commerce Shopee Indonesia ?.
2. Competitive Advantages on E-Commerce Shopee Indonesia ?.

LITERATURE REVIEW
Shopee Indonesia E-Commerce
E-commerce is a platform for buying and selling business activities that use electronic
technology and connect companies, producers, consumers, and the general public in electronic
transactions. Many types of E-commerce are developing in Indonesia. One of them is
Marketplace, and Marketplace is a forum that can connect sellers and buyers (seller & buyer)
in one network. The most popular types of E-commerce in Indonesia include; Shopee,
Tokopedia, Lazada, Bukalapak, Blibli, and so on. Shopee, as a significant and most sought-
after marketplace by the online community in previous years, was ranked first. Now, its ranking
has decreased due to competition between other marketplaces.
The number of similar Marketplaces engaged in online shopping applications has made
Shopee one of Indonesia's number one online shopping sites in the second quarter of 2019. It
now has to be replaced with Tokopedia, a similar marketplace. And at this time, Shopee must
continue to compete with Lazada, Bukalapak, and Blibli, which are identical marketplaces and
are both under the position of Tokopedia. The increase in E-commerce with the same
competitors shows that competition in obtaining a market position is getting tighter. It makes
the management of the Shopee E-commerce company have to work harder to determine various
strategies related to its external position. It is so that Shopee's position and market share can
continue to survive and increase according to its portfolio.
Shopee Indonesia E-Commerce has been widely by previous researchers, including:

Competitive Strategy
In achieving its vision and mission, and objectives, a company must have planned various
competitive strategies to become the best and only company among other similar companies.
The primary purpose of strategic planning is to see the internal and external conditions
objectively so that the company can anticipate changes in the external environment. Strategy is
a long term plan to achieve company goals by allocating limited company resources. The
strategy includes a comprehensive plan for both the external environment and the internal
environment. According to Umar (2010), strategy is an action that is continuously increasing,
carried out continuously, and based on the needs of future buyers. Porter (2018)
defines strategy as a tool to realize competitive advantage. The strategy will optimize
advantages and minimize competitive limitations. Porter (2018) also states that competitive

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strategy aims to create a favorable and sustainable condition for the forces that determine
industry competition.
Strategy is the form and steps taken by the company to achieve the planned goals.
Business strategy is a guideline for companies to compete and achieve business continuity.
Because if a company successfully implements a cost leadership strategy and product
differentiation, it will effectively determine success in an industry (Wibowo et al., 2017).
Competitive Strategy has been widely by previous researchers, including:

Competitive Advantages
The forms of competition that often occur are the entry of new entrants, the threat of
substitute products, the bargaining power of buyers, the bargaining power of suppliers, and
competition among competitors. This reflects that the threat of competition is not only limited
to fellow companies in the existing industry, but also comes from customers, suppliers,
substitute products, and potential new entrants. Shopee Indonesia can realize a competitive
advantage in gaining strategic, tactical, and operational benefits. At the highest managerial
level with strategic planning level, Shopee Indonesia can use information systems to change
the direction of a company to gain a strategic advantage. At the (middle) management control
level, managers can provide specifications on how Shopee Indonesia will implement the
strategic plan to create a tactical advantage.
Meanwhile, at the (lower) level of operational control, managers can use information
technology in various data collection and information creation that will ensure operating
efficiency, thus achieving operational excellence (AAker and McLoughlin, 2010). The primary
competency strategies that companies can use to win the competition are: 1) cost leadership
strategy, 2) differentiation strategy, 3) innovation strategy, 4) growth strategy and 5) alliance
strategy.
Competitive Advantages has been widely by previous researchers, including:

Table 1: Previous Research

No Author Previous Research Results Similarities to Difference with this
(year) this article article
1 (Ningsih, et Competitive Strategy Planning Competi-tive Planning Analysis Using
al., 2021) Analysis Using the BCG strategy the BCG Matrix Method
Matrix Method on E- on E-Commerce Shopee
Commerce Shopee
2 (Rakanita, A, Utilization of E-Commerce in Utilization of E- MSMEs in Karangsari
M., 2019) Improving the Commerc, Village, Karangtengah
Competitiveness of MSMEs in Competitiveness District, Lebak Regency
Karangsari Village,
Karangtengah District, Lebak
Regency
3 (Wibowo, et Company Competitive Competi-tive Company performance
al., 2017) Strategy and Company strategy
Performance
4 (Cahyani, U, Competitive Strategy in Competitive Competitive Strategy in
E., 2016) Business Naturally strategy Business Naturally
5 (Triani, Implementation of IT E- Strategy of IT E- Increasing Company
2012) Commerce Strategy as Commerce Business Competition
Increasing Company Business
Competition
6 (Nisak, SWOT Analysis To Competitive SWOT Analysis
2013) Determine Competitive Strategy
Strategy
7 (Andriyanto, Strengthening the Competitiveness Strengthening of Micro,
2018) Competitiveness of Micro, Small, and Medium

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Small, and Medium Enterprises Through E-

Enterprises Through E- Commerce
Commerce
8 (Ginny, Competitive Strategy Analysis Competitive Companies Engaged in
2019) of Companies Engaged in Strategy Logistics in Jakarta
Logistics in Jakarta

9 (Hartini, Relationship Market Competitive Relationship Market

2017) Orientation, Competitive Strategy Orientation, Corporate
Strategy, Corporate Entrepreneurship, and
Entrepreneurship, and Company Performance
Company Performance
10 (Febriantoro, Studies and Strategies to E-Commerce Studies the Development
2018) Support the Development of Strategis of E-Commerce for
E-Commerce for MSMEs in MSMEs in Indonesia
Indonesia
11 (Surahman et Implementation of 3D Visual Promotion 3D Object Visual
al., 2020) Object Technology as a Media Upgrade Technology
to Improve E-Commerce Implementation
Product Promotion
12 (Kurdi & Strategy to Increase MSME Competitiveness MSMEs in Sumenep
Firmansyah, Competitiveness in Sumenep Through E-
2020) Regency Through E- Commerce
Commerce

RESEARCH METHODS
This article uses descriptive qualitative, which conducts a literature review of previous
reports and searches for data sources through Google Scholar. In this study, the data obtained
can be accounted for and following existing provisions and citations using Mendeley. This
article discusses Competitive Strategy, Competitive Advantages, and Marketing Performance
in Shopee Indonesia's E-Commerce (Ali, H., & Limakrisna, 2013).

FINDINGS AND DISCUSSION

Based on relevant theoretical studies and previous research, the discussion of this
literature review article is as follows:

1. Competitive Strategy on E-Commerce Shopee Indonesia

E-Commerce is a place or platform for sellers to offer products from their business
activities. The difference with conventional business activities is that sellers only send product
photos and product descriptions to the e-commerce platform so that buyers can easily find the
product they are looking for or need. Buyers also don't need to come to the seller's shop. They
only need to make transactions through the e-commerce platform, and if the goods sent don't
match, the money will be guaranteed back by the forum as a third party.
Of course, with the current development of e-commerce in Indonesia, e-commerce
platforms have emerged with their respective slogans and unique offerings. To be noticed by
the public in buying and selling, an e-commerce platform must have a competitive strategy to
get the wider community's attention and excel from other platforms.
In this case, Shopee Indonesia has a Competitive Strategy in taking market share in
Indonesia, one of which is by promoting and having a differentiation from other platforms.
Shopee Indonesia offers good quality products at relatively lower prices than other platforms
and provides loyalty to its users in discounted vouchers and free shipping.
Competitive Strategy relates to E-Commerce Shopee Indonesia, and this variable is
similar to previous research, namely: (Wibowo et al., 2017), (Mahaputra & Saputra, 2021)

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2. Competitive Advantages on E-Commerce Shopee Indonesia

In doing business, of course, every company has its advantages, which are the attraction
of every e-commerce in Indonesia and attract someone's buying interest. To determine
competitive advantage, of course, every e-commerce must provide good service to the
perpetrators of activities in e-commerce.
For example, they are providing cheap administration fees for sellers on Shopee, giving
awards to sellers with the most product sales in their respective fields, giving discount
vouchers, and free shipping to users. It will impact user loyalty to determine someone's buying
interest. And if someone already has brand awareness, they will repurchase or repurchase the
e-commerce platform.
For this reason, every e-commerce, especially Shopee, applies price, promotion, and
quality variables to gain a competitive advantage. It makes it the largest e-commerce platform
in Indonesia today. Competitive Advantage is related to Shopee Indonesia's E-Commerce, and
this variable is similar to previous research, namely: (Desfiandi et al., 2017), (Rakanita, 2019).

Conceptual Framework
Based on the problem formulation and discussion described above, the conceptual
framework for this article is:

Competitive Strategy

Competitive Advantages E-Commerce Shopee

Indonesia

Figure 1: Conceptual Framework

This article discusses Competitive Strategy and Competitive Advantages in Shopee

Indonesia's E-commerce. There are still many variable factors that affect Competitive Strategy
and Competitive Advantages at Shopee Indonesia's E-Commerce, namely:
1) Product Quality: (Darwisyah et al., 2021), (Mulyani et al., 2020), (Sivaram et al., 2020),
(Agussalim et al., 2016), (Sivaram et al., 2019), (Somad et al., 2021), (Ridwan et al.,
2020a), (Ridwan et al., 2020b), (Rony et al., 2020), (Istianingsih, S. H. W., & Wijanto,
2008), (Gultom, 2015), (A. Widodo et al., 2018), (A. Widodo, 2016).
2) Service Quality: (D. S. Widodo et al., 2020), (Bimaruci et al., 2020), (Maida et al., 2017),
(Desfiandi et al., 2019), (R. F. A. Saputra et al., 2021), (Yeni et al., 2019), (Larasati et al.,
2018), (Elmi et al., 2016), (F. Saputra, 2022b), (Istianingsih & Utami, 2009)
3) Price: (Subronto et al., 2021), (Pitri et al., 2022), (Firmansyah & Ali, 2019), (Hafat & Ali,
2022), (Nugroho & Ali, 2022), (Faisal et al., 2021), (Ali et al., 2020), (Thanh Nguyen et
al., 2019), (Hardiansyah et al., 2019), (Sudiantini et al., 2022)
4) Promotion: (Riyanto et al., 2017), (Mansur & Ali, 2017), (Ali et al., 2022), (M & Ali, 2017),
(Ali, H., & Limakrisna, 2013), (Ilhamalimy & Ali, 2021), (Setyadi & Ali, 2017),
(Sudiantini & Saputra, 2022), (Sumar, S., Soehardi, S., Rony, Z. T., & Nurbaiti, 2020).
5) Customer Loyality: (Octavia & Ali, 2017), (Larasetiati & Ali, 2019), (Fahmi & Ali, 2022),
(Hernikasari et al., 2022), (Ali et al., 2016), (Wahono & Ali, 2021), (Iryani et al., 2021),
(Hasyim & Ali, 2022), (F. Saputra, 2022a), (Hermawan, 2022),

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CONCLUSION AND RECOMMENDATION

Conclusion
Based on the literature review and discussion above, a researcher can make a conclusion
based on these variables, namely:
1. Competitive Strategy is very much needed amid the development of the e-commerce
industry in Indonesia to create competitive competition.
2. Competitive Advantage is needed to get the public's attention and determine the buying
interest of users, which will ultimately lead to consumer loyalty.

Reccomendation
Based on the conclusions above, the suggestions needed are to add factors that
determine competitive advantage in e-commerce Shopee Indonesia.

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