Determinant Factors of SMEs in Adopting E-Commerce in Indonesia

The potential of digital economy in Indonesia in 2025 is predicted to provide added value up to USD 115 billion (McKinsey Study). Meanwhile, the adoption of e-commerce by SMEs in Indonesia still limited. Based on survey of Indonesian E-Commerce Association (IdEA), less than 16 percent of SMEs utilize the marketplace to sale their products. This analysis aims to identify factors that influence SMEs in marketing their products through e-commerce. This study conducted based on case study of SMEs in Yogyakarta by using the Importance Performance Analysis (IPA). IPA conducted by considering internal and external factors that influenced SMEs. It was concluded that the main factors inhibiting SMEs are the lack of knowledge about the marketplace and the ability to look over the market opportunities in digital media. It is recommended to provide business incubator model that is integrated with a training system, mentorship, and access to financing and marketing. Keywords—SME, e-commerce, policy response