Rising Sales, Shrinking Margins: Evaluating Shopee Marketplace Costs and Profitability of a Toraja Coffee Business

Abstract

Background: Sales growth can obscure marketplace margin pressure for coffee MSMEs; how mandatory and participation-based platform charges shape margins is unclear.
Purpose: To examine sales growth, platform costs and contribution margins in one Toraja coffee business.
Design/methodology/approach: A descriptive single-case study, chosen for access to internal cost records, analyzed 3,420 orders (July 2024–June 2026) in the seller’s Shopee channel, the unit of analysis, using transaction reports, advertising records and unit-based COGS estimates. Cost classification, margin decomposition and sensitivity analyses were applied.
Findings/Results: Annual sales rose 137% and contribution before fixed costs 90%; the contribution margin fell from 17.05% to 13.68%. A lower COGS ratio added 4.94 percentage points; higher mandatory fees and program, affiliate and advertising costs absorbed 2.43 and 5.92 points, respectively. Treating Promo XTRA as platform-determined reversed this ranking. The 50 g pack was most sensitive to advertising allocation.
Conclusion: Sales growth accompanied higher absolute contribution but a lower margin. The seller should monitor contribution by product and cost source, not sales alone; incremental advertising returns remain undetermined.
Originality/value: Cost records show that sales and absolute contribution can rise while the margin falls, and that whether the decline reflects platform or seller decisions depends on program classification.

Keywords: channel profitability, coffee MSME, contribution margin, marketplace advertising, platform fees