China’s TikTok agreed on Monday to revive its e-commerce arm, TikTok Shop, by investing $840 million to buy most of Indonesia’s tech conglomerate GoTo’s e-commerce unit, Tokopedia. The purchase appears to allow TikTok to restart its online shopping business in Southeast Asia's largest economy.
TikTok Shop shut down in Indonesia after President Joko Widodo called for tighter social media regulations because an influx of cheap imported goods from China led to a significant sales decline for domestic businesses. The Chinese-owned app was given one week to comply, and transactions stopped on its app in Indonesia on October 4.
Before the ban, TikTok Shop had 6 million sellers and 7 million creator affiliates.
As part of the agreement reached on Monday, Tokopedia and TikTok Shop, Indonesia’s businesses, will be combined under Tokopedia, but TikTok, which is owned by China’s Bytedance, will buy 75.01% of Tokopedia and hold the controlling stake.
Tokopedia, Indonesia’s largest e-commerce platform, will operate the shopping features within the TikTok Shop app, the companies said in a joint statement.
The agreement also calls for TikTok investing more in Tokopedia, for a total of $1.5 billion.
Indonesian regulators will supervise the strategic partnership with a pilot period that starts on Tuesday, coinciding with Indonesia’s National Online Shopping Day, a government program designed to grow Indonesia’s digital economy by supporting micro, small, medium enterprises (MSME). The campaign, titled Beli Lokal (Buy Locally), will promote a broad range of Indonesian merchants and will be available on both TikTok and Tokopedia.
GoTo CEO Patrick Walujo said in a joint statement, “Both of our companies are committed to supporting the growth of our MSMEs and promoting Indonesia-made products.”
More than 90% of the enterprises on the combined business app are MSMEs.
The companies will undertake a series of joint initiatives to support the MSMEs, including promoting Indonesian products on Tokopedia and TikTok’s platforms. Indonesian sellers will be offered training to promote their brands in international markets, while technology centers will be built to foster local tech talent.
Stephanie Susilo, head of e-commerce for TikTok Indonesia, said the partnership with GoTo will help the company “empower home-grown businesses to expand and thrive.”
Many of Indonesia's more than 270 million people are active social media users, and TikTok has been looking to translate its 125 million user base into e-commerce revenue.
Wenny Wijaya, a creator affiliate on TikTok Shop, sold smartphones and its accessories on TikTok Shop for numerous sellers and had 239,000 followers online. When TikTok was banned in October, she lost almost $700 in monthly earnings.
After TikTok Shop was banned, creator affiliates like her could only promote products on TikTok, and transactions were completed in online marketplaces like Shopee, Tokopedia or Lazada.
“I’m delighted that TikTok Shop will be revived and initiate joint programs to further strengthen, promote and develop local products," Wenny said. “This will surely create more jobs for Indonesians.”
Rudi Syarfi, a wholesale trader of Islamic men’s garment at Tanah Abang Market, Jakarta’s largest wholesale market said, “The rise of TikTok Shop created a ripple effect that crippled my business. My clients, who are mostly retailers that own either offline or online shops at e-commerce platforms, aren’t buying my products as much as before, since many consumers flocked to TikTok Shop in 2021.”
Rudi added that he’s aware that offline sellers need to adjust to the changes brought by e-commerce but hopes the government will collect the required taxes on all imported goods so local products can still maintain a competitive edge.
Andry Satrio Nugroho, head of the Center of Industry, Trade and Investment at the Institute for Development of Economics and Finance, said, “Tokopedia will likely have cross-border commerce like [Singapore e-commerce] Shopee, so it will be a battle of two giants.”
Some information in this report came from Reuters.
