TikTok, the popular short video app, is set to make a significant reentry into the Indonesian e-commerce market through a strategic partnership with the country’s largest e-commerce platform, Tokopedia. This move comes after Indonesia banned online shopping on social media platforms. This led to the suspension of TikTok’s e-commerce service, TikTok Shop. The partnership involves TikTok investing $1.5 billion to acquire a 75.01% stake in Tokopedia, which is part of Indonesia’s tech conglomerate GoTo.
The investment includes the purchase of most of GoTo’s e-commerce unit and the injection of TikTok Shop’s Indonesia business into the enlarged Tokopedia entity. The two companies have emphasized that the strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators. This reentry into the Indonesian market is a significant development for TikTok. The company has been looking to leverage its large user base in the country to establish a strong e-commerce presence.
TikTok officially announced that it has reached a strategic cooperation with Indonesian technology giant GoTo. TikTok’s Indonesian e-commerce business will merge with Tokopedia, the e-commerce platform of GoTo Group. The merged Tokopedia will be controlled by TikTok. TikTok’s e-commerce business had previously bid farewell to the local market due to policies. The business will now be relaunched on the “Indonesia Online Shopping Day” on December 12.
Strategic Partnership with Tokopedia
TikTok’s reentry into the Indonesian e-commerce market is born through a strategic partnership with Tokopedia, the country’s largest e-commerce platform. This partnership involves TikTok acquiring a 75.01% stake in Tokopedia, which is part of Indonesia’s tech conglomerate GoTo. The investment, totalling $1.5 billion, includes the purchase of most of GoTo’s e-commerce unit and the integration of TikTok Shop’s Indonesia business into the enlarged Tokopedia entity.
A statement from both parties stated that TikTok will work with GoTo to provide a series of support in marketing, branding and internationalization to help local small and medium-sized businesses develop. On the day of resumption, TikTok and Tokopedia will also jointly launch the “Buy Local Products” (Beli Lokal) campaign to help the development of local Indonesian companies.
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Indonesian Deputy Minister of Trade Jerry Sambuaga recently stated that TikTok is free to cooperate with any e-commerce platform as long as it abides by Indonesia’s applicable regulations and procedures. In late September this year, Indonesian Trade Minister Zulkifli Hasan had this to say
“Social media and e-commerce must be separated so that the algorithm is not completely controlled and can prevent personal data from being commercially exploited .”
Regulatory Considerations
The two brands have emphasized that the strategic partnership will commence with a pilot period. The pilot period will run in close consultation with and supervision by the relevant regulators. This highlights the importance of regulatory compliance and collaboration in the reentry of TikTok into the Indonesian e-commerce market. The pilot period is likely to involve regulatory oversight. This will ensure that the partnership aligns with the country’s e-commerce regulations and policies.
TikTok’s return to the Indonesian e-commerce market is a significant development. This is especially in the context of the country’s ban on online shopping on social media platforms, which led to the suspension of TikTok’s e-commerce service, TikTok Shop. With a large user base in Indonesia, TikTok has been keen on leveraging its platform for e-commerce activities. The reentry through the partnership with Tokopedia represents a strategic move. This move will also establish a strong e-commerce presence in Southeast Asia’s largest economy.
Final Words
TikTok is reentering the Indonesian e-commerce market through its strategic partnership with Tokopedia. This marks a significant development in the company’s e-commerce ambitions. The $1.5 billion investment and the acquisition of a controlling stake in Tokopedia demonstrate TikTok’s commitment. The company is also committed to regaining a foothold in the Indonesian e-commerce landscape. The partnership needs to align with the country’s e-commerce regulations. This is because of the emphasis on regulatory compliance. This reentry is poised to have a notable impact on the Indonesian e-commerce sector and TikTok’s position in the market.
