TikTok Shop has reportedly made a deal to partner with GoTo's Tokopedia in Indonesia
ByteDance's TikTok has reportedly made a deal to invest in a unit of Indonesia's GoTo Group
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The backstory: TikTok, the popular app among Gen Z and millennials, is about more than just viral dances and funny videos. The company behind it, ByteDance, is also venturing into e-commerce. In 2021, it introduced TikTok Shop, an online marketplace where local sellers can showcase their products to TikTok users in specific regions. Its first market was Indonesia, where it took off in popularity and gained around 6 million sellers in just a year.
ByteDance has big plans for its retail service, intending to invest billions in Southeast Asia in the coming years. The region, with over 630 million people, half of them under 30, is a crucial user base for TikTok, pulling in more than 325 million visitors monthly.
More recently: In July, Teten Masduki, Indonesia's Minister of Cooperatives and Small and Medium Enterprises, started expressing concerns about TikTok squeezing out local e-commerce, like GoTo’s Tokopedia. Jakarta took action in September by making new rules that said social media platforms couldn’t handle direct payments. This meant TikTok, the only one in the country doing it, had to separate payments from its shopping features. That pretty much zaps the convenience factor of TikTok Shop since users would have to use a different app to pay for purchases. This move also made Indonesia one of the first Southeast Asian nations to resist TikTok's growing influence.
The development: ByteDance's TikTok has reportedly made a deal to invest in a unit of Indonesia's GoTo Group. The plan is to work with GoTo's Tokopedia across several areas instead of competing with it. While the final details are still being worked out, insiders say an announcement could come as soon as next week. But the specifics are still up in the air, pending regulatory approval and possible changes before the official reveal.
For GoTo, this partnership with TikTok is a bit of a mixed bag. On one hand, it might be risky to help a major online retail rival operate in the country. On the other hand, it could give GoTo a powerful global social media ally, potentially benefiting both companies in shopping, logistics and payments. For TikTok, the partnership could be a model for how it moves forward with expanding in nearby markets like Malaysia.
Key comments:
"We need to be careful with e-commerce," said Indonesia President Joko Widodo at a government event in October. "It can be very good if there are regulations but can turn bad if there aren't any regulations."
"We're going to invest billions of dollars in Indonesia and Southeast Asia over the next few years," said TikTok CEO Shou Zi Chew at a forum it organized in Jakarta back in June.
"We deeply regret the government's announcement, especially how it will impact the livelihoods of the six million sellers and nearly seven million affiliate creators who use TikTok Shop," said TikTok's statement sent to The Associated Press regarding the regulations imposed by Indonesia in September.
"We have high exposure for our products by using TikTok Shop," said Muhammad Zidan, a merchant who uses TikTok Shop. "The government should find a win-win solution because we will also experience a lot of losses. ... The ban will have a huge impact on us."
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