TikTok has been successful in most of its endeavors, including e-commerce in certain countries. It's well on its way to becoming a multi-functional app. However, it lost one of its biggest customer bases when Indonesia prohibited social media companies from selling products on their platform.
TikTok Circumvents the Ban
As a way to continue its e-commerce business in Indonesia, TikTok decided to partner with tech firm PT GoTo Gojek Tokopedia. The social media giant will invest $1.5 billion in the long run, which will give the company a majority stake.
The initial investment of $840 million will buy 75.01% of GoTo's PT Tokopedia, which is smart on TikTok's part considering that the e-commerce platform is the biggest one in Indonesia, and will allow them to reach a bigger consumer base.
With the deal, TikTok will be able to add its shop to Tokopedia. Both parties said in a statement that the strategic partnership "will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators," as per Economic Times.
It won't be too hard for TikTok to revive its online shopping business, especially since it was already big in Indonesia before it was banned. The country has around 125 million users, which is almost half of its overall 270 million active social media users.
It's still unknown how this will work since it's still too early in the process. Usually, sellers on the platform would broadcast their products so that people would know what they're selling and what customers would get.
TikTok's shop feature also allows users to purchase the products without having to leave the app. The integration with Tokopedia might mean that it will have a separate tab for TikTok shops that show livestreams.
While this can serve as a win for the social media giant, it still faces a lot of scrutiny over its privacy practices. TikTok is still accused of stealing user data and spying on users through the app. This, in turn, sparked several bans on government-issued devices.
Read Also: TikTok Takes on Retail Titans Amazon And Shein With 'Trendy Beat'
Indonesia Bans Social Media Shopping Services
The country was the first to try out TikTok's e-commerce service but back in early October, Indonesia declared that social media companies should compete in selling products online, as it would affect local physical and online retailers.
The new regulations forced TikTok to shut down its shopping feature in the country, which is one of its most profitable locations. Indonesian Trade Minister Zulkifli Hasan strongly believed that e-commerce cannot become social media and that it is separated.
The emergence of online retail has already affected physical store owners as people now prefer shopping from their own homes. Sukmamalingga, a store owner in Jakarta, said that none of his customers shop anymore, even though he sent photos of new models of clothes.
Indonesian President Joko Widodo also stated: "We need to be careful with e-commerce. It can be very good if there are regulations but can turn bad if there aren't any regulations," as reported by BBC.
Related: TikTok to Further E-Commerce Ambitions With Indonesian Payments License
