TikTok decisive focus onE-commerce. The famous Chinese video sharing platform has announced a ambitious investment plan in e-commerce, signing a strategic partnership with the Indonesian tech conglomerate Goto.
The agreement provides for a financial commitment of 1,5 billion dollars and aims to revive the business of online shopping in Indonesia.
Creating an e-commerce giant
The move was preceded by TikTok's recent entry into the e-commerce sector, with the launch of TikTok Shop.
Based on the agreement stipulated, the Chinese social network, owned by ByteDance, will acquire a stake in 75,01% in PT Tokopedia, GoTo's e-commerce unit, for a total of 840 million dollars. In parallel, Tokopedia will acquire theTikTok Shop activity for 340 million dollars, bringing the total investment to $1,5 billion. GoTo's businesses include ride-hailing, delivery and financial services.
The stated objective is create an Indonesian e-commerce giant, leveraging Tokopedia's strong local presence and TikTok's vast reach. Indonesia represents, in fact, one of the main markets for the Chinese company with 125 million users, the second largest after the United States.
The partnership is not limited to the financial aspect: “TikTok, Tokopedia and GoTo will transform the Indonesian e-commerce sector, creating million new job opportunities over the next five years“, we read in a note published by GoTo.
We start with a pilot period
The new phase of the partnership will be preceded by a pilot period, conducted in collaboration with the competent regulatory authorities, in order to guarantee a harmonious transition that respects current regulations. TikTok had closed its e-commerce service in Indonesia last October, complying with a regulatory change which prohibits social networks from providing online transactions. This decision, motivated by the Indonesian authorities, aims to protect millions of small businesses.
“TikTok has committed to investing more than $1,5 billion in the expanded company, to provide future financing required by the company, without further dilution to GoTo,” the Indonesian group said. The partnership “will begin with a pilot period conducted in close collaboration and under the supervision of the relevant regulatory authorities". The deal is expected to close by the first quarter of 2024.
The Indonesian market is growing rapidly
Indonesia, with over 270 million inhabitants and a population very active on social media, represents a crucial market for TikTok.
According to a report by Google, Singapore state investor Temasek Holdings and consultancy firm Bain & Co., it is estimated that thee-commerce industry in Indonesia, reaches a value of approximately 1$ 60 billion by 2030, compared to the 62 billion estimated for the current year.
What is TikTok Shop
TikTok Shop, it's a marketplace integrated into the app and offers companies the ability to sell their products directly to users of the platform. Originally launched in 2021 in Indonesia, the service later expanded its reach to several nations before landing in the United States.
Users can explore and purchase products through shoppable videos and live streams that appear in their feeds, offering an integrated and engaging shopping experience.
In September TikTok Shop has officially landed in the United States, opening the doors to over 150 million American users. With its debut in the United States, TikTok Shop aims to challenge not only established giants like Amazon but also emerging platforms like Temu.
The declared objective is to expand in the sector reaching generate sales of 20 billion of dollars.
Currently, TikTok Shop is only available in some countries, including the United States, the United Kingdom and Singapore, according to its website. In Indonesia Tokopedia will compete with Shopee owned by Singapore-based Sea and Lazada owned by Chinese e-commerce giant Alibaba (9988.HK).
“We are creating an Indonesian e-commerce champion by combining Tokopedia's strong local presence with TikTok's mass reach and technological expertise,” said GoTo CEO Patrick Walujo.
