Key Points
- TikTok will invest $1.5 billion in Indonesia’s biggest e-commerce platform.
- ByteDance’s TikTok will buy 75% of GoTo’s Tokopedia.
- With 191 million active social media users, Indonesia is one of the most digitally active countries.
ByteDance’s TikTok agreed to invest $1.5 billion in a joint venture with Indonesia’s GoTo Group, restarting its shopping app in Indonesia, Southeast Asia’s biggest e-commerce market.
The Chinese company TikTok will combine its Indonesian TikTok Shop business with GoTo’s e-commerce unit Tokopedia, the companies said. TikTok will have a 75.01% stake in that combination in the new entity, which will run the shopping features of TikTok’s social media app in Indonesia.
“The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators,” the two companies said in a joint statement. “The arrangement will allow both TikTok and GoTo to each serve Indonesian consumers and MSMEs more comprehensively.” The transaction is expected to close in the first quarter of 2024.
Why Indonesia?
ByteDance’s TikTok Shop Indonesia, launched in 2021, quickly garnered more than 100 million users by October 2023. Indonesia’s e-commerce industry is expected to surge to approximately $160 billion by 2030, according to a report by Google, Temasek Holdings, and Bain & Co.
- With a population of 276.4 million, Indonesia is the fourth most populous country globally.
- Indonesia boasts one of the highest social media user penetrations in the Asia-Pacific region.
- Ranking third in Asia, behind only China and India, Indonesia has 191 million active social media users.
- TikTok is immensely popular in Indonesia, with 125 million users, making it the largest market in Southeast Asia and the second-largest globally after the U.S.
TikTok’s joint venture offers a lifeline to the popular short video app that was hit by a local ban on online shopping sales on social media platforms to protect smaller merchants and user data.
Before the October ban, Indonesia, with its 270+ million population, served as TikTok’s primary online retail market, challenging established platforms like Tokopedia, Shopee, and Lazada.
TikTok, Tokopedia and GoTo set to transform Indonesia’s e-commerce landscape
TikTok, Tokopedia, and GoTo are joining forces to reshape Indonesia’s e-commerce sector, promising millions of new job opportunities over the next five years. This strategic alliance focuses on empowering micro, small, and medium enterprises (MSMEs), with over 90% of the combined business’s merchants falling under this category.
The collaborative venture encompasses a series of joint initiatives designed to bolster and support MSMEs, including:
- Promotion of Indonesian Products: TikTok and Tokopedia will actively promote Indonesian products through their platforms, providing a significant boost to local businesses.
- Capacity Building for MSMEs: The collaboration aims to enhance the capabilities of Indonesia’s MSMEs through a comprehensive program on skills development, offering resources related to upstream production, and providing support for selling on the platforms.
- Merchant Support for Online Sales: A key focus will be supporting merchants in their online endeavors by offering assistance in critical areas such as marketing, branding, and sustainable business practices.
- Global Promotion for Local Brands: The collaboration seeks to assist local Indonesian brands in promoting their products in international markets.
- Establishment of Technology Centers: Technology centers will be established across Indonesia, serving as hubs for the development of local tech talent, fostering innovation, and encouraging fair competition, providing a level playing field for businesses of all sizes.
