TikTok has received approval to revive its e-commerce business in Indonesia and will invest $840 million into purchasing most of Tokopedia, the e-commerce unit of Indonesian tech conglomerate GoTo. The purchase will allow the Chinese social media company to relaunch its online shopping business in Indonesia, the largest economy in southeast Asia.
TikTok already had 6 million sellers as well as 7 million creator affiliates in Indonesia before Indonesian president Joko Widodo called for stricter social media regulations and stopped transactions on the social media app in early October. The social media company already had thousands of sellers on the platform; many of them lost hundreds of dollars in monthly income when Indonesia halted transactions on the platform.
A rush of cheap imports into Indonesia caused domestic sales to decline significantly and spurred the president to call for tighter regulations. More than two months after Indonesia stopped transactions on the TikTok app, the social media platform reached an agreement to combine TikTok Shop and Tokopedia. TikTok would purchase 75.01% of Tokopedia shares and hold the e-commerce company’s controlling stake.
Currently the largest e-commerce platform in Indonesia, Tokopedia would operate the commerce features in the TikTok Shop app. TikTok would also invest $1.5 billion in Tokopedia with Indonesian regulators supervising the partnership through a pilot period that started on last week.
Coincidentally, the pilot program begins on the country’s Online Shopping Day, a national government program that’s meant to expand the country’s digital economy by providing support to micro, small and medium enterprises (MSME). The program will promote a wide range of Indonesian sellers via a Bei Lokal (Buy Locally) campaign, which will be accessible via both Tokopedia and TikTok.
With more than 90% of the business enterprise on the Tokopedia-TikTok business app being MSMEs, the two companies are uniquely positioned to promote the growth of Indonesia’s MSMEs. Both companies will embark on several joint initiatives including promoting locally produced products and offering Indonesian sellers with training on how to promote their brands in foreign markets to support MSMEs.
According to TikTok Indonesia’s head of e-commerce Stephanie Susilo, the company’s partnership with GoTo will help TikTok “empower local businesses to expand and thrive.”
With millions of Indonesia’s population of more than 270 million people being daily active social-media users, TikTok is looking to convert its user base into an economically viable e-commerce venture.
E-commerce in general, along with segments such as healthcare e-commerce, are attracting major investment inflows as exhibited by the growing footprint of entities such as NextPlat Corp. (NASDAQ: NXPL) (NASDAQ: NXPLW) in the major markets around the world. The move by TikTok to gain a major stake in Tokopedia is therefore unlikely to be an isolated occurrence.
NOTE TO INVESTORS: The latest news and updates relating to NextPlat Corp. (NASDAQ: NXPL) are available in the company’s newsroom at https://ibn.fm/NXPL
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