by Fintech News Indonesia
December 11, 2023
In a move to bolster its online shopping presence in Southeast Asia, TikTok has announced a major investment of US$1.5 billion to acquire a controlling stake in Tokopedia, the e-commerce marketplace of Indonesia’s PT GoTo Gojek Tokopedia Tbk.
This strategic partnership between the country’s two most popular online platforms aims to reinvigorate Bytedance-owned TikTok’s e-commerce operations, which had been halted following regulatory actions in Indonesia, the region’s largest economy.
Indonesia’s decision in October 2023 to prohibit online shopping on social media platforms was a bid to safeguard smaller retailers and the privacy of user data. This resulted in the suspension of TikTok Shop, the platform’s e-commerce service, which had been launched in a limited number of markets earlier this year, including Indonesia.
TikTok Shop was part of TikTok’s strategy to leverage its substantial user base and compete with rapidly growing online sellers such as Shein and PDD Holdings’ Temu, both of which have seen swift expansion partly due to their effective use of TikTok for marketing.
This new arrangement with TikTok will see a purchase of 75.01% of Tokopedia, Indonesia’s largest e-commerce platform, at a cost of US$840 million. Additionally, TikTok Shop’s Indonesian operations will be integrated into the expanded Tokopedia entity.
Following this announcement, shares in GoTo, a company with a diverse portfolio including ride-hailing and delivery alongside its financial services, experienced an 8.3% drop, a response attributed by some to profit-taking after a recent surge in anticipation of the TikTok deal.
Both companies, in a statement released on Monday, have emphasised their commitment to a pilot phase for this partnership, to be conducted in close coordination with, and under the supervision of, the appropriate regulatory bodies. This move signals TikTok’s continued ambition to tap into the e-commerce market and its adaptability in navigating the regulatory landscapes of different regions.