TikTok’s e-commerce debacle in Indonesia poses a challenge for the ByteDance-owned app operator’s global online retail expansion plans. Image: Shutterstock
“TikTok was certainly counting on the Southeast Asian e-commerce market, with major economies like Indonesia, to reach its ambitious global revenue goals,” said William Yuen Yee, research assistant at the Columbia-Harvard China and the World programme and a consultant for independent research firm the Rhodium Group. “Those targets are now in doubt.”
Across other Southeast Asian economies, offline marketplaces and merchants whose interests are affected by social commerce platforms are expected to complain to their governments and lobby for a ban on TikTok Shop, the South China Morning Post reported on Wednesday.
TikTok Shop’s debacle in Indonesia – a market that made up almost 60 per cent of TikTok’s total e-commerce revenue in the region before the ban, according to market research firm Cube Asia – poses a challenge on how the app operator’s online retail business model could move forward, as competition from other shopping platforms in the region is expected to intensify.
TikTok Shop’s Seller Centre app is displayed on the smartphone of a user in Banyuwangi, capital of the Banyuwangi Regency in Indonesia’s East Java province, on July 7, 2023. Photo: Shutterstock
Jakarta’s ban could bode well for other e-commerce platforms that are less reliant on social media influencers to peddle goods through short video clips or live-streaming sessions, according to Li Chengdong, founder and chief analyst at Beijing-based consultancy Dolphin.
“TikTok has been experimenting with e-commerce in the UK, US and other markets with not much success,” Li said. “It performed the best in Southeast Asia, thanks to the traffic in Indonesia. So the ban there will certainly have a major impact [on its overall e-commerce operations].”
Indonesia, Southeast Asia’s most populous country and largest economy, was among the first markets where ByteDance-owned TikTok set up e-commerce activities in 2021, on the back of almost 100 million domestic users on its short video platform.
Indonesia’s ban on retail transactions via social media also showed how certain markets can inhibit TikTok’s live-streaming e-commerce model, which Chinese sibling Douyin pioneered on the mainland, according to Zhang Zhoupin, director of cross-border e-commerce research at consultancy 100ec.cn in Hangzhou, capital of eastern Zhejiang province.
Douyin’s live-streaming e-commerce business recorded almost 1.5 trillion yuan (US$205 billion) in gross merchandise volume (GMV) on the mainland last year, according to an estimate by Beijing-based Cinda Securities.
TikTok Shop last year generated more than US$2.5 billion in GMV in Indonesia, according to a report by Singapore-based consultancy Momentum Works. Its overall e-commerce GMV in Southeast Asia reached US$4.4 billion last year, according to a report by Bloomberg, which cited people familiar with the matter.
