TikTok to offer shopping in Indonesia again after $1.5B deal with e-commerce platform

Paul Godfrey
·2 min read
UPI
TikTok announced plans Monday to restart its Indonesian e-commerce business, TikTok Shop, after signing a $1.5 billion deal to acquire a controlling stake in the country's largest internet-selling platform. File photo by John Angelillo/UPI

Dec. 11 (UPI) -- TikTok announced plans Monday to restart its Indonesian e-commerce business, TikTok Shop, after signing a $1.5 billion deal to acquire a controlling stake in the country's largest Internet-selling platform to get around a ban on social media shopping.

The deal, which is expected to close in the first quarter of 2024, will see TikTok Shop merge with GoTo Tokopedia, which will operate and maintain the shopping element of TikTok's video-sharing app in Indonesia, GoTo and TikTok said in a joint news release.

The announcement, two months after TikTok shuttered its online shopping service in its second-largest market after the United States, comes after the government said it would no longer permit e-commerce transactions on social media platforms in a bid to regulate the industry and protect domestic businesses.

The tie-up, inked just in time for Indonesia's national shopping day Tuesday, is in line with GoTo Group's strategy to bolster its financial and strategic position by growing its total addressable market, allowing TikTok and GoTo to serve the needs of Indonesian consumers and micro and small and medium-sized enterprises more comprehensively.

The companies also claimed partnership will foster the promotion of Indonesian products on Tokopedia -- GoTo's e-commerce platform -- and support merchants to sell products online by providing support in areas such as marketing, branding, and sustainable business practices.

The combined entity will also assist domestic brands to promote their products in international markets, the establishment of technology centers across Indonesia to develop local tech talent and ensuring fair competition in the online market space.

Online retailing is one of Indonesia's fastest-growing sectors with sales forecast to have jumped more than 600% over the six years from 2018 to 2024 to $44 billion in a market dominated by Tokopedia, Singapore's Shopee and China's Lazada until TikTok entered the fray in 2021.

TikTok Shop's share of the market had been growing apace until President Joko Widodo signaled in September that regulation of the sector was coming down the track.