June 16, 2024

TikTok Partners with GoTo in a $1.5 Billion Deal to Relaunch Online Shop in Indonesia

TikTok has announced a $1.5 billion investment in GoTo, enabling the Chinese-owned short video app to restart its online shop in Indonesia. The announcement comes after social media sales were banned in Indonesia in September to protect small businesses from losing out to e-commerce giants. As a result, TikTok closed its online shopping business in October. However, the deal with GoTo will allow TikTok to resume its online shopping services in Indonesia, one of TikTok’s largest e-commerce markets.

Under the agreement, TikTok will acquire 75.01% of Tokopedia’s shares for $840 million, giving it a controlling stake in the popular local online shopping platform. Tokopedia and TikTok Shop Indonesia’s businesses will be combined under the existing PT Tokopedia entity. Additionally, TikTok has committed to investing over $1.5 billion in the enlarged entity over time to provide future funding without dilution for GoTo.

The partnership between TikTok, Tokopedia, and GoTo is expected to transform Indonesia’s e-commerce sector, creating millions of new job opportunities over the next five years. The deal is set to close in 2024 after a supervised pilot phase. As part of the agreement, Tokopedia will receive a $1 billion promissory note from TikTok.

The launch of the partnership will take place on Tuesday, coinciding with Indonesia’s national online shopping day, with the first campaign to be rolled out on both TikTok and Tokopedia.

Indonesia’s e-commerce market has long been dominated by platforms such as Tokopedia, Shopee, and Lazada. However, TikTok Shop has gained a significant market share since its launch in 2021. With 125 million users, Indonesia is TikTok’s second-largest global market, following the United States.

Experts believe that this investment plan will bring greater competition to Indonesia’s e-commerce market, benefiting consumers in the country. Tauhid Ahmad, the Executive Director of the Jakarta-based Institute for Development of Economics and Finance, stated that TikTok’s entry will strengthen the competition among e-commerce players, offering consumers better choices. Ahmad also highlighted that it is easier for TikTok to invest in one of Indonesia’s largest e-commerce platforms rather than creating its own.

The ban on social media sales in Indonesia was implemented amid growing calls for regulation of e-commerce platforms. Offline sellers raised concerns about their livelihoods being threatened by the cheaper products sold online. As a result, social media firms in Indonesia are now only allowed to promote products on their platforms and cannot conduct direct transactions. Indonesia is the first country in the region to take action against TikTok’s growing popularity as an e-commerce site.

The ban on social media sales was another setback for TikTok, which has faced intense scrutiny globally over data security and allegations of ties to the Chinese government. As a subsidiary of Beijing-based ByteDance, TikTok has more than one billion users, making it one of the most popular social media platforms worldwide.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it