TikTok announces $1.5b investment to revive online shop in Indonesia

TikTok unveiled a $1.5 billion investment in a deal with GoTo, aiming to resurrect its online shopping venture in Indonesia. Following the country’s ban on social media sales in September, TikTok had to shutter its online shopping operations, impacting one of its key e-commerce markets.

Under the agreement, TikTok will merge its business with Tokopedia, the widely-used online shopping platform owned by GoTo. The combined entity, operating under the existing PT Tokopedia structure, will be majority-controlled by TikTok, empowering the short video app to integrate shopping features into its platform.

The investment commitment of over $1.5 billion by TikTok will facilitate the growth of the joint entity without diluting GoTo’s stake. In a joint statement, the companies expressed their vision to reshape Indonesia’s e-commerce landscape and generate millions of job opportunities over the next five years.

This partnership will undergo a regulatory-supervised pilot before its anticipated completion in 2024. The inaugural campaign is set to launch on TikTok and Tokopedia simultaneously, coinciding with Indonesia’s national online shopping day.

Despite Indonesia’s e-commerce market being historically dominated by platforms like Tokopedia, Shopee, and Lazada, TikTok Shop has secured a significant market share since its 2021 launch. With 125 million users, Indonesia stands as TikTok’s second-largest global market.

The Indonesian government’s ban on direct transactions via social media aimed to regulate e-commerce platforms, responding to concerns from offline sellers who felt threatened by online competitors offering cheaper products. This regulatory move positioned Indonesia as the first country in the region to take action against TikTok’s rising prominence in e-commerce.

The ban added to TikTok’s challenges, as the platform faced heightened scrutiny worldwide over data security concerns and alleged ties to the Chinese government. As a social media giant boasting over one billion users globally, TikTok continues to navigate complexities in various nations, with this latest investment signaling a strategic pivot in the Indonesian market.