The TikTok Tokopedia partnership was announced in a joint statement by the two companies, which will help the Chinese giants continue their e-commerce work in Indonesia. However, this partnership has cost TikTok a whopping $1.5 billion, and the rest of the details can be found below!
In a major deal, TikTok, the popular Chinese app, is investing a huge $1.5 billion in Tokopedia, which is the largest online store in Indonesia. This is happening because TikTok wants to get back into the online shopping business in Indonesia, which is the biggest country in Southeast Asia. TikTok plans to spend $840 million to buy 75.01% of Tokopedia and is also putting in more money to help the business grow. This partnership is a big step for TikTok to become a big player in the thriving online shopping market in Indonesia.
The TikTok Tokopedia partnership came after a regulation
TikTok had to stop its online shopping service, TikTok Shop, in Indonesia because the country made a rule against social media platforms doing online shopping. This rule, which started in September, was made to protect smaller shops and the information of people using the platforms. Now, TikTok and Tokopedia are working together to follow the rules by trying things out first with the help of the people who make the rules. This careful way of working shows they are serious about overcoming challenges and making their services work well together.
This collaboration is more than just TikTok buying part of Tokopedia. TikTok also wants to add its business in Indonesia from TikTok Shop into Tokopedia. With this addition, TikTok aims to use its big group of users, which is 125 million people in Indonesia, to make TikTok Tokopedia a popular choice for online shopping. Since TikTok Shop is only in a few countries right now, including the United States, Britain, and Singapore, bringing it to Indonesia is a smart move to reach the many people who use social media here.
TikTok Tokopedia collaboration will conclude in “some time”
The $1.5 billion that TikTok is putting into Tokopedia isn’t happening all at once. The companies stated that this huge amount will be invested “over time” in their business partnership. Initially, as reported by Reuters, TikTok is paying $840 million to get its ownership stake.
The joint business called a joint venture (JV), means both TikTok and Tokopedia will own part of it. TikTok’s ownership is 75.01%, and GoTo, the parent company of Tokopedia, will have 24.99%. This ownership setup is crucial, especially because TikTok faced issues with its own online shopping service called TikTok Shop Indonesia.
Indonesia is a big player in Southeast Asia’s e-commerce world, estimated to be worth between $50 billion and $60 billion. This value is a significant chunk, making up about two-thirds of the entire region’s e-commerce revenue. Much of this comes from small and medium-sized businesses (MSMEs) selling on online marketplaces.
TikTok and GoTo are well aware of this and are actively working to respect and support small businesses. They highlighted that more than 90% of the combined business’s merchants are micro, small, and medium enterprises. This partnership aims to bring about joint initiatives to help these businesses thrive.
TikTok, owned by ByteDance, launched TikTok Shop Indonesia in 2021 and had about 106 million users in Indonesia as of October, making it the second-largest market after the U.S. Indonesia, with 167 million active social media users, ranks as the third-biggest market in Asia, following China and India. In recognizing the importance of having a local connection, TikTok has conceded that partnering with an Indonesian company, like Tokopedia, is crucial for success in this dynamic and rapidly growing market.
Featured image credit: Solen Feyissa/Unsplash
