Indonesia, a crucial market for TikTok‘s e-commerce, recently put the brakes on the platform’s online retail activities. This ban not only casts doubt on TikTok’s worldwide revenue goals but also sends a warning signal to social commerce platforms across Southeast Asia.
TikTok’s Chinese counterpart racked in $205 billion last year
TikTok had high hopes pinned on Southeast Asia’s flourishing e-commerce market, particularly Indonesia. The country accounted for almost 60% of TikTok’s e-commerce revenue in the region, according to Cube Asia. William Yuen Yee, a research assistant at the Columbia-Harvard China and the World programme, believes TikTok’s “ambitious global revenue goals” now hang in the balance.
In the wake of Indonesia’s move, traditional merchants and offline marketplaces in other Southeast Asian countries are likely to appeal to their respective governments for a similar ban. Jakarta’s decision could also serve as a boon for e-commerce platforms less dependent on social media clout. Li Chengdong, founder of Beijing-based consultancy Dolphin, noted that TikTok’s e-commerce efforts haven’t been stellar in Western markets. The ban in Indonesia, he says, is a “major blow.”
The ban also raises questions about the sustainability of the live-streaming e-commerce model, a trend that originated in China. Douyin, TikTok’s Chinese counterpart, has successfully turned live-streaming into a massive revenue generator, racking up nearly $205 billion last year, according to Beijing-based Cinda Securities.
The Indonesian prohibition also brings into focus the vulnerabilities of relying too heavily on one market. TikTok Shop generated over $2.5 billion in Indonesia last year, making up a significant portion of its $4.4 billion total e-commerce revenue in Southeast Asia, as per Bloomberg.
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(Via)
