Chinese app TikTok is taking one more major leap into Indonesia’s e-commerce market. In another striking US$1.5 billion deal, TikTok is set to become a key player in the Indonesian digital commerce space by acquiring a significant stake in GoTo Gojek Tokopedia’s e-commerce unit. That is, if all goes smoothly this time.
Temu and Shein hold control over the online shopping scene in Indonesia
This move marks TikTok’s re-entry into Indonesia’s e-commerce, following a temporary suspension by regulators. The investment is not just a financial transaction; it’s a statement of intent. TikTok is ready to tap into Indonesia’s booming online shopping sector, currently led by fast-growing platforms like Shein and PDD Holdings’ Temu.
The deal has sent ripples through the market, with GoTo’s shares experiencing an 8.3% drop post-announcement. Analysts are closely watching to gauge the impact this partnership will have on the market landscape.
The transaction details reveal TikTok’s plan to acquire 75.01% of Tokopedia, Indonesia’s largest e-commerce platform, for US$840 million, integrating its TikTok Shop business in Indonesia. This pilot partnership, closely monitored by regulators, is a significant step for both companies.
Indonesia, with a population of over 270 million and a high rate of social media engagement, presents a fertile ground for TikTok’s expansion. The company boasts 124 million users in Indonesia, and this deal could transform this user base into a significant e-commerce revenue stream.
The deal, expected to close by early 2024, includes a US$1 billion promissory note from TikTok to Tokopedia, ensuring operational funding. TikTok’s commitment to inject over US$1.5 billion into this venture over time underscores its dedication to establishing a strong foothold in the region.
With Indonesia’s e-commerce industry projected to grow from US$62 billion to approximately US$160 billion by 2030, TikTok’s strategic investment positions it at the forefront of this expanding market. This move signifies a major shift, not just for TikTok and GoTo, but for the entire e-commerce landscape in Southeast Asia.
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(Via)
