来源 | 伯虎财经（bohuFN）
Author | Dreamed
Two months after the e-commerce business shut down in Indonesia, TikTok finally chose to invest in a local company to solve compliance problems.
On the morning of December 11, TikTok issued an announcement announcing that it had reached a strategic cooperation with GoTo Group, Indonesia's largest Internet company. According to the agreement, TikTok's Indonesian e-commerce business will be merged into "PT Tokopedia", an entity of Tokopedia, an e-commerce platform owned by GoTo Group. TikTok acquired a 75.01% stake in the new entity and became the controlling shareholder, while the GoTo Group owns the other 24.99%.
The combined entity will be responsible for operating and maintaining TikTok's shopping function in Indonesia, and TikTok will invest more than US$1.5 billion to fund the business for the future, but the deal will not result in a dilution of GoTo's stake.
As a result, TikTok perfectly avoided the "minefield" demarcated by the Indonesian Ministry of Trade and re-entered the Indonesian market.
01 TikTok电商重返印尼
Let's first review the beginning and end of TikTok's exit from Indonesia. On October 4, TikTok e-commerce was forced offline in Indonesia, not to mention that more than 6 million merchants were caught off guard, and even insiders felt caught off guard.
In fact, TikTok has always attached great importance to the Indonesian market and has shown favor many times. For example, in June this year, TikTok CEO Zhou Shouzi went to the Indonesian capital to attend the "TikTok Southeast Asia Influence Forum 2023", not only wearing Indonesia's traditional badi cloth shirt, but also said, "We will invest billions of dollars in Indonesia and Southeast Asia in the next few years, including $12.2 million in the next three years, to support more than 120,000 small and medium-sized enterprises, support entrepreneurs and young people." ”
Unexpectedly, Indonesia turned its face faster than a book.
On September 25, the Indonesian government issued a ban on social media from being used as a platform for the sale of goods, and only for the promotion of goods or services, in order to protect the interests of the country's e-commerce platforms and small and medium-sized enterprises. According to Usman Kansong, director of Indonesia's Department of Public Communications, Facebook, Instagram and WhatsApp are not included in social commerce, and e-commerce platforms with live shopping functions such as Shopee or Tokopedia are not social platforms.
The day after the ban was issued, the Indonesian government required TikTok's shopping feature to be separated from TikTok and become a separate app within a week or it would be shut down. On October 4, TikTok e-commerce officially went offline in Indonesia.
Why TikTok?
This is inseparable from the fact that it has developed too vigorously in Indonesia in the past two years.
According to a report by market intelligence firm Cube Asia, live shopping sales in Indonesia reached US$5 billion in 2022, with about 55% of internet users in the country shopping on social media platforms such as Facebook, Instagram, TikTok, WhatsApp, Line and Zalo, with an average of US$100 per person spending on social commerce per year. Among the many social e-commerce, TikTok occupies a very high share, as high as 46%.
One important reason is that Indonesia is TikTok's second-largest user market after the United States, with 113 million users.
There is a saying that "those who win Indonesia get Southeast Asia", with a population of 270 million, an annual GDP growth rate of stable at 5%, an average age of around 30 years old, and strong consumption power, etc., make Indonesia a "sweet spot" in the eyes of major e-commerce platforms. For example, according to Bank Indonesia, e-commerce sales are expected to grow more than sixfold from 2018 to 2024 to reach US$44 billion.
It's no surprise that Indonesia is where TikTok's e-commerce business started, and it is also the market with the highest GMV and the best results.
In February 2021, TikTok Shop was launched in Indonesia, where merchants can recommend products to TikTok users through short videos, live broadcasts, product displays on the homepage, and other features within TikTok, turning users into consumers. By cooperating with merchants, Daren helps merchants use their personal influence to recommend products and obtain sales shares or cooperation benefits.
In just one year, the share of the Indonesian e-commerce market has grown to 5%. The following year, TikTok Shop's GMV in the Southeast Asian market soared by more than 400% to $4.4 billion. With the launch of the fully managed model, according to reports, TikTok Shop has increased its GMV target to US$12 billion in 2023, and its share of the Indonesian e-commerce market will also jump to 13.2%. Currently, TikTok has 325 million monthly active users in Southeast Asia, and Indonesia accounts for 125 million, contributing 44% of Southeast Asia's overall GMV in the first half of the year.
According to the "TikTok Ecological Development White Paper in the First Half of 2023" released by Fastdata, Indonesia will become the country with the largest number of TikTok Shops and products in the world in the first half of 2023, maintaining rapid growth.
At the same time, there is still a big gap between the competitiveness of Indonesian local manufacturers' products and Chinese products, and in order to protect Indonesian local sellers, Indonesia has added more tariff costs to cross-border e-commerce. According to statistics, starting from 2021, e-commerce platforms such as Shopee and Lazada, Southeast Asian e-commerce platforms, have stopped attracting investment from cross-border sellers, and are only open to local sellers.
TikTok has previously said that 100% of the sellers on the platform have registered entities in Indonesia, emphasizing that the Indonesian station of TikTok Shop is actually a trade platform for local small and micro enterprises in Indonesia. However, according to the report of "Beluga Whale Goes to Sea", the top few e-commerce live broadcasts in Indonesia are all incubated by Chinese teams, and most of the products are imported from China.
As a result, many offline merchants in Indonesia began to complain that the development of TikTok has caused them to lose more than 50% of their profits, and the cheap imported products have made them uncompetitive.
重返印尼后的TikTok也吸取教训。
After realizing the control of Tokopedia, TikTok said in a statement that it will work with GoTo Group to provide a series of support in marketing, branding and internationalization to help local small and medium-sized businesses develop. On the day of the resumption of launch, TikTok and Tokopedia will also jointly launch the "Beli Lokal" campaign to help the development of local businesses in Indonesia.
02 TikTok Adventures
It's not the first time TikTok Shop has hit a wall, and it won't be the last.
In June 2020, Douyin established an e-commerce department and officially ended up doing e-commerce. The following year, Douyin's e-commerce turnover reached more than 800 billion, making it the fastest-growing e-commerce platform in China at that time.
TikTok Shop has also borne such expectations, basically copying the domestic Douyin e-commerce style, relying on the sale of cost-effective "white label" goods and the live broadcast model to attract brands at all levels to settle in, and then launch shelf e-commerce forms such as search and malls.
But the difference between China and abroad is more violent than TikTok imagined.
The first is whether the model of live streaming can work.
As mentioned earlier, TikTok Shop has already made some achievements in Southeast Asia, but the competition is not small. According to a report by Singapore's VC Moten Ventures, in 2022, Shopee, Tokopedia, and Lazada will account for 36%, 35%, and 10% of the Indonesian market, respectively, and TikTok will rank fifth with a market share of 5%. As a latecomer, can it maintain its growth momentum in the face of fierce market competition? Although TikTok and Tokopedia have reached a cooperation, it is difficult to say whether it can become a beautiful talk.
And the European and American markets, which TikTok has always wanted to win, don't seem to be so enthusiastic about "live streaming".
According to a survey by Coresight Research, 74% of Chinese consumers have made purchases in live streaming in 2022, while in the United States, 78% have not entered a shopping live stream. Buy something, go to Amazon, scroll through TikTok, have fun. Some industry insiders bluntly said, "At present, only TikTok is the only platform in North America that is promoting live e-commerce, while in China, in addition to Kuaishou, Douyin, Taobao, Pinduoduo, and JD.com, we can do it together to build the ecology." ”
Some netizens described this as like using WeChat Alipay to pay in China, while cash and credit cards abroad are not easy.
In addition, compared to Douyin, TikTok's shopping recommendations are less accurate.
Douyin has almost exhausted its advertising business before it started to do e-commerce, and with the accumulation of rich brand placement data, it can capture the preferences of users.
But TikTok's traffic is large, but it is not accurate. According to Sensor Tower's data, TikTok's global penetration rate is 16%, while the global penetration rate of other social platforms YouTube and Facebook is more than 60%. As a result, merchants cast streams for the live broadcast room, and it often happens that they can't attract the target customers they want. In order to sustain growth, you have to spend more budget and not refine but only to complete, so that you can achieve transaction conversion. This undoubtedly puts more pressure on merchants' profits.
The second is the challenge of localization management.
In fact, some of the problems that TikTok has had in Indonesia have fallen behind in the UK.
TikTok's closed-loop e-commerce was opened up in the UK as early as now, and it was difficult to start in the exploration, until mid-2022, when the British e-commerce team suffered setbacks due to cultural conflicts, labor relations disputes, management team adjustments and other reasons, making TikTok's "European strategy" also far away.
According to Caixin, the main reason is that the ecological problems of British e-commerce platforms stem from the low entry threshold for merchants, which leads to the influx of counterfeit products. For example, in the 2021 UK "Black Friday" promotion, users went to the corresponding store to place an order after "planting grass" in the live broadcast room of the talent, but found that the goods were not on the right board, and the empty package was issued, which caused the reputation of the talent to be damaged, and the platform received a large number of complaints from users and institutions.
But as a result, no one dealt with it for two months, and the trust between the three ecological roles of merchants, influencers, and service providers collapsed.
Indonesia also encountered this problem, and from the beginning, it was only limited to local merchants to open stores, but because the TikTok merchant and service provider team did not establish an evaluation and control model in a timely manner, the platform was almost unable to do substantive merchant certification at first. According to relevant sources, before July 2022, cross-border stores and local stores can easily register a large number of stores or buy stores through channels, "Inferior merchants have repeatedly settled in, the platform does not pay attention to brand building and intellectual property protection, and in Southeast Asia, it is in the footsteps of Shopee to engage in low-price fighting through price wars." ”
03 Write at the end
TikTok has achieved unimaginable global success, with nearly 1.5 billion users in 2022, almost twice as many as all TikToks. But in terms of revenue, TikTok's commercial revenue will be $10 billion in 2022, accounting for only one-eighth of ByteDance's revenue.
You have to admit that TikTok's imaginative commercialization prospects, just two years ago, Byte's entire overseas revenue was only $1.2 billion. But you can't ignore the fact that at a time when geopolitical tensions are becoming more and more tense, TikToks must spend more energy to deal with these situations.
In the past, domestic giants could learn from foreign giants, but now, China's Internet giants are on the front line, and some roads have to be carved out on their own.
Reference Sources:
1、财新周刊:TikTok电商突围
2、最话Fun Talk:TikTok该如何解局印尼?
3. Enkawa Research Institute: Who caused the commercialization dilemma of Tiktok?
4, Li Chengdong: Why is it difficult for TikTok to copy Douyin?
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