TikTok, the cool app for short videos, is making a massive move: they’re splashing $1.5 billion to take charge of an e-commerce piece of GoTo Gojek Tokopedia in Indonesia. Why? ‘Cause they got sidelined from online shopping when Indonesian officials put a stop to it, all in the name of protecting smaller businesses and folks’ data.
TikTok’s Shopping Plans
Back in October, Indonesia slammed the brakes on online shopping through social media platforms. That meant TikTok had to shut down its shopping service called TikTok Shop.
A Big Market Shift
Indonesia was a key spot where TikTok launched TikTok Shop earlier this year. They wanted to tap into their huge user base and take on big online sellers like Shein and PDD Holdings’ Temu, who got a boost from TikTok’s viral marketing.
GoTo, which does ride-hailing, delivery, and finance stuff, took a hit in the stock market—shares fell by 8.3% after the news of TikTok’s shopping splurge. Some investors cashed in on the stock’s recent rise, expecting a deal with TikTok.
The Analyst Take
An analyst, Maximilianus Nico Demus, thinks this partnership might shake things up in the market. It’s like, what happens next?
The Big Buy
Here’s the deal: TikTok’s getting 75.01% ownership of Tokopedia, the biggest e-commerce platform in Indonesia, for $840 million. Plus, they’re merging in TikTok Shop’s Indonesia gig into this beefed-up Tokopedia.
The two companies are teaming up for a trial period, playing nice with the regulators’ watchful eyes, before going all-in.
Indonesia’s Big Social Media Scene
Loads of people in Indonesia—over 270 million—love hanging out on social media. That’s a huge pool of potential shoppers.
TikTok’s Game Plan
TikTok, owned by China’s ByteDance, has a whopping 124 million users in Indonesia. They’re hoping to turn this big user gang into a major money spot for e-commerce.
The Cash Flow
This whole thing is set to go down by early 2024. TikTok’s throwing a $1 billion promissory note to Tokopedia, kind of like an IOU to cover their expenses.
More Cash, More Growth
TikTok’s going all-in, promising over $1.5 billion in the future for this bigger partnership. The goal? Pumping more money into this business without diluting GoTo share.
Tokopedia’s got some serious rivals in the Indonesian e-commerce ring. Shopee from Sea, based in Singapore, and Lazada from Alibaba in China are playing big in this market.
The Money Game
Indonesia’s e-commerce world is set to boom. A report by Google, Temasek Holdings, and Bain & Co. says it could grow from $62 billion this year to a whopping $160 billion by 2030.
TikTok’s making waves, gearing up to get back in the shopping game. With their eye on Indonesia’s booming e-commerce scene, they’re aiming big to make some serious moves.