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Miguel Cordon · · 5 min readTikTok Shop gets winning hand in Indonesia via Tokopedia mega deal
Thu Huong Le contributed to this report.
After much speculation, TikTok Shop is making a strong comeback in Indonesia via a mega deal with Tokopedia. This follows its two-month ban in the country due to new rules on social commerce.
The deal, which is still subject to regulatory approval, surprised some analysts in terms of the structure. TikTok will invest US$1.5 billion in the merged entity, acquire a 75% stake in Tokopedia, and retain its shopping arm.
Photo credit: TikTok
“This deal is much better for TikTok than I had anticipated,” says Jianggan Li, founder and CEO of Momentum Works. “It essentially takes over Tokopedia at no cost.”
“If you can’t beat them, join them”
That’s how Paul Srivorakul, co-founder and group CEO of aCommerce, describes the situation. GoTo can offer “everything that TikTok was looking to build” in Indonesia, he says, including a nationwide logistics network and financial products.
“This merger gives TikTok access to a powerful back-end and operations that will help them scale the business fast,” he adds.
For Tokopedia, given its significantly larger share of Indonesia’s total gross merchandise value (GMV) – which sits at 35% compared to TikTok Shop’s 5% – the decision to pursue a merger seems strategic, enabling it to avoid costly subsidy wars for market dominance, according to Srivorakul.
As Tech in Asia previously analyzed, TikTok mostly relies on third-party logistics players such as J&T Express and Ninja Van for delivery, affecting its ability to offer competitive shipping costs.
See also: TikTok Shop’s logistics dilemma: to build or not to build
Even without having an in-house logistics infrastructure, TikTok Shop has already become a formidable competitor in Southeast Asia’s ecommerce space. Last year, it recorded a GMV of US$4.4 billion in the region, a 363% growth from 2021.
By nearly offloading Tokopedia, GoTo can focus on its on-demand and financial services with “possibly limited distraction from the competitive ecommerce operations,” says Roshan Raj, a partner at RedSeer Strategy Consultants.
Angus Mackintosh, founder of CrossASEAN Research, agrees that this large divestment would de-risk GoTo’s ecommerce business in the country.
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Acquiring a 75% stake in Tokopedia puts TikTok Shop in a better position to dominate the country’s ecommerce scene, analysts say.
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