TikTok Shop’s logistics trade-off in ID

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In focus

• ​​Why TikTok Shop veered off Shopee’s logistics track in Indonesia
• From our archives: How Batam is striving to become Southeast Asia’s next data center hub
• Why Shein is planning payouts for late-stage investors before IPO

Hello reader,

TikTok Shop and Shopee have often moved in lockstep across Southeast Asia. But in Indonesia, TikTok Shop has made a deliberate choice to diverge from Shopee’s strategy.

Shopee built SPX during the pandemic, when ecommerce demand was booming and capital was still abundant. Today, though, the economics of building logistics infrastructure look far less attractive.

That appears to be the challenge TikTok Shop is facing in Indonesia. Despite acquiring GoTo Logistics’ assets in 2024, TikTok Shop has refrained from making major investments in the logistics business and instead shut down its fulfillment services last year.

In today’s Top Story, I examine why TikTok Shop has been reluctant to build its own in-house logistics network in the country. Timing is only part of the story. Regulatory uncertainty and shifting policy in Indonesia may also have made the company think twice about committing billions to long-term logistics infrastructure.

What’s striking is that scale doesn’t appear to be the problem. TikTok Shop already commands the second-largest ecommerce market share in the country after Shopee, giving it enough volume to justify building its own network. Yet it has chosen a different path.

Jofie Yordan, journalist

Top Story

Behind TikTok Shop’s logistics gamble in Indonesia

Image credit: Ulla

TikTok Shop’s decision to scrap its fulfillment operation in Indonesia means the company will continue to rely on J&T Express for most of its deliveries. This prevents the social commerce platform from having greater control over its delivery service quality and margins.

Given the current macroeconomic environment and rising costs, building logistics infrastructure may not be the most strategic move for TikTok Shop. The bigger question is whether relying on J&T Express will remain a viable long-term game plan as the platform continues to scale.

From our archives

Batam’s data center boom is just getting started, with caveats

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