Just how important is ecommerce to TikTok?

What was once an unthinkable nightmare for TikTok executives has become reality: Indonesia has banned direct ecommerce transactions on social media.

Now the firm’s ecommerce arm, TikTok Shop, can’t operate as it once did in the country.

TikTok, though, is still a giant and one of the world’s most prominent tech companies. Just how badly will the new policy hurt it?

As the graphic above shows, ecommerce takes up a small portion of the company’s revenue in Southeast Asia. The data comes from the filings of its Singapore-incorporated entity, which covers the region, South Korea, Russia, India, New Zealand, Turkey, and Kazakhstan.

While the company’s US$179.9 million in ecommerce revenue last year is small – at least compared to the US$2.4 billion it earned from advertising and the US$2.1 billion from livestreaming – the segment has been growing rapidly for the company.

In 2021, amid TikTok’s early forays into the industry, the firm’s ecommerce revenue was only at US$1.9 million. That means revenue rose by more than 9,000% year on year, far outpacing the growth of other revenue streams. Of course, ecommerce was starting from a much lower base.

Such a rapid year-on-year increase clearly isn’t sustainable, but it does hint at just how promising an area ecommerce is for the company. That promise has taken a dent over the past few weeks.

For our full analysis on how Indonesia’s ban could play out for TikTok Shop, check out the story here.

Credits

Graphics: Yofie Jordan and Peter Cowan

Editing: Jaclyn Tiu