TikTok to Invest $1.5 Bn in Tokopedia for an e-commerce re-launch in Indonesia

Can you hear the music? Well Indonesia might soon be able to. TikTok, the popular short form video app has unveiled its plans to restart its endeavour in the world of e-commerce. It made the hint by agreeing to invest $840 million in acquiring a majority stake (75.01%) in Tokopedia, Indonesia’s leading e-commerce platform. Tokopedia is owned by listed Indonesian tech upstart GoTo.

TikTok, owned by ByteDance also hinted that it plans to invest further in Tokopedia in the coming future.

The move comes after closure of TikTok’s very own e-commerce unit in Indonesia as the country prohibited social media platform-based online shopping. The ban aimed to protect small merchants and most importantly, user data. 

The partnership aims to create an Indonesian e-commerce powerhouse by combining the forces of Tokopedia and TikTok. The combination of Tokopedia’s local presence and TikTok’s extensive market reach is bound to draw in a lot of customers as it scrambles for newer markets amid impending and existing bans in several of the world’s largest internet markets. 

GoTo, the Indonesian tech conglomerate that owns Tokopedia, sees this collaboration benefitting not only e-commerce but also on-demand services and fintech.

According to the deal, TikTok will purchase a 75.01% stake in Tokopedia, and then integrate TikTok Shop’s Indonesia business into the grown Tokopedia entity. 

TikTok has a huge user base, with around 125 million using the app on a regular basis. The numbers are only increasing. It has been looking for a method to convert its user base into a source of revenue through e-commerce. This dream of TikTok now seems possible as it prepares to tap into the 270 million active social media users of Indonesia.

As of now, TikTok Shop is only limited to a few nations, according to its website, United States, Britain and Singapore to be specific. 

The deal, expected to conclude by Q1 2024, includes TikTok purchasing a major chunk of Tokopedia. As part of the agreement, the Indonesian conglomerate will receive a $1 billion promissory note from TikTok in return to cater to working capital needs.