TikTok is planning to secure a controlling stake in an e-commerce unit of Indonesia’s tech firm, GoTo Gojek Tokopedia. As part of the deal, TikTok will purchase 75% of the company at $840 million and will fold in its TikToK Shop service within Tokopedia. Overall, the social media giant will invest $1.5 billion over time to fuel the new entity’s growth.
TikTok wants to regain its foothold in the Indonesian market after being booted out due to a government ban on social commerce sales. Indonesia’s Trade Minister Zulkifli Hasan announced in September that the country was banning e-commerce transactions on social media networks. According to Hasan, the new regulations were set to ensure equality for business competition—particularly setting the playing field for offline merchants—and avoid “predatory pricing.”
The Rise of Social Commerce
Social commerce leverages social media platforms to promote and sell products and services. According to Statista, the global revenue of social commerce is expected to surpass $6 trillion by 2030. That’s no surprise since more consumers are increasing their time on social media platforms, boosting their chances to discover new products and services via social media advertising.
Social commerce isn’t new, it’s been growing in popularity on various platforms, including Instagram, and more recently, TikTok. What makes TikTok so irresistible to customers is the video feature, where sellers can interact with potential customers in real-time. Plus, the entire customer journey is enhanced as all major points on the journey are featured: the discovery of the product, the research on the product, the purchase, as well as customer service. Overall, it’s a more engaging, entertaining, and convenient way to shop, enabling the consumer to see the product being used, as well as having the opportunity to ask questions.
More companies have been mirroring TikTok’s discover feeds in their own efforts as a way to drive up engagement, and ultimately bolster sales. Earlier this year Klarna, partnered with celebrity socialite Paris Hilton to draw in Millennials and Gen Z consumers via a discovery page the company created.
Last year, e-commerce giant Amazon launched Inspire, an app that has a similar type of discovery, but unlike what Instagram and TikTok our doing, it’s less entertainment-focused and more advertising-focused.