TikTok, a subsidiary of ByteDance, has reached an agreement to invest in Tokopedia, the e-commerce unit of GoTo, Indonesia's largest Internet company. The two parties will also cooperate on an online shopping service. This cooperation may create a template for TikTok to provide TikTok e-commerce (TikTokShop) services globally.
People familiar with the matter said TikTok has agreed to cooperate extensively with Tokopedia in multiple areas rather than compete directly with the latter. The companies aim to announce details of the strategic collaboration as early as next week. While the two companies have reached an informal agreement, the final details of the alliance are still being ironed out and could change before being announced. The agreement is subject to regulatory approval and could still fall apart.
For TikTok, investing in Tokopedia will be the company’s first such cooperation for TikTok e-commerce services. TikTok e-commerce is a rapidly growing business under TikTok. It is entering the online shopping market from the United States to Europe. However, its actions to challenge rivals Sea and Tokopedia in the Indonesian e-commerce market came to an abrupt end because the Indonesian government announced a ban on TikTok engaging in e-commerce transactions through social platforms after receiving complaints from local merchants.
ByteDance’s ultimate goal is to restore online shopping services in Indonesia, Southeast Asia’s largest retail market. TikTok was the only platform immediately affected by Indonesia's new regulations and has stopped online shopping services. There were reports last month that TikTok and GoTo were discussing a potential investment, but another option was a joint venture, which would likely require building a new e-commerce platform. Representatives for TikTok and GoTo declined to comment.
Now, working with a local company that knows the ropes may become a template for TikTok to develop e-commerce services in other countries. After all, the company is also looking to expand in other markets such as Malaysia. The Malaysian government has also previously stated that it is willing to review the influence of overseas companies such as TikTok.
For GoTo, cooperation with TikTok is a double-edged sword. First, the tie-up could be risky because it would help a major online retail competitor establish its presence in Indonesia. But at the same time, this will also give GoTo a strong global social media partner to promote shopping, logistics and payment totals between the two companies.