In order to comply with the newly revised regulations in Indonesia, TikTok Shop has announced the official closure of its e-commerce transactions in Indonesia.
According to TikTok's official email, TikTok Shop will no longer provide TikTok Shop services to Indonesian users from October 4, 2023, at 17:00 TikTok will follow Indonesian regulations and work to adapt its products to find innovative ways to support the long-term growth of Indonesia's SME community.
According to reports, the Indonesian government signed the latest trade regulations that prohibit social media (e.g. TikTok, Facebook, Instagram, etc.) from involving e-commerce transactions within their products. Zulkifli Hasan, Indonesia's Minister of Trade, said, "It is important to separate social media from e-commerce so that the algorithms are not completely controlled and can prevent personal data from being used commercially." This means that Indonesian residents will no longer be able to place direct shopping orders through social media such as TikTok, Facebook, and Instagram.
Indonesia is TikTok's second-largest market, with 113 million users, and nearly half of the population are TikTok users, a number second only to the US market with 116.5 million users. It is also the first country site to open a TikTok Shop closed-loop e-commerce, with a GMV that far exceeds that of other countries, and thus gets the most attention. Especially sellers and brands planning to sail to Southeast Asia.
According to MomentumWorks' latest report: in the GMV structure of e-commerce in six Southeast Asian countries in 2022, the Indonesian market has a sole 52.1% market share.
TikTok Shop may set up a separate e-commerce app in Indonesia, but there is no clear timeframe on exactly how long it will take to go live. "If TikTok wishes to run e-commerce services in TikTok Shop Indonesia, such services must be separate (with their own business license). We will assist in managing the business license in accordance with the latest regulations," Indonesian Trade Minister Zulkifli Hasan told the media on October 4th.
EchoTik learned from the Indonesian seller community that there are two main ways for Indonesian sellers to deal with the unexpected situation:
A part of the sellers are ready to continue to deepen the local plowing in Indonesia, especially the Chinese who are about to land or have already landed local factories. "The Indonesian market is large in volume, with a population of 270 million. We have traditional platforms such as Shopee and Lazada as a foundation, and we have also started private domain operations, so overall it is still manageable. Having challenges means there are opportunities." A seller who has already established a factory and team in Indonesia told us.
There are also sellers with light asset investment who are ready to look at opportunities in other countries in regions such as Southeast Asia, North America and Latin America. "Malaysia's terroir and culture are more similar to Indonesia, and TikTok e-commerce in the US, the Philippines, Vietnam, and Thailand are also growing fast, with an explosion of traffic and more openness to cross-border e-commerce."
No one has been hit harder by this sudden measure than the big sellers and head honchos who specialize in a single channel of TikTok Shop. However, many sellers still have confidence and expectations for TikTok Shop Indonesia, waiting for the return of e-commerce.
The main remedies given to you at the moment are as follows:
1. Quickly build a landing page or independent station as a transition to undertake TikTok advertising traffic; or diversion to other e-commerce platforms such as Shopee to complete the transaction. At present, from the feedback of sellers, the conversion rate of this way is low, and many buyers are still not very comfortable with it, but the field view of the live broadcast is still relatively good, and it also brings a lot of hope. It will take some time for buyers to get used to the new way of trading.
2 For sellers who want to move their target market to other Southeast Asian countries, they can contact logistics companies to move their inventory and live room supplies to other countries.
3. for sellers who want to completely withdraw from the local market, call off factory orders, dispose of inventory locally, and speed up the return of capital: work with local distributors, transfer pallets and warehouses to other traders, resell company leases, small shop/window numbers, and other fixed assets to minimize losses.
As a third-party TikTok Shop data platform, EchoTik also hopes to do its bit to help the majority of TikTok Shop Indonesia sellers:
If you have the need to resell/recycle your company's pallets or related assets and want to find local sellers/buyers/service providers, you can use the small program we developed for you: Echo cross-border notification: the industry's first small program that promotes the linking of resources, and enables cross-group communication and docking between sellers and service providers.
EchoTik.live( https://echotik.live ) is a third-party platform for analyzing international TikTok short videos and live e-commerce data. We have currently received angel round financing in the tens of millions. Based on big data and continuous exploration in the field of AI, EchoTik (https://echotik.live) closely caters to user needs, driving product and service iteration and upgrades. We help global sellers, creators, MCNs, and brands to access easy marketing methods for short videos and live streaming rooms, enabling them to sell and promote products.