TikTok Shop Survived Indonesia's Axe

A year ago, TikTok’s e-commerce business in Indonesia was booming, allowing users to buy and sell directly through its viral videos.

Indonesia was TikTok’s first major market to test its "Shop" feature, which quickly became one of the most popular ways to shop online in the country, where TikTok has nearly 130 million users. TikTok Shop’s success was a big step for ByteDance, TikTok's parent company, which aimed to replicate the success of Douyin—TikTok’s Chinese counterpart that generated over $200 billion in transactions in 2022.

But TikTok’s e-commerce journey hit a major roadblock when the Indonesian government announced that social media platforms couldn’t process online payments directly.

Officials argued that TikTok’s popularity could lead to an e-commerce monopoly, while some said TikTok lacked the necessary licenses.

While the government didn’t specifically name TikTok, it was clear the new rule targeted them since no other app merged social media and e-commerce so seamlessly. TikTok had to shut down Shop in Indonesia, and for ByteDance, this presented a serious risk. Losing Indonesia could affect its plans for Southeast Asia and potentially inspire other countries to impose similar restrictions.

In response, TikTok acted fast. It started searching for a local partner and soon struck a deal with Tokopedia, one of Indonesia’s biggest e-commerce players and part of the GoTo tech conglomerate. With Tokopedia’s infrastructure integrated into TikTok, they re-launched TikTok Shop on December 11, just in time for one of Indonesia’s biggest online shopping days.

This partnership meant that while shoppers still used TikTok Shop, the transactions were handled through Tokopedia’s system, meeting the government’s requirements and keeping TikTok in the game.

TikTok invested $840 million into this collaboration and now holds majority ownership of Tokopedia. The deal benefits both sides: TikTok brings the reach and resources, while Tokopedia provides a local presence and expertise.

Now dubbed "Shopedia" by some sellers, the combined e-commerce platform is still settling in, with sellers and customers adapting to the new setup. Still, the shift was a hard hit for some small businesses, who lost their main income source during the transition and now face tougher competition with 23 million active merchants.

While TikTok Shop is back in Indonesia, the platform’s e-commerce future in Southeast Asia remains uncertain.

Malaysia, where TikTok also has a big e-commerce market share, is already considering new rules for the platform. And as ByteDance braces for a potential ban in the U.S., its reliance on the Southeast Asian market, where TikTok processed over $16 billion in transactions last year, is greater than ever.