TikTok is buying a majority stake in Indonesia’s largest e-commerce platform Tokopedia, in a deal it says will be worth more than $1.5 billion.
Under the agreement, the Chinese short-form video app will take a “controlling stake” in Tokopedia, with the $1.5 billion investment to be made “over time” as part of further funds to support the business. This will not push up its stake in Tokopedia, whose remaining shares will be retained by its current parent and Indonesian tech conglomerate, GoTo.
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While TikTok did not reveal its actual stake in Tokopedia, various reports have estimated it to be 75%. TikTok is owned by ByteDance, which is based in Beijing, but operates with Singapore and Los Angeles as its global headquarters.
The deal will see TikTok’s own commerce platform, TikTok Shop, subsumed under Tokopedia, with the former’s shopping features to be integrated and maintained by merged entity under Tokopedia.
“The arrangement will allow both TikTok and GoTo to each serve Indonesian consumers and MSMBs (micro, small, and mid-size businesses) more comprehensively,” TikTok said in a statement. “GoTo will…remain an ecosystem partner to Tokopedia through its digital financial services via GoTo Financial and on-demand services via Gojek [which is owned by GoTo]. GoTo will also receive an ongoing revenue stream from Tokopedia commensurate with its scale and growth.”
The merged entity already has plans to launch its first campaign this week, in line with Indonesia’s national online shopping day on December 12. The campaign will run on both TikTok and Tokopedia, and showcase local merchants and products, TikTok said.
Expected to close in the first quarter of 2024, TikTok’s GoTo deal comes weeks after the Indonesian government in September blocked e-commerce transactions on social media platforms, saying the move was necessary to safeguard user data and protect physical SMB retailers. It put a damper on TikTok’s earlier plans to invest heavily in TikTok Shop and drive its e-commerce platform in Southeast Asia (SEA), in particular, Indonesia.
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The region’s digital economy is projected to hit $100 billion in revenue this year, with e-commerce, travel, transport, and media accounting for $70 billion, according to the latest e-Conomy SEA report released by Google, Temasek, and Bain & Company. The report noted that Southeast Asia has weathered global macroeconomic headwinds better than other regions, with GDP growth above 4% and consumer confidence showing a rebound in the second half of 2023, after falling to lower levels in the first half.
E-commerce remains on a growth path this year, increasing 22% in revenue year on year to hit $28 billion. Gross merchandise value (GMV) in the sector is projected to climb to $139 billion in 2023, before hitting $186 billion in 2025 on a 16% growth rate.
The Indonesian e-commerce market is forecast to expand from $62 billion this year to $82 billion in 2025, and $160 billion by 2030. This market segment will be a significant growth enabler in the country’s digital economy, which is expected to be worth $110 billion in 2025, according to the e-Conomy SEA report.
An August report by Momentum Works also has projected TikTok Shop to snag a 13.2% share of the region’s e-commerce market this year. It noted that TikTok Shop clocked $4.4 billion in GMV last year, up from $600 million in 2021, and was on track to reach $15 billion this year.
