This weekly newsletter chronicles top digital themes and trends playing out in SE Asia, especially Indonesia. We will decode policy and regulatory changes affecting digital economy sectors, crunch earnings data of top players, track developments related to gig economy workers and attempt to piece together ecosystem buildouts in some of the fastest-growing, venture-backed plays. You can access the previous editions of the Vantage Point weekly posts here.
Executive Summary
- TikTok Shop’s second coming won’t be easy
- J&T Express listing at the lower end
- Indonesia’s carbon trading exchange: A step in the right direction
- Shuttering GrabInvest to help Grab streamline financial services
TikTok Shop’s second coming won’t be easy
The TikTok Shop debate has dragged on for long with many twists and turns, but not many expected the government to effectively ban it or delink social media and e-commerce.
TikTok and its social commerce arm, TikTok Shop, had been billed as the next big disruptor with huge financial backing. It had already made an impact, albeit not as much as the hype would suggest, with around 5% of GMV in Indonesia in 2022.
TikTok Shop had been making good progress in 2023, but Indonesia’s leading e-commerce players had not been standing still, with Shopee stepping up its live-streaming efforts and maintaining a significant lead with Shopee-live.
However, the Indonesian government’s latest move to dissociate e-commerce and social media will stop TikTok Shop in its tracks with pretty much immediate effect, given the one-week window to fall in line.
Playing the drama card is very unlikely to make any difference, given that TikTok has talked about the number of sellers on its platform and the “creators” that will be impacted.
The former have the option to switch to other e-commerce platforms, while the value-creation abilities of the latter are questionable. They can keep attempting to influence, just that there won’t be any sale on TikTok, and they can, of course, switch to other platforms.
There was also much commentary on TikTok’s use of personal data to sell products to users, which is a valid point given its huge social media user base of 128 million in Indonesia, which was seen as an unfair advantage over MSMEs [micro and small enterprises].
The ethical arguments about using personal data to manipulate consumers have hardly been touched upon but probably should be.
The real thorn in TikTok’s side is the fact that it is seen as impacting Indonesia’s MSMEs by using its algorithms to track consumer preferences and effectively flood the market with cheap Chinese products, where it is also providing subsidies.
