The Indonesian government last week asked TikTok to separate its e-commerce function from its video-sharing service, a measure that took effect at 17:00 Jakarta time on October 4.
Social media platforms are completely banned as sales channels, and Indonesian users can no longer live stream goods through platforms such as TikTok and Instagram. This policy is designed to protect local brick-and-mortar and online retailers from shocks to the domestic market by foreign goods and low-priced goods. Indonesian President Joko Widodo personally spoke out, criticizing live streaming as a predatory pricing method that will lead to a large number of bankruptcies and bankruptcies of physical merchants.
This policy has aroused widespread attention and discussion. Indonesia is the largest economy in Southeast Asia and one of the important markets for live streaming e-commerce. According to statistics, Indonesia has a population of more than 276 million, of which 125 million active users use TikTok, and TikTok Shop is the e-commerce function launched by the platform in Indonesia and is currently one of the largest social e-commerce platforms in Indonesia. In addition, many domestic players go directly to Indonesia to do TikTok and use low-priced goods to attract consumers.
This policy of the Indonesian government is undoubtedly a huge blow to live streaming platforms and anchors. First, they will lose a huge market and revenue stream. It is estimated that TikTok Shop has a monthly turnover of about $1 billion in Indonesia, and streamers can also earn a lot of commissions and tips. If these incomes are suddenly cut off, they will face difficulties in survival and development.
Indonesia has the 4th largest population in the world, with 276 million, second only to China, India and the United States.
TikTok has 125 million users, including 6 million seller accounts, and millions of content creators who use TikTok Shop to make money, and they will "live stream."
In 2022, TikTok's Southeast Asia e-commerce GMV was $4.4 billion, of which Indonesia accounted for more than half, accounting for nearly 60%, or $2.5 billion.
In the past two years, Indonesia's live streaming e-commerce business has grown wildly. At once, more than 6 million sellers, more than 7 million streamers and video creators sprang up.
Second, they will face legal risks and penalties. The Indonesian government said TikTok would have its business license revoked and could face fines or imprisonment if it did not comply within a week. If anchors continue to live broadcast on social media, they may also be investigated or complained. These risks will seriously affect their credibility and reputation.
Finally, they will face the challenge of transformation and innovation. If they want to continue to survive and thrive in the Indonesian market, they must find new channels and models for e-commerce activities. For example, they can transfer to other e-commerce platforms that are not banned, such as Shopee, Lazada, etc.; Or they can use their influence and fan base to market and convert in private domain traffic; Or they can develop new forms of content and services that improve user experience and loyalty.