TikTok's Thrilling Quest for E-Commerce Dominance: Indonesia and Beyond

TikTok is currently in negotiations with Indonesian regulators to secure a payment license for its social media platform, which is owned by ByteDance. While the central bank of Indonesia has shown a positive response to the application, this information was not officially announced, writes PaySpace Magazine.

If the negotiations go well and TikTok is granted a payment license, the platform will be able to benefit from transaction fees, and Indonesian content creators and sellers will have better opportunities. Obtaining a payment license will also enable TikTok to compete fully with e-commerce giants in Southeast Asia, such as Sea's Shopee and Alibaba's Lazada.

Currently, TikTok serves 125 million users in Indonesia, and last year, it accounted for 5% of e-commerce transactions, totaling $52 billion. Most of these transactions were related to live broadcasts. In June, TikTok revealed its plans to invest several billion dollars in expanding its operations in Indonesia and Southeast Asia. This investment aims to increase e-commerce sales from $4.4 billion to $20 billion.

CEO Shou Zi Chew mentioned at a TikTok forum in Jakarta that these investments would take place over the next few years, without specifying a specific timeframe. TikTok's investment plans include training, advertising, and support for small sellers who want to join its TikTok Shop e-commerce platform. Currently, 2 million small sellers in Indonesia interact with the platform, and TikTok has 800 employees in Southeast Asia. The media reported that TikTok is actively seeking opportunities to expand its e-commerce business in Southeast Asia, with a particular interest in Indonesia due to the popularity of videos featuring influential people in the country.

However, there have been challenges for TikTok in other regions. In July, it was revealed that the company couldn't fully pass the test conducted by the European Union's governing body. This raised concerns about the application's compliance with the EU's Digital Services Act, and the company has until January 1, 2024, to address the identified issues.

In the US, TikTok has faced difficulties attracting sellers due to concerns about a potential government ban on the application. These concerns are not unfounded, as discussions about banning TikTok have been ongoing in the United States.