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TikTok’s Unexpected Move Shakes Up Indonesian Online Shopping Scene

TikTok’s Unexpected Move Shakes Up Indonesian Online Shopping Scene

TikTok suspends its online shopping service in Indonesia to comply with new regulations aimed at protecting local retailers.

TikTok, the popular social media app, has announced that it will suspend its online shopping service in Indonesia. The move comes as the country’s government introduces new regulations to protect local physical and online retailers. Indonesia was the first country to pilot TikTok’s e-commerce service in 2021 and quickly became one of its biggest markets.

Last week, Indonesia announced measures that would require TikTok to separate its shopping feature from its video sharing service. The country’s trade minister, Zulkifli Hasan, stated that e-commerce and social media should be separated. Social media platforms were given a week to comply with the new rules or risk losing their license to operate in the country.

The decision to suspend the online shopping service comes after Indonesia’s President, Joko Widodo, emphasized the need for regulations in the e-commerce sector. While e-commerce can be beneficial, President Widodo warned that without regulations, it can also have negative consequences.

Online retailing in Indonesia has experienced significant growth in recent years. The value of e-commerce sales is expected to increase more than sixfold between 2018 and next year, reaching 689 trillion Indonesian rupiah ($44 billion). TikTok Shop had been gaining market share in Indonesia’s online shopping market, which is dominated by platforms like Tokopedia, Shopee, and Lazada.

Indonesia has a large population of over 278 million people, with 125 million TikTok users. The platform has been a source of income for millions of creators and sellers, with 6 million sellers using TikTok Shop to promote their goods. In June, TikTok’s CEO, Shou Zi Chew, visited Indonesia and pledged to invest billions of dollars in the region over the next few years.

However, the growth of online retailers has had a significant impact on physical shops in Indonesia. Owners of physical stores have reported a decline in customers, even with efforts to promote their products through platforms like TikTok. The country has over 64 million smaller businesses, which make up almost two-thirds of Indonesia’s economy.

In conclusion, TikTok’s decision to suspend its online shopping service in Indonesia reflects the country’s efforts to regulate the e-commerce sector and protect local retailers. While the move may impact TikTok’s market share, it highlights the importance of balancing the growth of online retailers with the needs of physical businesses.

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