TikTok sales ban draws uncertainty

Under regulations: Monica Amadea (centre), owner of a TikTok sales channel called Monomolly, and her employees offering merchandise through a TikTok livestream in Jakarta. — AFP

Promoting children’s clothes online, instead of to people passing by his stall at Tanah Abang Market in Jakarta, was one of the best decisions entrepreneur Andre Oktavianus made.

Since he started selling on online platforms via live stream in 2017, nearly a decade after he started his business, the 37-year-old said his sales have increased.

“TikTok Shop in particular has helped me. With it, I’ve seen turnaround increase by between 30% and 40%,” said Oktavianus, referring to the video-sharing platform’s shopping arm, which launched in Jakarta about two years ago. But the good times enjoyed by entrepreneurs who use social media to generate sales may not last much longer.

The government has started moves to prevent social media companies from allowing users to make online purchases on their platforms.

This comes after several government officials called for social media and e-commerce to be separated, taking aim at companies like TikTok and Shopee for what they say are unfair social commerce practices that threaten local and small businesses.

Social commerce is a subset of e-commerce that involves social media, with consumers interacting with sellers while buying and selling products and services.

Local media reported that according to draft documents, trade ministry regulations will be revised to disallow social media platforms from providing payment facilities, among other things. This means that Facebook, TikTok and other social media platforms cannot be used for buying and selling products and services in Indonesia. They can still be used for marketing and promotions.

President Joko Widodo previously addressed concerns about the growing reach and impact of TikTok Shop, saying it had adversely affected micro, small and medium enterprises in the country.

Responding to news of the Cabinet meeting, a TikTok spokesperson said social commerce was born to solve a “real world problem” for traditional small sellers by matching them with local creators who can help drive traffic to their online shops.

While sellers Oktavianus are lucky that the pivot to digital worked out, not all share his good fortune. Many retailers at Tanah Abang Market, the largest market in Indonesia, said sellers on TikTok shop are undercutting their business, with some reporting that due to importing in bulk, goods there can be sold cheaper, with some as low as 30% less than their locally made counterparts.

Weihan Chen, who leads the Insights team at Momentum Works, said that while no one can confirm that Indonesia’s potential ban is specifically targeted at TikTok, other platforms such as Shopee and Meta have been in the market much longer and are more experienced in navigating policy and other sensitivities.

“This ban would inevitably affect TikTok tremendously, given that Indonesia is TikTok’s largest and second largest market in terms of TikTok Shop and user numbers respectively,” she added, but the effects of the ban will extend beyond TikTok. — The Straits Times/ANN

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