TikTok Invests $1.5 Billion in Indonesia’s eCommerce Platform Tokopedia

TikTok is reportedly investing $1.5 billion in Tokopedia to salvage its Indonesian eCommerce efforts.

The company is set to take a controlling 75.01% stake in Tokopedia, the eCommerce arm of Indonesia’s GoTo Group, according to a letter Monday (Dec. 11) to GoTo investors seen by the Financial Times (FT).

Under the deal, Tokopedia will acquire TikTok Shop’s Indonesia business for $340 million, the report said. PYMNTS has reached out to both companies for comment but has not yet received a reply.

The news follows reports from last month that TikTok — owned by China’s ByteDance — was considering an investment in GoTo after new regulations in Indonesia put its eCommerce ambitions there at risk.

Indonesia in September announced new measures that block social media platforms from handling direct payments for online purchases, a distinction that only applied to TikTok.

The rules mean that TikTok would be able to advertise products to its more than 100 million Indonesian customers, but those users would need to switch over to a different site or app to pay for their purchases.

According to the FT, analysts say TikTok’s takeover of an Indonesian company could create a blueprint for dealing with regulatory roadblocks in other markets. The report notes that Vietnam and Malaysia have also spoken of setting up restrictions on TikTok.

“For ByteDance and TikTok it provides a plug-and-play solution to their Indonesia problems,” said Simon Torring, co-founder of Cube Asia, an eCommerce research platform.

“Not only does Tokopedia have a large local merchant base and strong logistics and payments assets that TikTok can leverage,” Toring said, adding that “the company also has deep ties to Indonesia’s regulators and broader government stakeholders, something TikTok has been lacking in the country.”

Meanwhile, recent research from PYMNTS Intelligence examined the popularity of platforms like TikTok as a way for younger consumers to search for products.

“Tracking the Digital Payments Takeover: Monetizing Social Media,” a collaboration between PYMNTS and Amazon Web Services, found that 68% of Gen Z consumers searched for products on social media, and 22% ultimately completed a purchase, the highest shopping rate on social media across all age groups.

“Instagram and TikTok are the go-to social networks for browsing and purchasing products. with clothing, apparel and beauty products being the most sought-after,” PYMNTS wrote last week. “Additionally, the study reveals that over 40% of this generation prefer using Instagram or TikTok over Google to explore brands, as per separate PYMNTS Intelligence research.”