Yesterday, we reported about the fact that Indonesia has passed a new regulation that will ban the use of e-commerce on social media apps that are doing live streaming and other things to sell their products. Since this was hurting the local businesses, Indonesia said that they will have to do something to stop it and they did. Now, we know that businesses are free to leave Indonesia if they want but it is also a fact that Southeast Asia is a major market for them and Indonesia is one of the key sectors in this market.
We also know that TikTok was absolutely thriving in the e-commerce live streaming space before the ban came into effect and now its plans are essentially derailed because of these new regulations. It is worth noting that e-commerce is not banned in Indonesia but we can say that live-stream shopping and other ways of selling via social media is now banned and the main target is TikTok. An analyst at DBS Bank says about TikTok, “Even if it can secure a separate license to operate, operating as a standalone app may still be challenging. Given that most of its purchases are impulse buys, the need to log into a separate app might lead to a high drop-out rate”
Another analyst said, ″[Being a standalone app] could introduce significant friction for existing TikTok users, negatively impacting user experiences”. DBS Bank analyst adds that “Given that most [purchases on TikTok] are impulse buys, the need to log into a separate app might lead to a high drop-out rate.” Understanding the new regulations better, you should note that Indonesia does not want the social media platforms to become e-commerce stores in disguise of social media platforms which is why it has banned the use of e-commerce inside them. They are essentially saying that if you want to sell products, you can do so but you need to have a different app or platform for that. Since TikTok knows that it will be difficult for them to make people buy from a standalone TikTok Shop app, the company says they are “deeply concerned about [the] announcement”