TikTok is investing over US$1.5bn in Indonesia’s GoTo, a technology company that formed two years ago in a merger between the country’s two most valuable startups, ride-hailing giant Gojek and e-commerce firm Tokopedia.
As part of the agreement, Tokopedia and TikTok Shop Indonesia’s businesses will be combined under the existing PT Tokopedia entity in which TikTok will take a controlling stake. Shopping features within the TikTok app in Indonesia will be operated and maintained by the enlarged entity.
Announcing the deal, the firms said the move is part of long-term plans to grow the country’s digital economy as well as the Micro, Small and Medium Enterprises (MSME) sector. It has several joint initiatives planned to help achieve this.
Among them, the firms said they plan to improve tech skills and resources including the development of technology centers across Indonesia which will be used to develop local tech talent. They also plan to provide support to merchants in areas such as marketing, branding, and sustainable business practices while local brands can expect increased opportunities to promote their products in international markets.
Intensified competition
Competition among major e-commerce platforms has intensified in recent years as platforms have expanded their capabilities in areas such as transportation and payments. Partnerships, such as Gojek and Tokopedia, have also enabled platforms to offer lower prices to consumers.
Tokopedia and Shopee are currently the most dominant players in Indonesia’s e-commerce market, holding a combined market share of 65%. Alibaba, along with their consumer-facing brand Lazada had previously been leading players but reportedly had difficulties in growing their position in the local market.
Under the new deal, GoTo will remain an ecosystem partner to Tokopedia, through its digital financial services via GoTo Financial and on-demand services via Gojek. It will also receive an ongoing revenue stream from Tokopedia in line with its scale and growth, the firms said. The transaction is expected to close in the first quarter of 2024, the firms said.
