Why Tokopedia Went for the TikTok Deal: Insights from GoTo Chief

Why Tokopedia Went for the TikTok Deal: Insights from GoTo Chief. Alrighty, folks, let’s dive into some juicy news from the world of Indonesian ecommerce! Patrick Walujo, the big cheese over at GoTo Group, spilled the beans on why Tokopedia decided to cozy up to TikTok. Here’s the scoop:

Tokopedia’s Market Share Takes a Hit

So, it turns out that Tokopedia’s slice of the market pie has been shrinking, especially among bargain-hunting shoppers. Why? Well, it seems like Tokopedia pumped the brakes on handing out incentives left and right to focus on turning a profit. But with fierce competition in the Indonesian ecommerce arena, it’s been a tough nut to crack.

Enter TikTok: A Game-Changing Acquisition

Facing off against big foreign players with deep pockets, Tokopedia needed a lifeline to keep up. That’s where the TikTok deal comes in. GoTo Group swooped in and sealed the deal last month, seeing it as a strategic move to stay afloat in the cutthroat market.

The Numbers Game: Tokopedia vs. TikTok Shop

Now, let’s talk numbers. Tokopedia boasts 18 million monthly active users (MAUs), which is a far cry from the 100 million it claimed before. But hold on, TikTok Shop has a whopping 125 million MAUs in Indonesia! However, Tokopedia still holds the crown when it comes to gross merchandise value (GMV), raking in a hefty US$15.6 billion compared to TikTok Shop’s US$6 billion estimate for 2023.

The Price Tag: How Much TikTok Paid for Tokopedia

Here’s the kicker: independent assessors valued Tokopedia at a cool US$606 million before the acquisition. But TikTok didn’t hold back, snapping up 75% of Tokopedia for a jaw-dropping US$1.8 billion. They coughed up US$1 billion in promissory notes and threw in some freshly minted shares for good measure.

The Payoff for GoTo Group

Now, what’s in it for GoTo Group, you ask? Well, besides getting TikTok Shop back in action in Indonesia, they’ll also be cashing in on an ongoing revenue stream. Yup, they’ll be taking a slice of the pie from the combined entity’s GMV as an ecommerce service fee.

The Integration Game Plan

Right now, Tokopedia and TikTok are playing nice and working on integrating their platforms. Walujo reckons they’ll have everything sorted out by April. To keep things kosher with the government, TikTok Shop will handle the flashy promos, while Tokopedia takes care of the nitty-gritty shopping and payment stuff.

Regulatory Hurdles and Government Oversight

Speaking of the government, there have been some raised eyebrows over at the Ministry of Cooperatives and SMEs. Teten Masduki pointed out that TikTok Shop might still be breaking some rules. But fear not, the Ministry of Trade will be keeping a close eye on things and auditing the integration process after four months to make sure everything’s above board.

Looking Ahead

In the meantime, GoTo Group has some good news to share. They’ve reported a positive adjusted EBITDA in the fourth quarter of 2023, and they’re gearing up to spill all the deets in their next earnings call in March. So, stay tuned for more updates from the ever-evolving world of Indonesian ecommerce!