Indonesian internet giant GoTo and entertainment platform TikTok have announced the official combination of Tokopedia and TikTok Shop Indonesia’s businesses under the existing PT Tokopedia entity, in which TikTok holds a controlling stake, on Jan 31.
In December last year, ByteDance-owned TikTok committed to invest over US$1.5 billion ($2.01 billion) in the enlarged entity over time to provide future funding required by the business, without additional dilution to GoTo.
The previously announced transaction followed the Indonesia government’s ban on social commerce companies from facilitating direct e-commerce payments on their platforms in September.
TikTok, which was forced to abruptly close its Indonesian shopping platform to comply with the surprise regulations, aims to drive long term growth for Indonesia’s micro, small and medium enterprises (MSMEs) and digital economy with the partnership.
According to a joint press statement, the integration and migration process for a seamless shopping experience within Tokopedia and the TikTok app in Indonesia has been making good progress and is set to be completed within the trial period in consultation with the relevant ministries and in line with prevailing regulations.
The shopping features within the TikTok app in Indonesia will be operated and maintained by the enlarged entity.
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In addition, GoTo Group showed strong performance at the end of 2023, enabling it to achieve positive adjusted ebitda for the whole of 4QFY2023, while exceeding the top end of its full-year adjusted ebitda guidance range. The company will release its 4QFY2023 and FY2023 results in March.
GoTo Group CEO Patrick Walujo says: “Today marks the completion of a partnership with TikTok that will continue to bring benefits to Indonesia and its MSMEs. It is also a big step forward for GoTo Group. Having reached positive adjusted EBITDA for the fourth quarter of 2023, we can now look forward to accelerating our progress, driven in part by supportive ecosystem partners.
“As our profitability and cash flow continue to improve, we will optimise our capital usage in line with a newly developed capital allocation plan, which may include a share buyback initiative, subject to regulatory and shareholder approval,” he adds.
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Stephanie Susilo, TikTok Indonesia’s executive director of e-commerce, says: “We are proud to officially work with Tokopedia, its stakeholders and employees. We view this moment as a significant milestone in our commitment to contribute to Indonesia, its MSMEs and the growth of its digital economy alongside GoTo as a partner.”
GoTo says it will benefit from the growth of the enlarged entity and remains an ecosystem partner to Tokopedia, through its digital financial services via GoTo Financial and on-demand services via Gojek. The company will also receive an ongoing revenue stream in the form of an e-commerce service fee from Tokopedia commensurate with its scale and growth making the agreement cash generative for the group as it continues to focus on its long term profitability.
The partnership between GoTo and Tiktok commenced with the Beli Lokal campaign last December, which has supported thousands of Indonesian merchants and has resulted in an increase in their sales of 125% during the campaign period.
A recent survey of participating merchants, found that 97% have felt benefits from the collaboration between TikTok and Tokopedia, while 90% reported an increase in income as a result of the Beli Lokal campaign. A majority also increased the number of people that they employ since the collaboration began.
As part of a commitment to support the development of Indonesia's digital talent, TikTok has also worked with GoTo and Gadjah Mada University (UGM) to partner in the establishment of the GoTo x TikTok x UGM Technology Center — a digital talent development centre at UGM's Innovation and Creativity Gallery. The partnership will facilitate an internship and employee exchange program, through which participants can grow their skills by being assigned to different TikTok offices around the world.
The two companies have further initiated an MSME empowerment program through the #MelokalDenganBatik campaign, involving hundreds of local batik entrepreneurs in Solo and Yogyakarta. This initiative aims to support small businesses by providing them with production support technology, including advanced production tools, insights on trends and inventory management.
These initiatives are part of a broader strategy to transform Indonesia’s e-commerce sector, creating millions of new job opportunities over the next five years, particularly in the MSME sector.
