TikTok Shop faces backlash from ID government over unreleased Project S

In a short span of time, TikTok has completely won the globe over with its highly specific algorithm, entertaining, educational content and addictive trends. However, as of late, TikTok has been working to break out of the social media space to compete with other eCommerce platforms through the introduction of TikTok Shop.

Since its launch in Indonesia in April last year, TikTok shop has been gaining traction considering its user base and highly personalised algorithm.

In a recent regional survey by TikTok, The TikTok Effect: Accelerating Southeast Asia's Businesses, Education and Community Report, SMBs reported increased revenues of nearly 50% by using TikTok to sell their products and services.

It was also found that close to four in five businesses (79%) transitioned from offline to online marketing channels using the platform. In addition to that, more than 80% of TikTok creators polled boosted their incomes through avenues such as TikTok LIVE and brand sponsorships.

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While local businesses currently stand to benefit from TikTok Shop that help their products reach new audiences, the platform’s intentions to introduce a cross-border business service could pose a threat to micro, small and medium enterprises in Indonesia.

Project S or TikTok’s Global Selling Program is a new e-commerce initiative that enables global merchants to easily sell their products to TikTok users globally through TikTok Shop, said a TikTok representative to MARKETING-INTERACTIVE.

The program will help Chinese merchants sell goods globally and is in its trial phase in the UK with plans to expand the service to the United States this month, according to a report by Reuters.

News of Project S has been met with backlash from the Indonesian government as the report revealed that Indonesia's Minister of Cooperatives and Small and Medium Enterprises Teten Masduki met with TikTok to express concern over its launch that could hurt small businesses.

Special advisor to Masduki also confirmed the minister’s comments to Reuters, emphasising that such a program would put small businesses at a disadvantage against other sellers through predatory pricing.

As a result of the government’s stance against the unreleased initiative, Anggini Setiawan, head of communications, TikTok Indonesia, told Reuters it had made the deliberate decision to not launch the cross-border initiative in Indonesia.

Setiawan highlights that the current localised TikTok Shop model aims to empower and benefit local sellers rather than to use the platform to become a retailer in Indonesia to compete with MSMEs.

Additionally, a TikTok representative told MARKETING-INTERACTIVE that the company does not plan for the Global Selling Program eCommerce initiative to be available in markets in the SEA region.

TikTok has been ramping up its support for sellers in SEA as it will be launching a multi-million-dollar investment in aimed at helping more than 120,000 SMBs transition their businesses online and participate in the digital economy in SEA, according to the platform.

The US$12.2 million investment will comprise cash grants, digital skills training and advertising credits for SMBs, including micro businesses, in rural and suburban areas, it said.

Over the next three years, the 'Support Local' programme will aim to empower micro and small businesses, particularly those in rural areas, who may be new to social commerce. It will partner with over 25 government agencies and non-profit organisations across Southeast Asia and will give businesses the opportunity to reach new digital consumers through cash grants, digital skills training and advertising credits.

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