TikTok’s e-commerce push faces headwinds in Southeast Asia as other countries could follow Indonesia’s ban on online shopping via social media

TikTok, the globally popular short video app, is facing challenges in its e-commerce expansion in Southeast Asia. This is due to Indonesia's recent ban on online shopping via social media platforms. TikTok, which has its headquarters in Singapore, had to comply with this directive and halt its sales on the TikTok Shop platform. Analysts predict that other Southeast Asian countries may follow suit, influenced by Indonesia's decision. Offline marketplaces and merchants who feel threatened by social commerce platforms may lobby their governments for similar bans. TikTok, which began offering in-app shopping in 2021, is known for its high e-commerce conversion rates. However, if users are unable to shop directly from the app, it could hinder TikTok's e-commerce growth. TikTok's future growth strategy heavily relies on e-commerce, aiming to convert its massive user base into a consistent revenue stream. It remains unclear whether TikTok plans to launch a separate e-commerce app in response to the Indonesian ban. Prior to the ban, TikTok Shop had been expanding rapidly in several Southeast Asian countries, including Indonesia, Malaysia, the Philippines, Vietnam, Singapore, and Thailand. The platform also operates in the United Kingdom, Saudi Arabia, and recently launched in the United States. The ban on social media shopping could significantly impact TikTok's monetization plans. In China, TikTok's sister app, Douyin, is already generating substantial e-commerce sales. The future of social commerce activities in Southeast Asia may depend on negotiations between TikTok, various interest groups, and their respective governments. TikTok has faced challenges in Indonesia before, with the country banning the app in 2018 due to inappropriate content. TikTok addressed this by hiring content moderators, and the ban was lifted after eight days. In Vietnam, the government accused TikTok of violating local laws by spreading distorted information and failing to provide adequate information about sellers' goods. TikTok Shop was the second-largest e-commerce platform in Vietnam in the first half of this year. A TikTok Shop employee in Vietnam stated that the team is aware of the government's concerns and is taking measures to ensure compliance. TikTok has also ceased operations in other parts of Asia, such as India, following a border clash with China in 2020.