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TikTok not taking traditional market share, says e-commerce observer

Tempo - September 26, 2023

Riri Rahayu, Daniel A. Fajri, Jakarta – E-commerce observer and former chairperson of the Indonesia E-commerce Association (idEA), Ignatius Untung, disagreed with the government's decision to ban online sales through social media platforms or social commerce such as TikTok Shop, albeit it is aimed at protecting local micro, small, and medium enterprises (MSMEs).

"It's a big mistake to put TikTok face to face with MSMEs," Untung told Tempo on Monday, September 28, 2023.

He argued that the China-based short video app has no products of its own. All goods sold on the platform are basically owned by merchants, most of whom are MSMEs. "TikTok is not taking traditional market share," Untung said.

As for the low number of transactions in the traditional market, Untung assessed that it happened because their market share was taken by other traders who are using TikTok, which are mostly MSMEs.

"This is purely business competition between traders, not between TikTok and traders," Untung said. "Besides, TikTok cannot possibly be big if there are no MSMEs getting big because TikTok's business is to grow MSMEs."

Untung understood that the government was late in preparing regulations related to e-commerce given the rapid pace of digital development and innovation. However, he lamented that the government seemed to panic and hurriedly decided on the new regulation without giving time to the parties involved.

As reported earlier, President Joko Widodo or Jokowi said the government decided to ban social networking platforms, such as TikTok, from facilitating online sales or serving as social commerce through the revision of the Trade Minister's Regulation No. 50 of 2020. Trade Minister Zulkifli Hasan said social commerce will only be allowed to be used for promoting goods or services, not for direct transactions.

Source: https://en.tempo.co/read/1776466/tiktok-not-taking-traditional-market-share-says-e-commerce-observe