TikTok Shop’s Southeast Asian ambitions take a major hit as it is forced to operate as a standalone short video app in Indonesia.
Indonesia is TikTok's largest Southeast Asian market and second-largest global market with 125 million users after the U.S., according to the company.
"Given that most [purchases on TikTok] are impulse buys, the need to log into a separate app might lead to a high drop-out rate," said Sachin Mittal, head of telecom, media and technology research at DBS Bank, in a Thursday report."Even if it can secure a separate license to operate, operating as a standalone app may still be challenging," said Mittal., saying such platforms impact micro-, small- and medium-sized companies and the economy.
"Because we know it affects MSMEs, small businesses, micro-enterprises, and also the market, there are markets where sales have started to decline due to the influx," he said in a statement.in the country to implement a minimum price of $100 for certain items that are directly purchased from overseas. All products offered should meet local standards.
"Crucially, the only business affected will be challenger TikTok Shop, whose entire business model relies on social commerce," said BMI in a Tuesday report, adding that it expects to see a decline in TikTok Shop's numbers.
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