As JD.ID quietly announced its exit from the Indonesian market, a pressing question emerges: What direction will Indonesia's e-commerce sector take? The answer may lie within the short video revolution—TikTok is transforming Indonesian consumer behavior at an unprecedented pace, potentially reshaping the entire e-commerce landscape.
Social Commerce: The New Engine of Indonesian Online Shopping
Social commerce did not emerge overnight. Years ago, Edward Ismawan Chamdani, co-founder of Ideosource and Gayo Capital, had already identified this trend. A 2018 McKinsey report revealed that nearly 40% of Indonesian consumers (approximately 30 million people) had begun experimenting with social commerce. PayPal's research further confirmed this potential.
Millennials and Gen Z are the most active participants in this wave. They enthusiastically use social media videos to research products and make purchasing decisions. Platforms like TikTok Shop attract different market segments compared to traditional e-commerce players such as Tokopedia and Shopee. While some overlap exists, differentiation has become inevitable.
Eddi Danusaputro, Chairman of the Indonesian Venture Capital Association, agrees that TikTok Shop targets a distinct customer base compared to Tokopedia and Shopee. Nevertheless, TikTok is undeniably altering Indonesian consumption patterns.
Live Shopping: TikTok's Winning Strategy
Live shopping has become a favorite among Indonesian consumers. TikTok Shop's robust live-streaming features have propelled its rapid rise in the market, even surpassing Shopee and Tokopedia in certain aspects. The real-time interactive shopping experience significantly boosts purchase intent.
A November 2022 survey by Ninja Van, a Southeast Asian cross-border logistics provider, interviewed 316 Indonesian merchants. The results showed that approximately 27.5% of respondents used TikTok for sales—surpassing Shopee (26.5%). Other platforms included Lazada (20.1%), Instagram (12.2%), Facebook (10.1%), and YouTube (3.7%).
Behind these numbers lies TikTok's explosive e-commerce growth. In the first half of 2022, TikTok's gross merchandise volume (GMV) exceeded $1 billion—equivalent to its total 2021 GMV—with Indonesia contributing $200 million. This growth stems not only from TikTok's expanding user base but also from its aggressive Southeast Asian expansion.
Since late 2021, TikTok's Indonesian e-commerce operations have seen explosive merchant growth. During Ramadan in April 2022—a peak online shopping period—TikTok launched promotional campaigns that drove a 493% increase in orders and 92% GMV growth.
Challenges and Opportunities Ahead
While TikTok's social commerce strength is undeniable, its live-streaming functionality still trails Shopee in some aspects. Shopee's long-term investment in live commerce gives it an edge in user retention and conversion rates.
Additionally, TikTok faces stiff competition in Indonesia's social media landscape, where Instagram, Facebook, YouTube, and WhatsApp remain dominant. To stand out, TikTok must further improve user penetration.
The Future of Indonesian E-commerce: Social, Personalized, and Experience-Driven
JD.ID's exit does not signal the end of traditional e-commerce but rather highlights a market transformation. Consumers now demand personalized, interactive, and entertaining shopping experiences—a trend that social commerce perfectly aligns with.
TikTok's success lies in blending entertainment, social interaction, and shopping into a seamless experience. Users discover products while browsing videos or watching live streams, creating a highly engaging purchase journey that boosts conversion rates.
Moving forward, Indonesian e-commerce will prioritize user experience. Platforms must innovate with richer content while ensuring product quality and service standards to build trust. Traditional players should embrace social, personalized approaches rather than viewing TikTok as a pure competitor—a shift that will ultimately benefit Indonesian consumers.