TikTok Business Scale Is Tokopedia's Key to Leading Indonesian E-commerce

PT GoTo Gojek Tokopedia Tbk (IDX: GOTO) released an Incidental Public Expose explaining the business potential E-commerceTikTok Shop and Tokopedia post-join. It was stated that the integration progress between the two was approaching the completion stage.

Based on independent analysis, the synergy between TikTok and Tokopedia allows both of them to lead the business E-commerce in Indonesia by leveraging TikTok's business scale and global reach as the key to growth. Tokopedia also benefits, because in the agreement between the two, E-commerce those with the green logo do not need to spend any more funding.

This growth will be extended to two segments, Tokopedia is closely related to planned spending on electronic products, FMCG, and home living. The next segment is driven by services live-shopping TikTok Shop whose growth came from impulse spending on fashion and beauty products.

The synergy between the two is a strategy to compete fiercely with players E-commerce others, especially with the emergence of TikTok Shop several years ago. Tokopedia is said to compete with "Competitor 1" which has 40% market share, as well as being part of a group with digital entertainment and digital finance businesses whose profits can be subsidized to the business e-commerce.

Meanwhile, "Competitor 2" has a 10% share --- its parent company also recorded adjusted EBITDA (annualized) of $25 billion and cash of $33 billion, and invested more than $3,4 billion in the last 18 months.

With tight business competition, Tokopedia experienced a decline in share due to its focus on pursuing profitability. The company is also saving capital. “Tokopedia can seize opportunities in live commerce, also encourages Tokopedia market penetration in E-commerce conventional while enriching consumer acquisition channels," said the presentation.

As of 2023, Tokopedia will have 18 million Monthly Active Users (MAU). However, its Monthly Transacting User (MTU) is said to have decreased, as has GMV in 2023 which is projected to decline 10% (YoY) to $15,6 billion. Meanwhile, TikTok Shop has an MAU of 125 million with MTU growing by three digits. TikTok's 2023 GMV is estimated at $6 billion, i.e. growing 3 times (YoY).

The Tokopedia and TikTok transaction agreement was completed in early February. In the integration process, product promotions are managed by the TikTok electronic system. Meanwhile, product display, order completion, and payment occur in the system backend Tokopedia.

After removed as controlling shareholder, GoTo said it would derecognize assets (incl goodwill recognized at the group consolidated level) and Tokopedia's liabilities from the consolidated financial statements.

GoTo also revealed that losses from losing control of Tokopedia reached IDR 80,3 trillion. The loss was caused by derecognition goodwill amounting to IDR 76,6 trillion which is the company's non-cash and non-operational expenses.

In a separate report released in 2023, as reported DailySocial.id, Momentum Works noted Shopee as the GMV market leader in Indonesia with a share of 36%, followed by Tokopedia (35%), Lazada (10%), Bukalapak (10%), TikTok Shop (5%), and BliBli (4%).