Courtesy of Rest of World, an article on
how TikTok Shop, the controversial app’s ambitious next phase, has caught fire in Indonesia:

In the U.S., TikTok’s ambitions to level up into a shopping empire have stumbled on the possibility of a countrywide ban, and a miscalculation of shopping behaviors.

But over in Indonesia, the app’s next-biggest market, TikTok Shop is thriving — especially during the consumer-friendly period of Ramadan.

Over the holy month of Ramadan, Indonesian TikTok transforms into a shopping paradise. The video app lights up with long-haul livestreams, done in shifts by presenters shaking glittery kaftans and colorful headscarves before the camera. Live chats buzz with questions, and the tempo rises after sundown when Muslims break their fast.

Permata Hidayat, the 29-year-old founder of kaftan store Caftanesia, is delighted. Over March and April, the store has livestreamed on TikTok Shop, the app’s virtual marketplace, for 18 hours a day, with three six-hour sessions staggered across morning, afternoon, and evening. Kaftans to wear during Eid are in hot demand on TikTok right now; Hidayat’s usual daily sales have leaped fivefold to around 1,500 pieces, he told Rest of World.

“We just started trying TikTok at the beginning of November 2021, and we can’t believe we have done so well,” he said.

It’s been TikTok’s ambition to boost its vast audience into a moneymaking shopping arm, TikTok Shop, for two years now. That effort is being stymied in the U.S. by concerns of a potential countrywide ban, and had collapsed in the U.K. last year under a cloud of missed targets and management concerns. But TikTok Shop is sweeping across Indonesia, the company’s second-biggest market behind the U.S. — home to an estimated 110 million users, according to consultancy DataReportal.

From an uncertain start in the region in 2021, TikTok Shop reportedly racked up a gross merchandise value of $4.4 billion across Southeast Asia over 2022, powered by a network of agencies who “manage” livestream presenters and shopfronts. In a country where politics have yet to get in the way of its rise, TikTok has been busy training sellers and showering them with incentives like purchasing subsidies and free shipping. Experts told Rest of World the situation was unlikely to change.

“The TikTok user base in Indonesia is now so large, and so engaged, that no government will want to ‘ban’ the app for fear of alienating younger voters,” Ross Tapsell, associate professor at the Australian National University and an expert on new media in Indonesia, told Rest of World. He compared the prospect to banning Facebook or Twitter. “Bans are unlikely to win votes.”

TikTok’s shopping feature has a predecessor in Douyin, its Chinese equivalent, which is big business for parent company ByteDance. For sellers, it’s pitched as a way to promote their products via the video feed, and sell them through a frictionless, built-in e-commerce platform at the same time.

Sellers in Indonesia can register on TikTok Shop for free by providing official documents, such as a business registration certificate, but must agree to pay a 1% commission, plus 2,000 Indonesian rupiah (13 cents) per item sold. Once approved, they can link their TikTok account to TikTok Shop.

In April 2021, TikTok Shop fully launched in Indonesia, one of the first countries to pilot the feature outside China. Hidayat kicked off his Caftanesia TikTok account in November that year, and the following month, he said, a TikTok representative invited him to be part of the new Shop initiative. They assigned Hidayat an “account manager,” who gave him advice on content creation, special sales events, and other promotional strategies.

The sellers in Hidayat’s TikTok livestreams come from a talent agency, whose models are trained in the art of online selling, and have been taught how to sell the kaftans to a digital audience. Rangga Revan, who runs the agency, told Rest of World TikTok Shop has grown so fast that their “talent” is fully booked for the next five years.

A screenshot of the Caftanesia TikTok account, showing a woman in a green dress with a clothing sales floor as a backdrop.
Caftanesia has over 700,000 followers and has seen huge growth since it started livestreams. @caftanesia
Jodi Rizaldi Akbar is the co-founder and owner of Kitty Shop Girls, a Muslim casualwear store targeting young mothers. (His fellow founder is a fan of the Sanrio franchise, he explained.)

The 29-year-old has owned a brick-and-mortar shop in Banten province for the past nine years, and decided to try out TikTok at the end of 2022. The team posted content for “a short time,” he told Rest of World, before discovering the shopping service. Once an account manager got them into a sales rhythm, their trickle of 100 sales a day became a flood of around 10,000 per week, Jodi claimed.

“This is truly the year of TikTok,” he said. “The audience size and their enthusiasm for shopping is unparalleled.” The traffic on TikTok is around 50% more than what he has experienced using other marketplace apps, including e-commerce giant Shopee, he added.

Both Hidayat and Jodi enjoy subsidies from TikTok on the purchase of wholesale items, as well as on shipping costs, they told Rest of World. They declined to disclose exactly how much. TikTok did not respond to questions from Rest of World.

In the first year, Hidayat said, he did not pay a percentage of sales to the app. This year, TikTok Shop has taken 2% of his profits — a fee that Hidayat expects to rise the longer he sells through the app. He has had a similar experience when working with other digital marketplaces, such as Lazada and Shopee, which also took incrementally deeper cuts of his profits.

In preparation for the Ramadan rush this year, the TikTok Business Center produced a playbook to “win the hearts and carts during Ramadan in Indonesia.” It provided a range of tips for creating “shoppertainment” — from trending hashtags to creating categories of content users might be looking for, such as finance, beauty hacks, and cooking. According to a small-scale study commissioned by the company, 67% of TikTok users shop more on TikTok during Ramadan.

Hidayat told Rest of World he was not worried about news that some countries, including the U.S., are mulling TikTok bans due to data privacy issues — something that has spooked creators internationally.

“If TikTok is banned in Indonesia, no problem. We will still sell through our [brick-and-mortar] shop in Tanah Abang, and we will sell through whatever the latest trend [in selling apps] is,” he said.

Tapsell, the associate professor, said that he thought Indonesians were fairly unequivocal about using the platform, and weren’t in danger of fleeing.

“The U.S. is concerned about TikTok because, for the first time, they have to think about what it means to have a large tech company influencing minds — and collecting data — that isn’t based in their own country,” he said.

“Southeast Asians have been dealing with this situation throughout the digital era,” Tapsell said. “So, to some extent, there is nothing ‘new’ about TikTok if you take the view of many Southeast Asians that all ‘foreign-owned’ tech platforms are all harvesting local data to make money.”