Indonesia delivers blow to social commerce

The Indonesian government is to ban social media companies from taking direct e-commerce payments on their platforms, as it seeks to protect millions of offline small and medium-sized businesses from being squeezed. 

Why a social commerce ban matters

It’s a particular blow for TikTok’s ambitions: its TikTok Shop is one of the app’s most popular features in Indonesia, and it hoped to replicate that success in other countries as it pursues a target of quadrupling e-commerce sales in 2023.

Where next?

Legislation has yet to pass but it seems likely that promotions will still be permitted. Marketers will almost certainly have to rethink their budget allocations and content strategies; a shift from performance to brand marketing could follow. 

Meanwhile, authorities around the world will be watching with interest to gauge the impact of the restrictions and to study TikTok’s response as they contemplate regulation of a new and fast-growing area of commerce.

Final thought

“This could be an excellent opportunity to carry out small test-and-learn campaigns with channels which have not been overly crowded by brands, making them cheaper channels to spend on” – David Lim, principal consultant at Avante Strategies, speaking to Campaign Asia.

Sourced form Verdict, Campaign Asia