Indonesia has implemented a ban on ecommerce transactions on social media platforms like TikTok to prevent the domination of the algorithm and the use of personal data in business interests. The regulation, announced on Sept 28, was a response to complaints from sellers at Tanah Abang wholesale market in Jakarta who claimed that their businesses were affected by customers choosing to buy cheaper imported products online. TikTok was accused of engaging in predatory pricing that harmed local small- and medium-sized businesses. Social media platforms often offer heavy discounts to attract customers, which creates a mindset that consumers should only buy products with large discounts. However, some businesses believe that relying solely on social media platforms for sales may not be sustainable in the long run.
Despite the ban, some entrepreneurs believe that platforms like TikTok can still help draw attention to local businesses and generate additional revenue. For example, Dododots, a beauty product company, uses TikTok to promote products and increase brand awareness. However, they acknowledge that live streams on TikTok can be hit or miss. Malaysia’s Communications and Digital Minister is studying Indonesia’s ban and held discussions with TikTok’s global vice president to ensure that the platform operates according to Malaysia’s guidelines and laws.
Economists emphasize the importance of diversifying online selling platforms to minimize vulnerability to sudden changes or bans. Ecommerce sellers should utilize multiple social media sites, create their own ecommerce website, or sell through well-known online markets. It is also advised to adopt a growth mindset and be receptive to new platforms, technology, and marketing strategies. Sellers must also stay updated on the rules and laws that apply in the markets where they do business, as regulations regarding ecommerce, taxes, and buyer protection can change.
Ecommerce was crucial during the pandemic when selling through retail shops was not feasible. Traditional B2B strategies remain important for some businesses, reducing the potential impact of a ban on social media ecommerce transactions. Ultimately, having a backup plan and not relying solely on one platform is advised for all businesses.
