No more TikTok buys: Indonesian shoppers fret over higher prices as analyst says ban a ‘partial step’ to aid local firms

[SGMCF328]

To protect the consumer or business owner (and government coffer)? I hope Singapore and other countries will no follow suit. I cannot imagine how much more we need to pay for the same items without competition online (e-commerce and sales via social media).

As consumer, we have to exercise due diligences when making purchase online, instead of relying on our givernment to protect us from being scammed.

Source: https://www.channelnewsasia.com/asia/indonesia-ban-sale-goods-tiktok-shop-social-media-regulation-commerce-3802491

SINGAPORE: For the past two months, factory worker Subairi has come to rely on TikTok Shop to purchase his daily necessities. From baby formula to cooking oil, he stocks up on these items each payday.

But with the announcement that the Indonesian government has banned the direct sales of goods on social media platforms, Mr Subairi - who like many Indonesians go by one name - is worried over the loss of a cheaper shopping alternative. 

“If TikTok Shop is banned, I will find it difficult to find items that are as cheap as (those sold there),” the 38-year-old from Karawang, West Java told CNA. 

“On other e-commerce platforms, the service fee is almost 10,000 rupiah (US$0.64) but on TikTok Shop it is totally free, with no conditions.” 

Mr Subairi added that the flash sales and payday promotions - normally offered at the end of the month when workers receive their salaries - on TikTok Shop make the prices much cheaper. He has been comparing prices of goods across various e-commerce platforms, and found those sold on TikTok Shop to be the cheapest. 

“Yesterday, I bought baby formula. Elsewhere, the cheapest price was 320,000 rupiah but on TikTok, with various discounts, I could get (the formula at) around 300,000 rupiah,” said the father of two. 

Meanwhile, TikTok Shop buyer Nadya Aulia Arma told CNA that while she disagrees with the new regulation, she will accept the development and switch to using other e-commerce platforms. 

“I honestly don't agree, because I will lose a place to buy things at low prices. But if it's for the good of the Indonesian people, that's okay. I'll go back to shopping on Shopee,” she said. 

On Monday (Sep 25), the Indonesian government announced that it will no longer allow social media platforms to double as e-commerce sites, in order to prevent the misuse of data. 

"(Social media) can only (be used to) facilitate the promotion of goods or services (but) direct transactions … (and) direct payments are no longer allowed; (social media) can only be used for promotion," said Trade Minister Zulkifli Hasan after a closed meeting on electronic commerce issues. 

Under the Revised Ministry of Trade Regulation, a minimum import transaction of US$100 will also be imposed on goods purchased from abroad. 

While the ban has caught the disappointment of buyers, some sellers at physical stores in Indonesia have celebrated the move. 

Textile seller Iyal Suryadi told CNA that the sale of goods online has reduced his income. 

“In the local market where we sell our goods, sometimes we only sell one or two pieces of cloth in a week … If it continues like this, don’t even think about growing (the business); just being able to survive is good,” he said. 

He added that the prices of items sold on TikTok Shop “do not make sense”. 

“They sell goods at factory prices directly to consumers, not to distributors or resellers. It is true that we have entered the free market, but let's not go too far.

“The government must act if it does not want the country's economy to be destroyed. The reason is that the money in this country revolves around the small people like us, not the rich,” said Mr Suryadi, who owns a shop at Pasar Cipeundeuy located in Subang, West Java.

Similarly, Mr Raden, a seller at Tanah Abang market in Jakarta, agreed that TikTok Shop has hurt his sales due to the cheap prices offered on the social media platform.

However, he told CNA that he disagrees with the new ban and suggested that the sale of items through social media be restricted instead. 

“(This is) because there are merchants here who also sell through TikTok. They are forced to sell on TikTok because the physical market is starting to be abandoned by buyers,” said Mr Raden, who goes by one name. 

“In my opinion, TikTok shops should not be banned but restricted. (Instead), foreign products should be stopped and domestic products should be sold.”

In response to the ban, TikTok Indonesia said that it will abide by the laws and regulations of the country. 

"However, we also hope that the government will consider the effect (of the ban) toward the livelihood of six million local sellers and around seven million creator affiliates that use TikTok Shop," a TikTok Indonesia spokesperson was quoted as saying by Tempo on Tuesday. 

The platform, owned by China's ByteDance, reportedly said that it has received complaints from local sellers and has asked for certainty from the authorities regarding the newly issued regulation. 

According to Tempo, TikTok said that social commerce emerged as a solution to the problems faced by micro, small and medium enterprises (MSMEs), adding that it believes that TikTok Shop was established to support local sellers to collaborate with local creators in order to boost traffic for their online shops.

TikTok has been hit with allegations that its TikTok Shop service is implementing predatory pricing by selling imported goods at significantly lower prices, thus leading to major profit losses for MSMEs who struggle to compete with such prices. 

Mr Dedi Dinarto, lead Indonesia analyst at public policy advisory firm Global Counsel, told CNA that Indonesia is the first Southeast Asian country to implement regulations prohibiting social media companies from simultaneously operating as e-commerce platforms. 

“TikTok is expected to be the most affected, as TikTok Shop currently allows Indonesian buyers to make direct purchases within the app, whereas platforms like Facebook, Instagram, and WhatsApp lack built-in transaction features,” he said. 

However, he noted that small vendors who have benefited from TikTok Shop can still use any social media platforms to advertise their products, even though transactions will now need to be arranged separately between buyers and sellers. 

“Engaging in transactions outside of the apps may be considered risky, and this will place established e-commerce platforms such as Shopee, Lazada, and Tokopedia as more trusted options for online purchases,” said Mr Dinarto. 

Meanwhile, speaking to CNA, Jakarta-based economist Bhima Yudhistira from the Center of Economic and Law Studies (CELIOS) said that banning social commerce is just a partial step to help SMEs. 

“The government also needs to monitor illegal imports through airplane passengers - such as through a service known as Jastip - and also support SMEs by lowering lending rates, increasing domestic purchasing power, and government procurement absorption of SME products,” said Mr Yudhistira. 

Jastip allows buyers to obtain items available overseas by contracting the services of travellers who can buy and deliver the goods in their travels. 

[Davidklt]

Its a step backwards for sure.

[Watwheels]

I dont see it that way. For many countries SMEs is the backbone of their economy. Protecting SMEs is also in a way protecting jobs for the locals. If majority of the local businesses is SMEs, dont you think majority of the population are hired by them? How come so few ppl realised this? Would a govt let ppl save a few bucks and hurt the economy and let unemployment rise significantly? For you ,if you are hired by SMEs and you lost your job the savings would most certainly dont matter anymore.

I can understand where the Indonesian govt is coming from. Banning direct transaction from social media but not stop them from just promoting products. That's acceptable as it helps protect local businesses and SMEs.

Edited September 28, 2023 by Watwheels

[Heartlander]

To me I am ok if other e-commerce sites such as Shopee and Lazada and Amazon and such continue to be able to operate. There is totally no regulation on Facebook for example to protect consumers, which those e-commerce sites have such as releasing payments only after buyers acknowledge receipt of goods in proper order. Scammers would have lesser avenue to do their dirty tricks. 

[Mustank]

Heng rmb drop. Can buy Taobao 😁

[Voodooman]

Can't stop technology.  This is a direct sales model. Some merchandise just don't need a middleman.

[Jman888]

直播，带货，人人都可以发财！ 

i old people duno how to appreciate such trend, never watch any of such video, not even if it was carry by famous celebrities, i'm soooo outdated!   

[Stratovarius]

I bought a secret lab chair on TikTok earlier this year as it was the cheapest I can find. So I will go for the cheapest possible method. For commodities, it might be cheaper to buy from the store as you need to pay for delivery if you don't meet the minimum spend.

In sg, the main killer is rental and by extension, landlords. And also other overheads like employees. Buying from a grey importer basically means by passing all these costs. My friend last time worked for a major retail brand and he needs to compete with his online counterpart selling the same thing at less than half the price. Of coz he lost the battle. Lol.

[Stary]

wah TikTok also got shop now?

I thought it is just a dancing video platform

Sorry....me no to social media, except Linkedin only.

I need my mind to be zen and free from unnecessary noises. 😄

Edited September 28, 2023 by Starry

[Lala81]

On 9/28/2023 at 1:22 PM, Jman888 said:

直播，带货，人人都可以发财！ 

i old people duno how to appreciate such trend, never watch any of such video, not even if it was carry by famous celebrities, i'm soooo outdated!   

I find them very noisy. Sometimes the videos can autoplay on FB feeds. 

Brings me back to the time when we small, follow our parents go clementi central. then bored, then sit there and watch the emporium promoters or promoters outside the hdb shophouses sell vacuum, mop etc. 

Edited September 28, 2023 by Lala81

[SGMCF328]

It is not just the middleman who mark up the price (for profits). Think about rental, overhead and logistics cost, and when we add up all these extra cost, traditional retailers simply has no fight with direct sellers on social media.

I guess this is what many government have been worrying about. Lesser retailer stores will directly affect rental and property prices, and not to mention the declining corporates taxes. The same can be said for WFH. When some companies started downsizing the office space in prime area (I know of companies who cut the office space by >50% after Covid), there is now call to resume working in office.

Sad to say, consumers' benefits has been override with business needs in the name of having a sustainable economy. 

[Jman888]

On 9/28/2023 at 2:13 PM, Lala81 said:

I find them very noisy. Sometimes the videos can autoplay on FB feeds. 

Brings me back to the time when we small, follow our parents go clementi central. then bored, then sit there and watch the emporium promoters or promoters outside the hdb shophouses sell vacuum, mop etc. 

yalor noisy like those promoters sell koyok shouting in the street, something like the infomercial thing on tv last time, heard 林志玲姐姐 was the pioneer of this trade  

[Lala81]

both sides to the story. People buying stuff that just ships from some china warehouse is also not good for the domestic economy. 

[Lala81]

I think it's easier to make a rational decision when it's just scrolling through the listings on a online platform. 
These kind of live buying/auction type, I've never liked since young.

 

[Benarsenal]

On 9/28/2023 at 2:01 PM, Starry said:

wah TikTok also got shop now?

I thought it is just a dancing video platform

Sorry....me no to social media, except Linkedin only.

I need my mind to be zen and free from unnecessary noises. 😄

China app is all in one. Social media, payment, can buy things, can take loan. All can do.

[SGMCF328]

Pardon me for been harsh, we paid millions $$ per ministers per year to solve problem for us, so shouldn't they be the one to relook at our economic model? Some (opposition members) had already highlighted in early 2000 that heavy reliance on service industry (retail and tourism) is going to put us at risk but we go all out until getting a wake up call during Covid.

Property, transport, manpower and even utility cost are just to high for business owners and it is natural that they will lose their customers to online platform / social media and soon to come, neighborhood group buy. It has been a while since I last shop at Orchard Road and it is now like a dead town, even on weekends, so is our economic model still viable?

I admit I am not a high income earner and thus every cent counts. I will continue to shun retailers as much as I can, for I cannot comprehend paying extra for the so call services at the retail store. Buy online (from reliable source of course) at a cheaper price, and get doorstep delivery with practically zero delivery charges, why not?

[Stratovarius]

On 9/28/2023 at 4:00 PM, SGMCF328 said:

Pardon me for been harsh, we paid millions $$ per ministers per year to solve problem for us, so shouldn't they be the one to relook at our economic model? Some (opposition members) had already highlighted in early 2000 that heavy reliance on service industry (retail and tourism) is going to put us at risk but we go all out until getting a wake up call during Covid.

Property, transport, manpower and even utility cost are just to high for business owners and it is natural that they will lose their customers to online platform / social media and soon to come, neighborhood group buy. It has been a while since I last shop at Orchard Road and it is now like a dead town, even on weekends, so is our economic model still viable?

I admit I am not a high income earner and thus every cent counts. I will continue to shun retailers as much as I can, for I cannot comprehend paying extra for the so call services at the retail store. Buy online (from reliable source of course) at a cheaper price, and get doorstep delivery with practically zero delivery charges, why not?

I find Orchard very crowded on weekends, still far from dead. The sales volume is actually quite good on weekends but mainly come from tourist. Sinkies will go there see see look look, take photos of the things they want to buy and go online find. Lol.

Shops can survive there are mainly luxury and f&b. But the rental there kills.

[Jamesc]

Stop buying useless things online.

Go for a massage and help the economy.