Footfall Declining
On September 12, 2023, Thamrin City retail centre in Central Jakarta seemed empty and it all cause of TikTok Shop. The mall was empty now, with just a few people browsing the sellers’ goods. The normal lively negotiating between customers and sellers had almost evaporated, giving merchants unexpected free time. Some even took a noon siesta in the stillness. A half-hour shopping tour reinforced a gloomy outlook. Visitors actually engaged in transactions were so few that you could count them on one hand.
Ova’s Misfortune: A Major Flip
Ova, 36, a Thamrin City apparel dealer, lamented the decline in consumers after Eid al-Adha in June. Sadly, “This trend began after the Hajj holiday, but recently, it has worsened considerably.”
Thus, Ova’s profits plummeted. In the heydays of frenetic trade, she might make Rp50 million everyday.
There are few passerby or devoted customers anymore. The market has changed drastically; it seems to have disappeared “sigh.
Ova said the present tourist shortage was the worst she had ever encountered. She said TikTok Shop had surpassed conventional marketplaces and retail malls.
The Rise of TikTok Shop: Competitive Prices
Ova said TikTok Shop’s low price attracted more consumers who preferred online purchasing to brick-and-mortar stores.
According to her understanding, platform subsidies might cut TikTok’s rates. For instance, a product offered at Rp38,000 may display on the site for Rp3,000.
Ova said TikTok paid the pricing difference. Essentially, consumers paid Rp3,000 and sellers earned Rp38,000.
So, it was no surprise that many consumers avoided physical shops.
Free delivery is offered by TikTok. Shoppers at conventional marketplaces must consider transportation expenses. Staying home and purchasing cheap products feels better “Ova remarked.
Ova refused to give up despite TikTok Shop’s rise. Price reductions were among her attempts to reignite client enthusiasm.
TikTok Shop Price Always Outperformed Her
“While other online platforms like Shopee maintain standard prices, TikTok stands out,” she said.
Ova hoped the government would quickly regulate internet trade to help small businesses. Her main issue was government action in online sales of cheap foreign items.
“We don’t want internet stores closed. Instead, we hope the government can solve this problem. Even the Minister of Trade has been alerted about the inflow of cheaper foreign items “Ova said.
Sales Decline: Sarah’s Challenges
In conjunction with Ova’s struggles, 24-year-old vendor Sarah observed a drop in Thamrin City foot traffic during the last two weeks.
She shared Ova’s fears about internet shop competitiveness. Sarah also sold online but used a variety of methods.
The effect is internet purchasing. People prefer internet shopping over in-person visits “Sarah stated.
She said her daily earnings had dropped over 60%.
“Previously, I could generate Rp3 million daily; now, it’s Rp1 million,” she bemoaned.
Government Interventions: TikTok Shop Conundrum
The authorities has noticed TikTok Shop’s growing popularity and complaints about inexpensive foreign items on the site.
The Minister of Trade, Zulkifli Hasan, said that inexpensive foreign products were not only affecting MSMEs. Even beauty and fashion struggled under TikTok Shop items.
Zulkifli met with State Secretary Pratikno to address these concerns. The topic was Indonesian TikTok Shop bans.
Although Zulkifli could not commit to a date for regulatory amendment, he highlighted that the Ministry of Trade had already finished its adjustments and was awaiting harmonisation.
Zulkifli outlined four key changes to Regulation No. 50 of 2020: Business Licencing Provisions, Advertising, Guidance, and Supervision of Business Actors in Trade Through Electronic Systems.
First, creating a positive list of importable products.
Zulkifli stressed that locally produced items will not be accepted.
Second, licencing. According to him, social media networks should not act as e-commerce firms under one licence.
“Licences shouldn’t match. Social media should be social commerce to avoid disputes. This will be controlled “said.
Zulkifli addressed import product standards third. He emphasised that imported items must meet requirements and be examined before entering the market. The same criterion apply to these commodities’ provenance.
Finally, to safeguard local products from undercutting, imported items had a minimum purchasing value of US$100, or Rp1.5 million.
Minister Urges TikTok Shop Indonesia
Teten Masduki, the Minister of Cooperatives and SMEs, asked TikTok Indonesia to stop predatory pricing and cheap rates. The appeal has yet to generate results.
Teten anticipated that government laws will encourage TikTok e-commerce players to collaborate. He also said President Jokowi was organising a digital transformation task team to prepare for TikTok Shop’s possible ban in Indonesia.
Teten stated that protecting the home market was necessary due to digital transformation’s irreversible impact on the economy. Teten told Commission VI of the DPR that Indonesia should mimic China’s digital acceleration to build a new economy while preserving the local market.
In China, 90% of the internet platform is controlled by local firms, while 10% is international due to rigorous regulation. In the last hearing, I urged we adopt China’s approach “Teten said Tuesday, September 12.
Social media and business are different in China, therefore digital platforms cannot monopolise. Even in China, TikTok Shop and social media are separate. Indonesia allows it. Who loses? “he concluded.
