DIGIVESTASI - E-commerce companies in Southeast Asia may come under pressure to conduct business activities if TikTok parent ByteDance Ltd. officially enters into a broad cooperation with PT Gojek Tokopedia Tbk. (GOTO). Sea Ltd, the owner of Shopee, is no exception.

Based on information quoted by Bloomberg, Tuesday (April 12, 2023), ByteDance is willing to cooperate with GOTO's Tokopedia in several fields, rather than compete directly with the e-commerce platform. This partnership is in the form of investment from ByteDance to Tokopedia.

"TikTok and Tokopedia plan to announce the details of the cooperation as early as next week," a source who declined to be named told Bloomberg. Although the two companies have reached an informal agreement, the details of the cooperation between the two entities are still being discussed. Therefore, this agreement does not rule out the possibility that it can be changed at any time.

However, Bloomberg's source also added that the agreement between TikTok Shop and Tokopedia still requires regulatory approval in Indonesia so there is still a risk of failure. Now, partnerships with local players could be a model for TikTok to expand into other markets such as Malaysia.

In addition, the Malaysian government has signaled its desire to review the influence of foreign companies such as TikTok. TikTok's ferocity in investing and utilizing the e-commerce field in Southeast Asia is in fact a challenge for other e-commerce companies, Shopee by Sea Co., Ltd. is no exception.

Morgan Stanley even downgraded Sea Ltd's stock rating from overweight to equalweight. Securities companies and financial institutions believe that the stock price movements of e-commerce companies in Southeast Asia will continue to fluctuate.

Morgan Stanley even predicts that Sea and other e-commerce companies in Southeast Asia, including Indonesia, will be encouraged to increase their marketing budgets. This step is necessary for them to maintain market share in the face of competition with the return of Tiktok Shop and Tokopedia from GOTO.

"We believe [Sea Ltd's] share price will be driven by current events and may fluctuate in the short term. "We will stay on the sidelines and look for attractive opportunities," said Morgan Stanley analyst Divya Gangahar Kothiyal.

Previously, Nathan Naidu, an analyst at Bloomberg Intelligence, said the return of Tiktok Shop could be a challenge for Shopee Sea Ltd in developing its business. According to Nathan, if Tiktok Shop continues to operate in Indonesia, Shopee's market share could be closed again.

Especially if Tiktok officially cooperates with GOTO's Tokopedia to operate in Indonesia. Indeed, Tokopedia so far cannot be considered as Shopee's main competitor in targeting sales through direct shopping. Nathan said: "In-person shopping can effectively reach rural areas in Southeast Asia, as evidenced by the increasing number of TikTok stores in non-metropolitan areas of the region's largest online shopping marketplace platform, Indonesia".

LEAVING BIG PLAYERS BEHIND

In addition, the potential cooperation between TikTok and PT GoTo Gojek Tokopedia Tbk. (GOTO) is considered to have the potential to erode the market share of other e-commerce players such as Shopper, Bligli, Lazada, and Bukalapak. Nailul Huda, Director of the Center for Economic and Legal Studies of the Digital Economy (Celios), said that the e-commerce market share could drop to the top two and small e-commerce.

In addition, Huda also assessed that the opportunity for GOTO to collaborate with TikTok would also worsen Bukalapak's performance. "Maybe [the only two e-commerce players] because Blibli and Lazada are no longer able to spend money. Bukalapak seems to be losing the competition," Huda told Bisnis, Tuesday (May 12, 2023).

Huda sees the potential for cooperation between TikTok and GOTO, not only involving capital injections but also cooperation between the TikTok platform and any GOTO services. "TikTok's social media ecosystem is one of the largest, while Tokopedia's ecosystem is also one of the most complete in the e-commerce market," Huda said. Therefore, according to Huda, one of the features that will be improved in the company's activities is the live purchase or live streaming function.