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Shopee, the e-commerce arm of Southeast Asian tech giant Sea Limited, faces potential pressure in Indonesia due to the strategic partnership between GoTo's Tokopedia and TikTok. GoTo, resulting from the merger of Indonesia’s Gojek and e-commerce platform Tokopedia, announced a collaboration with TikTok to serve small and medium-sized businesses in Indonesia. Analysts suggest this move might intensify pressure on Shopee, which is already grappling with profitability challenges.
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Sea Limited's US-listed shares closed lower on Monday, following a third-quarter net loss of $143.9 million. The loss reflects the company's focus on growth rather than profit. In the announced deal, TikTok will gain a controlling stake of 75.01% in an enlarged Tokopedia entity and inject $1.5 billion over time. The move is seen as a concern for local incumbents in the Southeast Asian e-commerce and consumer tech space, impacting companies like Shopee.
Why it matters
The GoTo-TikTok partnership is considered a "masterstroke," with TikTok Shop gaining operational control and local legitimacy in e-commerce. Indonesia's ban on e-commerce on social media platforms in October influenced the deal, leading TikTok to suspend its e-commerce service. Analysts emphasize Sea's pivot to growth over profits in the face of rising competition, and the market's reaction indicates concerns about the loss of GoTo's upside potential and its shift away from e-commerce.
