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TikTok Live and the rise of digital neo-mercantilism
Protection will keep local e-commerce, MSMEs and producers dependent on government protection, making it difficult for them to scale up without government support.
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Marketing media: Small and medium entrepreneurs in Bandarlampung, Lampung, try live TikTok to promote their products on June 16, 2023. Social media has become an effective marketplace for business players. (Kompas/Vina Oktavia)
T
he market does not always work free from restrictions or barriers. Markets always face intervention and disruption. One of the biggest market obstacles is government intervention.
The newly revised Trade Ministerial Regulation No. 50/2020 on business licensing, advertising, guidance and supervision of business players in trading through electronic systems is one of the examples of how governments take control of the market, protect local players and regulate the digital economic ecosystem.
Based on a Trade Ministry statement, this new regulation distinguishes between social commerce and e-commerce, prohibits transactions on social media, restricts e-commerce and social commerce platforms being producers and requires merchants to comply with tax regulations and quality standards and to have a license.
The new amendment drives the hype of social commerce in Indonesia. The popularity of social commerce such as TikTok Shop has gained attention among users and the government. With its shopping entertainment (shoppertainment) concept in one platform, TikTok Shop has connected 2 million sellers since it rolled out in 2021, and accumulated US$2.5 billion gross merchandise value (GMV) in Indonesia (Momentum Works, 2023).
Shoppertainment concepts shift the way merchants do business and consumer behavior. With its In-Feed Video and LIVE Shopping features, merchants on TikTok can directly showcase and sell their products. Therefore, merchants can skip the process of creating attention, interest, desire and action (AIDA) in marketing communication into conversion actions.
On the other hand, TikTok provides different consumer journeys to its customers, direct connection to sellers in real time, and a one-stop platform from social media and entertainment, into shopping in the hand.
TikTok's massive penetration has raised concerns and triggered governments worldwide to ban and regulate the platform. Data from The China Project shows six countries ban, and 23 countries ban on government devices, the short-form video hosting service.
