Indonesia bans direct sales on social media


The Indonesian government has banned social media platforms from conducting direct sales. This is a blow to TikTok, as this was the second largest market for the Chinese giant. The Indonesian authorities aim to protect micro-entrepreneurs, but they are protesting, as social media is an excellent promotional channel for many of them. In Poland, however, direct sales on “socials” are only just beginning, but experts agree that there is no space for promotional success without an influencer on board. This is especially true given that we are increasingly buying online.

The Indonesian government has prohibited commodity transactions on social media platforms, looking to protect small businesses from competition that is rapidly growing online. This is significant because, until now, Indonesia has been one of the largest markets for TikTok, and its Chinese owners have decided that this country will be the first to introduce an e-commerce feature. TikTok has even 125 million users in Indonesia, more than in the USA.

The Indonesian authorities made a radical move, as social media platforms were given just a week to disable their store features.

At a press conference, trade minister Zulkifli Hasan said that “every government would protect local small businesses.” Adding that the regulation aimed to ensure “business competition equality.” The policy’s goal is to prevent the displacement of more than 64 million micro-enterprises and small and medium companies, which contribute 61% of Indonesia’s GDP.

What does it mean in practice? Advertising can still be placed on social media, but no shops facilitating direct sales can be created on platforms.

-No social media platform managers, and Chinese TikTok is at the forefront of that trend, want to simplify the purchasing process as much as possible. Seeing a product that we want to buy while watching a video, picture, or reading a post and being additionally encouraged by the influencer’s opinion? With one click, without leaving a particular application, we can order and pay for the item. Companies then minimize the risk of an abandoned cart because fewer factors distract their customer – explains Tomasz Niedźwiecki, creator, and president of the platform, where you can set up an online store in dropshipping form, i.e., without the need to have a warehouse and ship the item manually.

Firms that do not comply with these regulations may have their licenses to operate in Indonesia revoked. TikTok authorities have already criticized the regulation, but representatives of other applications remain silent so far.

How do the inhabitants themselves look at this ban? The British portal Guardian gives two examples. A denim wholesaler in Jakarta praised the government’s decision, claiming her revenue has dropped by 60% in recent months as buyers turned to online stores. However, a local confectioner is disappointed with the ban. He said: -For sellers like me, TikTok can be used for soft selling. We can simultaneously become influencers and sellers.

Moving to the Polish market, here, according to data from the Eurocommerce report, every active internet user has shopped online at least once. More precise data is, however, presented annually by Gemius. The company once again has looked into Polish online trade. What emerges from its analysis? The percentage of Polish Internet users who shop online is rising – it currently sits at 79%. 75% make purchases on Polish pages, while 30% on foreign ones.

According to data presented by the Central Statistical Office (GUS) in late August, in July 7.9% of all retail sales were carried out through online stores. This is a small increase compared to the previous month, but at the same time, these values ​​are lower than during the pandemic peak. However, it should be noted that GUS data is incomplete. It does not include companies employing fewer than ten people. Large foreign sales platforms like AliExpress are not included in these statistics, either.

-I find it difficult to conclude from these data that e-commerce is a threat to sellers. There is no room for quite populist bans limiting the development of e-commerce. The Polish entrepreneur – even if he has only done stationary trading so far – is currently thinking about completely transitioning to the online world, and certainly striving for hybridity, that is, selling in both channels – says the president of

However, Niedźwiecki emphasizes that the main factor hindering the Polish e-commerce market is quite backward digitization of business. Most vendors only started to take an interest in this topic after the outbreak of the pandemic. Delays cannot be compensated for in such a short time. Especially since at the beginning of the pandemic, we were dealing with unsystematic action, using technology “at random”. The customer was then happy anyway that he bought the goods online, which he had previously been obtaining stationary – if the shipment arrived reasonably quickly, he felt relieved.

-Today, consumer requirements are much higher. The shopping experience must be at least at the store level, if not higher. The customer must be sure that he will not waste time buying goods online, that he will get exactly what he ordered, that it will be of the expected quality. Only full use of the technology currently available on the market and that being created enables such a process – Niedźwiecki from emphasizes, adding: -It is not enough just to move your stationary store to the network. You need to constantly look for tech novelties that will make customers reach for their wallets, but first, you have to reach and engage them.

Who can benefit the most today from promoting and creating boutique online stores? Brands targeting their offering to the younger generation. For the youngest generations, opinions are very important. Over 80% of users look for inspiration on Instagram. However, when a product is targeted at people under 25, it is as much as over 90% of them that will check their opinion online before buying something. What’s most important for brands, after seeing posts with product information on this platform, 87% of them started following the brand, visited the store, or made a purchase. Additionally, according to a recent survey by the Influencer Marketing Factory, almost 60% of respondents said they already follow one or more virtual influencers, and over one-third purchased a product advertised by them.