Available online at JIS website: https://jis.
Research Article POST-TIKTOK SHOP CLOSE DOWN: WILL MSMEs REALLY RISE
IN INDONESIA?
Received:11th June 2024.
Revised: 30th December 2024.
Accepted: 3rd January 2025.
Available online: 5th January 2025 Keisha Dinya Solihati1.
Nila Kurnia Wati2.
Augustin Rina Herawati3.
Novieta Hardeani Sari4 1,2 NIPA School of Administration Jakarta.
Jl.
Administrasi II.
Pejompongan Bend.
Hilir.
Kec.
Tanah Abang.
Kota Jakarta Pusat.
DKI Jakarta,102060.
Indonesia 3 Universitas Diponegoro.
Jl.
Prof.
Soedarto SH Tembalang.
Semarang, 1269.
Indoensia 4 Newcastle University.
Newcastle upon Tyne NE1 7RU.
United Kingdom Abstract TikTok is ranked 1st place in the period from January to December 2022.
There have been suspicions over TikTok's efforts to further prosper its business through an initiative called Project S via TikTok Shop.
Therefore, recently the government established Regulation of the Minister of Trade of the Republic of Indonesia Number 31 of 2003.
With this policy.
TikTok Shop stopped operating on October 4, 2023 due to violations of socio-commerce rules.
This study aims to explore perspectives related to post-closure policies of TikTok Shops in relation to supporting the sustainability of MSMEs in Indonesia.
This research uses a qualitative descriptive research method with phenomenology and case study approach.
Data collection techniques through interviews with MSMEs and TikTok Shop users and literature studies.
It is concluded that although the weakening of the conventional MSME market is not necessarily caused by e-commerce only, this policy is considered a good step to be taken to anticipate the threat of rampant trade from abroad that can threaten Indonesian MSMEs.
MSMEs that have indeed utilized the TikTok Shop feature will still be able to use TikTok as a social media service for promotional means, only the transactions will be connected to other platforms.
Keywords: TikTok Shop.
Socio-Commerce.
Project S.
How to Cite: Solihati.
Wati.
Herawati.
Sari.
Post-Tiktok Shop Close Down: Will MSMEs Really Rise In Indonesia?.
Jurnal Ilmu Sosial, 23 .
: 1-13 .
ttps://doi.
org/10.
14710/jis.
Permalink/DOI: https://doi.
org/10.
14710/jis.
Corresponding Author: Keisha.
dinya@gmail.
com (Keisha Dinya Solihat.
2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13
INTRODUCTION
MSMEs play an important role in supporting the economies of most countries, especially developing countries, through job creation and global economic development.
MSMEs contribute 90% of world production, 60-80% of employment and 55% of GDPB.
developing countries.
MSMEs contribute almost 40% of national income (Koghuashvili, 2.
Similarly, to countries in ASEAN.
MSMEs also have a very important role in job creation and as a source of income (Tambunan, 2.
In Indonesia.
MSMEs are an important pillar on the In 2021, the contribution of MSMEs to GDP is 61.
07% and can absorb 97% of the total workforce and collect 60.
4% of the total investment (Limanseto, 2.
On the other hand, the environment around MSMEs and business behavior continues to change, especially with the emergence of digital technology that allows the creation of new business models, new product/service offerings, or new business processes.
The digital age has touched almost all aspects of life and offers convenience and speed.
Online sales media can speed up processing time and reduce the risk of human error so that in its operations, sales can be carried out effectively and efficiently (Supriyanto et al.
, 2.
This has also made changes in people's business behavior and shopping patterns, especially driven by the impact of the COVID-19 pandemic that has hit since 2020.
One of the behavioral changes is making people leave the conventional face-to-face shopping method to shop online.
Based on data from the 2023 Indonesia Digital survey conducted by We Are Social, 77% of Indonesia's population or as many as 212.
9 million people have become Internet users, and the number of people purchasing consumer goods via the Internet in Indonesia is 178.
9 million .
6%) with an increase of more than 20 million people compared in 2022 (Digital 2023 - We Are Social Indonesia, n.
The development of digital technology has given rise to various internet-based applications that provide various business opportunities (Afdhal et al.
, 2.
Among the most widespread is the emergence of e-commerce, marketplaces and social media.
E-commerce is an electronic commerce service or transaction process between sellers and buyers as well as dissemination, and marketing carried out electronically with the help of the internet and relying on information systems (SaAoadah et al.
, 2.
, an example of this e-commerce is a special website from a brand to market its products in cyberspace.
The marketplace is an electronic product marketing forum that brings together many sellers and buyers to transact with each 2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13 other (Apriadi & Saputra, 2.
, just like Shopee.
Tokopedia.
Lazada, etc.
Social media is an online media where users can easily participate, share and create content, including blogs, networks, social, forums, and so on in the virtual world without the limits of space and time (Liedfray et al.
, 2.
, such as Instagram.
TikTok.
Snapchat.
LinkedIn etc.
This development has caused various significant changes in people's behavior, such as changing consumption patterns, the influence of social interaction and influencers, the emergence of sharing economy practices, the involvement of netizens or internet users, and the potential for MSME business growth through the use of these applications.
Based on statistics.
Internet users in Indonesia spend an average of 7 hours and 42 minutes surfing the Internet, of which 3 hours and 18 minutes are spent on social media.
As many as 60.
4% or 167 million Indonesians have become active users of social media.
The most favorite social media platforms are WhatsApp .
5%).
Instagram .
2%), and TikTok .
9%).
Although TikTok is in 3rd position, for the ranking of mobile apps based on consumer spend.
TikTok is ranked 1st based on the period January to December 2022 (Digital 2023 - We Are Social Indonesia, n.
Tiktok has been present as a social media application since 2016 and has become a very popular application among teenagers and young people.
TikTok positions itself as a fun and creative platform for creating and sharing short videos globally.
Along the way.
TikTok has also added various features to ensure user engagement of its users, including adding video duration.
TikTok TV.
TikTok Shop, visit history analysis, video filters, stickers, beautification, live, etc.
TikTok Shop allows users to be able to sell directly through live streaming include product links and directly make transactions with available services, such as Gopay.
Dana, etc.
With these various features.
TikTok is proven to have a high engagement rate, which is 17.
per upload, whereas InstagramAos engagement rate is 3.
86% and YoutubeAos 1.
63% (Ilmiah & Pendidikan, 2.
Since 2023, there have been suspicions over TikTok's efforts to further prosper its business through an initiative called Project S.
Project S is suspected to be the company's way of doing business by collecting data on best-selling products, which are then produced in China and sold at lower prices on TikTok Shop.
The project was first reported by the Financial Times on June 21, 2023 and has been operating in the UK market through the Trendy Beat feature on the TikTok app.
(Kontroversi Project S TikTok Di Indonesia - Infografik Katadata.
Co.
Id, n.
Project S is also suspected of engineering consumer behavior and influencing market preferences by leveraging TikTok's algorithm to direct users to products originating in China.
2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13 This can certainly be a threat to MSME players in competing in the digital market The existence of digitalization in trade through digital markets can expand access to market products and reach consumers.
But on the other hand, digitalization in trade through digital markets can also expand access to business competition.
There needs to be rules governing equality in business competition so that domestic MSMEs are not disadvantaged and can benefit as well.
In addition, the protection of personal data is also very necessary in this digital market.
The study conducted by Ghani and Sidek emphasizes the potential threats to personal information provided in e-commerce and the need for personal information control (Ghani and Sidek, 2.
In a similar study conducted by Berendt.
Gynther.
, &
Spiekermann there are concerns about maintaining privacy in e-commerce, especially because of the large amount of personal data available and the potential use in marketing.
In particular, the study underscores the importance of data privacy in the field of e-commerce and the need for effective measures to protect users' personal information (Berendt.
Gynther.
, &.
Spiekermann, 2.
In supporting the empowerment of MSMEs through domestic electronic systems, protecting consumers, encouraging the development of trade through electronic systems, and paying attention to dynamic technological developments, the government reregulates provisions regarding business licenses, advertising, coaching and business supervision in trade through electronic systems.
This regulation is realized through the Regulation of the Minister of Trade of the Republic of Indonesia Number 31 of 2003 concerning business licensing, advertising, coaching and business supervision in trade through electronic systems.
Some of the reasons for the issuance of this regulation are that the Electronic Trading Through Systems (PMSE) platform needs to have standards since there is some existence of foreign business actors who are indicated to be conducting unhealthy trade, the PSME ecosystem has not been able to realize equal competition, and the potential to disrupt the PMSE ecosystem, namely the emergence of new business models (Wardani, 2.
This rule governs six main points.
First, to facilitate coaching and supervision, the definition of the business model of PMSE organizers such as marketplaces and social commerce is clarified.
Second, overseas traders can directly sell finished goods to Indonesia through crossborder e-commerce platforms at a minimum price of 100 USD per unit.
Third, there is a positive list, which is a list of foreign goods that can be traded across countries directly into Indonesia through e-commerce platforms.
Fourth, foreign traders who will sell in the Indonesian 2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13 marketplace are stipulated with special requirements such as business legality.
SNI and halal fulfillment, the inclusion of Indonesian-language labels and the origin of delivery of Fifth, marketplaces and social commerce are prohibited to act as producers.
Sixth, prohibition of data control by PPMSE and affiliates to ensure there is no misuse of data for use by PPMSE or its affiliated companies (Wardani, 2.
Therefore, this rule is expected to achieve its three main objectives.
First, creating a healthy PMSE ecosystem by paying attention to dynamic technological developments.
Second, supporting the empowerment of MSMEs and domestic PMSE business actors.
Third, improving consumer protection in the country (Wardani, 2.
With this policy.
TikTok Shop will stop operating on October 4, 2023 due to violations of social commerce rules or social media that doubles as e-commerce.
Based on the description above, this study aims to explore perspectives related to the post-closure policies of TikTok Shops in relation to supporting the sustainability of MSMEs in Indonesia.
RESEARCH METHODS
This research uses a qualitative descriptive research method with phenomenology and case study approach.
The approach used in this study is phenomenology, namely by exploring individual experiences subjectively in using the TikTok Shop application and trying to interpret the phenomenon, and the case study approach, which is focuses on government policies in prohibiting TikTok Shops from being used as e-commerce and MSMEs.
Data collection techniques through interviews and literature studies.
The interview was conducted online using WhatsApp with MSME actors who have experience in selling on TikTok Shop.
As for the literature study is carried out by reviewing various scientific literature and news.
The analysis method used is the Miles and Huberman .
method which consists of data collection, data reduction and drawing conclusions.
Triangulation of methods and sources is used to obtain correct information from research results.
RESULTS AND DISCUSSION
Findings from TikTok Shop User and MSMEs Interview Business actors who act as interview informants in this study interpret TikTok Shop as a form of new business model in online shopping.
There are two types of TikTok Shop users, which are as sellers/affiliates, or as buyers/viewers.
They considered TikTok Shop as a facility that makes it easier for sellers to market their sales without having to create separate impressions 2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13 between content and goods/transactions.
The advantage of selling on TikTok Shop that is felt by sellers is the many supporting facilities provided by TikTok, such as free shipping The benefits from the buyer's side also vary such as being able to see the live display of the product through live streaming, coupons and free shipping, thus increasing confidence to make transactions.
The shortcomings felt by users of the TikTok Shop service are in the transaction, where the funds from the buyerAos transaction are not directly transferred to the seller's balance and are delayed for some time.
Regarding the government's policy to close the TikTok Shop transaction service, the reaction from users also varied.
Some sellers felt that TikTok Shop should be closed because it violated the rules, but other parties expressed disappointment.
The opinions of the interviewees regarding the closure of TikTok Shop to save MSMEs also vary, some feel appropriate, but some also feel that the policies made are not right on target.
Policy analysis from Permendag no 31/2023 As of June 2023,17 countries have blocked TikTok for various reasons, one of which is data The seventeen countries include Taiwan, the United States, the European Union.
Canada.
Latvia.
Denmark.
Belgium, the United Kingdom.
New Zealand.
Australia.
Estonia.
France, the Netherlands.
Norway.
Pakistan.
Afghanistan, and Japan.
While the Indonesian government until now has not blocked TikTok completely but one of the activities on TikTok has been closed, the TikTok Shop.
This closure is in line with the issuance of the Regulation of the Minister of Trade of the Republic of Indonesia Number 31 of 2003 concerning business licensing, advertising, coaching and business supervision in trade through electronic systems.
The issuance of the Regulation of the Minister of Trade of the Republic of Indonesia Number 31 of 2003 concerning business licensing, advertising, coaching and business supervision in trade through electronic systems, is one of the efforts of the government in Indonesia in supporting the empowerment of MSMEs and protecting MSMEs.
This is in accordance with what was conveyed by Wardani .
in his writing that "The background to the revision of Permendag 31/2023 includes, among others, the need for standardization of goods on the Electronic Trading Through Systems (PMSE) platform, indications of unhealthy trade by foreign business actors, still weak competitiveness of MSMEs and domestic products, still not realizing equal competition in the PMSE ecosystem, and the emergence of new business models that have the potential to disrupt the PMSE ecosystem.
Ay Furthermore, in his writing.
Wardani .
explained that "The purpose of the preparation of Permendag 31/2023 2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13 is to create a healthy PMSE ecosystem, taking into account dynamic technological Second, supporting the empowerment of MSMEs and domestic PMSE business actors, and third, increasing consumer protection in the country.
In addition.
Trade Minister Zulkifli Hasan was quoted in Wardani .
as explaining that according to Zulhas, the existence of digital technology in the marketplace that is present in Indonesia has a different impact than in China.
"In China, offline merchants are not bothered by digital platforms.
Instead, they developed a new market of almost 50% wider, so it became win-win solution.
While in Indonesia, itAos different, some of the offline merchants stay alive, but many have died," Zulhas explained.
Therefore, this rule emphasizes several important points.
First, coaching and supervising PMSE and e-commerce becomes easier because the definition of PMSE organizers' business models such as marketplaces and social commerce is clarified.
Second, local traders and MSMEs will be better protected because there is a minimum price of 100 USD, then a positive list, special requirements for foreign traders who will sell their finished products directly to Indonesia through e-commerce platforms, as well as a ban on marketplaces and social commerce acting as producers.
This will filter what foreign products can be sold in Indonesia so that the hope is that MSMEs and local traders will not be rivaled.
In addition, there are requirements for merchants who will sell in Indonesian e-commerce will also guarantee that the products sold are not dangerous and safe products for consumers in Indonesia.
Then, the ban on marketplaces and social commerce acting as producers is expected to minimize unfair trade in PMSE management which can harm local traders and MSMEs.
Third, improving consumer protection through the prohibition of data control by PMSE and affiliates to ensure that there is no misuse of data for use by PMSE or its affiliated companies.
This is in accordance with studies conducted by Ghani and Sidek .
and Berendt and Spiekermann .
that the protection of personal data in e-commerce is very important considering the great potential for the use of personal data by e-commerce.
Therefore, this policy is one step in protecting consumers' data.
Synthesis of Opportunities and Challenges for MSMEs Several studies show that TikTok offers opportunities for MSME players, especially in terms of marketing and increasing sales.
A study conducted by Yasa .
shows that Indonesian smartphone brands such as Oppo have utilized TikTok as a marketing platform and can increase performance credibility better than other brands.
This study shows that TikTok can be used as a marketing platform and can provide opportunities to increase sales.
Vonny Ernita Susamto, 2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13 Incubation Lead TikTok Shop Indonesia quoted by Perkasa .
explained that ".
Social commerce can increase the turnover of MSME players and the increase in turnover is quite This shows that TikTok can also provide opportunities to increase sales for the MSME sector that promotes its products through TikTok.
The results of the study are in line with a study conducted by Afiah .
showing that TikTok is effective as a promotional tool and can increase sales of MSMEs in the culinary sector in Makassar.
The results of this study are also reinforced by a study conducted by Kharianti .
showing that strategies such as discounts, vouchers, and interactive marketing can be applied by MSMEs in marketing products and increasing sales through TikTok.
Based on the study.
TikTok provides an opportunity for MSMEs to increase marketing efforts and drive sales.
The opportunities offered by TikTok are in line with social commerce opportunities in general as the results of a study conducted by Nathan and Blicharz .
The existence of impulse/ spontaneous purchases, buyer experience without the need to go to a physical store, sharing opinions related to products marketed, collaboration with influencers according to the target market, and increasing product insight to consumers can be opportunities in increasing product marketing and sales.
As for challenges, basically the challenges of the emergence of TikTok for MSMEs are almost the same as challenges in social commerce, including reputational damage, marketing strategies, consumer behavior and information security.
This is as shown by a study conducted by Horn, et al .
which focused on the threat of negative publicity and reputational damage through social media, and emphasized the need for businesses to develop response strategies.
In line with the study of Werner Degenhardt .
which focuses on the potential of customers to exploit the weaknesses of social commerce.
Similarly.
MSMEs can also get negative publicity and reputational damage through TikTok media if they get bad comments from Even consumers have the potential to exploit certain product weaknesses through TikTok.
Therefore, when this happens, it is necessary to immediately formulate a strategy for responding and marketing.
While Noushad Kk .
focuses on the influence of marketing in social media on consumer behavior and pressure on companies to adopt social media platforms to survive.
Likewise.
MSMEs that use TikTok media, also have to compete with a wider scope of competitors, and the marketing strategy carried out will affect consumer behavior.
While Tse.
Daniel W.
et al .
focused on the risk of privacy violations and data leaks in the era of 2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13 social media.
This is also one of the challenges in using TikTok as a marketing medium for MSME players.
CONCLUSIONS
TikTok Shop services provide an easy, effective, efficient shopping experience for sellers and buyers, by making TikTok Shop a medium to disseminate information, while making it possible to make direct transactions.
Meanwhile, threats related to the protection of the Indonesian market from the rise of imported goods and unfair competition are regulated in the Regulation of the Minister of Trade of the Republic of Indonesia Number 31 of 2033 concerning business licensing, advertising, coaching and business supervision in PMSE.
This regulation in more detail governs: .
Different definitions of business models of PMSE operators.
Restrictions on the sale of imported goods sold directly to Indonesia with a minimum price of 100 USD.
Positive list, which is a list of foreign goods that can be traded across countries directly.
Special requirements for foreign traders who want to sell on the Indonesian marketplace.
marketplaces and social commerce are prohibited from acting as .
Prohibition of data control by PPMSE and affiliates.
The closure of the transaction feature on TikTok Shop is based on the position of TikTok services which should only be limited to social media platforms, not socio-commerce.
Although the weakening of the conventional MSME market is not necessarily caused by e-commerce only, this policy is considered a good enough step to be taken to anticipate the threat of rampant trade from abroad that can threaten Indonesian MSMEs.
In addition.
MSMEs that have indeed utilized the TikTok Shop feature will still be able to use TikTok as a social media service for promotional means, it's just that transactions will be connected to other In the future.
MSMEs can still take advantage of opportunities from the use of digital technology to develop their business, by increasing product insight to consumers through digital platforms can be opportunities in increasing product marketing and sales.
As for the challenges.
MSMEs need to position and prepare strategies to compete with a wider scope of competitors, anticipate negative publications, and stay alert with the risk of privacy violations and data leaks in the era of social media.
The government should not only regulate Trade Through Electronic Systems or online transactions, but also fix rules regarding import restrictions duties and excise more 2024AJISAeISSN: 2548-4893.
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Jurnal Ilmu Sosial Volume 23 | Issue 2 | Year 2024 | Page 1-13 To support MSMEs, it needs to be supported by various other policies, such as increasing digital technology literacy for MSME actors, supporting financial access facilities, simplification of regulations and bureaucracy, legal protection, assistance in access to international markets, encouraging collaboration and partnership.
REFERENCE