TikTok Shop has a platform problem that will get worse before it is resolved. The company has a prohibited products policy but will need to enforce it - to protect customers from counterfeits and protect them from unscientific claims that can harm customers.
TikTok Shop combines a shop and a social network, creating virality inside commerce that has not been seen. This opportunity allows bad actors to sell products and services and vanish from the platform. Publications such as Wired and The Rolling Stone have found products for sale that is against the prohibited products policy].
On regular product marketplaces such as Amazon and others, these listings combine images and text that can be blocked before consumers see it. TikTok, a video-based platform, will likely need to create new tools to ensure that the videos created do not sell or show products that are against the prohibited products policy. TikTok Shop has the potential for TikTok to be further under the microscope by regulators if it does not keep its platform under control and customers safe.
Indonesia bans social commerce
On Wednesday this week, the Indonesian government banned e-commerce tranactions on social media platforms. It is important to note that TikTok Shop has been acrive in Indonesia for almost 18 months and TikTok was to invest heavily in South East Asia as they saw the area as an opportunity - what no-one saw was regulators getting involved.
The government said the move, which takes effect immediately, is aimed at protecting offline merchants and marketplaces, adding that predatory pricing on social media platforms is threatening small and medium-sized enterprises. CNN
Indonesia’s Trade Minister Zulkifli Hasan on Monday announced the decision after a meeting with President Joko Widodo. The ban ”is to prevent the domination of the algorithm and prevent the use of personal data in business interests,” Hasan told a news conference. AP News
TikTok Shop is a cross-border business aimed at moving Chinese goods at considerably lower priciing than what local shops, marketplaces and local online merchants can offer. How TikTok manages that perception will determine its future.