Phasio, a Singapore- and Berlin-based startup developing software for the ‘productionisation’ of digital manufacturing, has secured US$2.5 million in seed funding led by Airtree Ventures.

500 Global, Entrepreneur First, and Michael Sorkin’s Gattaca Ventures also joined the round.

The strategic funding will enable Phasio to scale its engineering team to support the growing demand for its interface. A portion of the capital will be used to accelerate its manufacturing interface with feature improvements.

Also Read: Industry 4.0: Navigating disruptive technologies in manufacturing

“Our manufacturing interface is not just a tool; it’s a carefully designed ecosystem rooted in a deep understanding of the challenges that both manufacturers and customers face. Phasio’s intuitive by design, removing barriers and making it easier for manufacturers to focus on what they do best: creating quality products,” said Co-Founder Sudharshan Raman.

Founded by Harry Conor Lucas (CEO) and Raman (CPO), Phasio provides a manufacturing interface tailored to address existing friction points between manufacturers and customers throughout the standard process. The company claims its software tackles the end-to-end workflow between these stakeholders — from instant quotations to collaborating on designs to managing personalised order experiences via a digital storefront.

Each tool featured on Phasio’s manufacturing interface is designed to streamline product development in a way that’s intuitive to the manufacturer-customer workflow. For instance, when collaborating on designs, Phasio’s interface enables the manufacturer and customer to view the design on the former’s website and leave comments on the parts in 3D. This means a single engineer can scale up their workflow from an average of two projects to ten at a time.

Also Read: Making smart manufacturing a cost-efficient reality for SMEs

In addition to its core features, Phasio has developed ManufacturingGPT (mGPT), an AI agent to answer questions customers may have about specific manufacturing processes to simplify parts of the order management workflow, which may need an instant response.

Phasio’s platform boasts a number of integrations across the manufacturing workflow from Computer Aided Design software (Fusion360, CREO, Solidworks), accounting software (Xero, Quickbooks and Zoho), and shipping providers (Australia Post, UPS and FedEx).

Over 50 local manufacturers use Phasio across many markets, such as Singapore, Australia, Germany, India, the UK, Greece and the Netherlands.

Also Read: 

Vishal Harnal, Managing Partner at 500 Global, added: “Manufacturing plays a key role in bolstering the prosperity of the global economy. Phasio’s commitment to foster hyper-local and hyper-connected manufacturing holds the potential to catapult not only their customers but the people and economies dependent on these industries.”

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Image Credit: Phasio.

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LUNA, an Indonesian embedded fintech and vertical SaaS platform for retailers and MSMEs in Indonesia, has raised an undisclosed round of financing led by TNB Aura through its TNBA Scout initiative.

Seedstars and existing investors 1982 Ventures, Century Oak Capital, and Prasetia Dwidharma also participated.

Also Read: Fintech funding in Q3: Indonesia witnesses 94% plunge while Vietnam sees 190% surge

With this financing, the startup plans to recruit talent across all functions, expand to new cities in the archipelago, and invest in platform development.

Launched in late 2019 by Abdullah Lewis (CEO), Patricco Baron (CTO), and Irianto Siah (COO), LUNA is an Operating System for merchants to improve their operations, payments, accounting, access to financing, supply chain, digital marketing, customer relationship, loyalty programmes, HR, legal and compliance.

“Retail merchants face an incredibly complex and competitive market. Many have not digitised or are using outdated legacy systems not built for Indonesian retailers or MSMEs. We are the all-in-one system for retail owners to scale their business and provide enhanced customer experiences,” CEO Lewis said.

Also Read: What you can learn about Singapore, Indonesia from this list of top tech startups

Its solutions include a mobile point-of-sale system with a built-in enterprise resource planning (ERP)/accounting system (Luna POS); QRIS, debit, and credit card payment enablement (Luna One); financing support for MSMEs (Luna Capital); online web (TokoLuna); and digital supply chain solutions (Luna Mart); legal support, company registration, and patenting (Luna Legal); helping MSMEs to manage social media and advertising (Luna Ads); as well as HR management, loyalty programs, and customer relationship management offerings.

According to the company, it covers over 70 cities in Indonesia and is growing over 20 per cent m-o-m, with over 7,000 active merchants onboarded.

LUNA has partnered with major banks such as Bank Jawa Barat, CIMB Niaga, Bank Neo Commerce and Nobu Bank; P2P lenders Koinworks and Batumbu, and wireless network operator Smartfren. The company is rolling out an HR management system and additional value-added services to meet the needs of MSMEs as a comprehensive solution.

Also Read: 

“With 90 per cent of all MSMEs in ASEAN based in Indonesia, we believe there is still a large, untapped market presently facing a lack of access to new technology and capital. We believe LUNA’s unique access to MSMEs through its rural bank partnerships along with their POS system software serve as prime data collection points which will enable business owners access to their full suite of product offerings,” said Glen Ramersan, Managing Partner & Head of Indonesia, TNB Aura.

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Image Credit: LUNA.

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Eazy Digital, a SaaS platform empowering agents and brokers to automate their insurance sales and processes in Thailand, has closed a US$1 million seed round.

M Venture Partners led the round, with participation from returning investors Wavemaker Partners, OneDegree, Ascend Angels, and Orvel Ventures.

Also Read: Thai insurtech company Roojai acquires DirectAsia from Hiscox

The fresh funding will be used to upgrade Eazy Digital’s automated agency management system platform for agents and brokers and fuel expansion to Malaysia and the Philippines.

Eazy Digital was built by serial entrepreneurs and insurance veterans Harprem Doowa (CEO) and Maethavee Sukul (COO). Doowa, previously co-founded Frank (acquired by bolttech in 2020).

Eazy Digital leverages technology to help insurance intermediaries break free from manual and legacy processes. The insurtech platform is built to handle millions of transactions with features such as an automation campaign builder to launch data-driven and personalised campaigns to boost sales efficiency. Agent request management that connects to a workflow system allows agents to request claims, amendments, quotations, and cancellations.

Intelligent dashboarding and reporting of key KPIs and SLAs to help boost visibility for agents. Agency profile pages allow individual agents to have their own profile pages branded under the insurance company. These pages help agents quickly build trust and generate leads.

Also Read: Wealthtech, insurtech, SaaS fintech are the new hot verticals in Indonesia: AC Ventures report

Other modular add-ons in the works include Application Programming Interface (API) enabled payment, onboarding, workflow management, dashboard, and training management to reduce operational workloads.

Eazy Digital recently partnered with Ergo Insurance and Tokio Marine Safety Insurance, facilitating 100,000 policies, renewals, and claims in Thailand.

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e27 has been dedicated to nurturing a supportive ecosystem for entrepreneurs since its inception. Our Contributor Programme offers a platform for sharing unique insights.

As part of our newly introduced ‘Contributor Spotlight’, we shine a weekly spotlight on an outstanding contributor and dive into the vastness of their knowledge and expertise.

In our first episode, we feature Daan van Rossum, CEO of FlexOS and the creator of Future Work, a weekly newsletter and podcast about the future of work for an audience of over 15,000 business and people leaders.

A valued contributor, Rossum joined us in Q2 with his debut article. Since then, his work has amassed over 3,000 views. His motivation as an e27 contributor stems from his desire to impart knowledge and experience to the startup community.

Rossum shares his personal and professional journey in our debut episode of Contributor Spotlight.

The driving force

Rossum is passionate about helping startups create environments where their employees flourish in happiness and productivity. “Startups can potentially change the world, and I want to help them achieve their goals,” he said candidly.

How it all began

Rossum embarked on his journey at 15 when he chose to leave school and delve into the internet, enticed by its transformative possibilities. With experiences at Ogilvy spanning multiple global cities, he ventured to establish his own company, committed to aiding individuals in discovering happiness and realising their aspirations.

This journey evolved further as he took on the CEO role at Dreamplex, a co-working network in Vietnam. He later introduced FlexOS, a platform that empowers people-centric managers in hybrid and remote work settings.

Also Read: Myths vs reality: Remote and hybrid managers report high productivity and trust

The future is happy

Rossum specialises in employee experience, employee engagement, remote and hybrid work models, and fostering happiness in the workplace.

Regarding employee experience trends, he said, “There’s a noticeable shift towards emphasizing its importance in boosting engagement, retention, and productivity. Furthermore, we’ve seen the rapid rise of remote and hybrid work models, accelerated by the COVID-19 pandemic. This has pushed companies to rethink and enhance the experience for remote and hybrid workers.”

He highlighted the growing focus on workplace happiness, emphasizing that companies now understand its role in driving productivity and innovation. They actively strive to create supportive, valued, and appreciated workplaces.

Advice for budding thought leaders

To all aspiring thought leaders and regular contributors seeking to enhance their skills as articulate and efficient communicators, here are some of his top tips:

• Develop a deep understanding of your field. This will give you the credibility and authority to speak on relevant topics.
• Maybe, more importantly, understand who you’re writing for. If you don’t know what your audience cares about, it’s hard to provide real value. 
• Be able to communicate your ideas clearly and concisely. 
  • Writing is thinking, but the final product should convey your message. I highly recommend the University of Michigan’s Good With Words course. 
  • Read a lot. The more you read, the more you’ll get into the flow of writing well yourself. 
• Be responsive to your audience. Engage with them on social media and answer their questions. Writing can’t be a one-way street. Let your readers inspire your next piece and help you develop your thinking and writing. 

Juggling too many things?

“Understanding your priorities is crucial,” Rossum emphasised. “Once you’ve identified them, it’s time to evaluate your schedule. Chances are, your current time allocation doesn’t align with your priorities. In that case, it’s time for a schedule reset.”

He further suggested allocating time to prioritise significant aspects of life, such as family and career, emphasizing deliberate scheduling and hyper-effective time management. He recommended eliminating non-contributory meetings and dedicating substantial blocks for meaningful, productive work.

“In my case, I rely on tools like Clockwise to automate this process, even reshuffling meetings. Balancing work, contributing, and personal life can be challenging, but setting boundaries and consciously structuring your time is essential. It’s equally important to include moments for relaxation and rejuvenation. When you follow these principles, you’ll find ample time to enjoy life”, he added.

Also Read: Examining global hybrid and remote work trends beyond the West

Staying in the loop

To stay informed, Rossum relies heavily on LinkedIn, where he follows industry leaders and influencers. “I’ve found that when crucial news surfaces, it’s often shared by one of these individuals on their profiles”, he said.

Podcasts are another invaluable resource, he feels. He’s an avid listener, regularly tuning into shows like This Week in Startups, Josh Bersin, WorkLife with Adam Grant, Acquired, My First Million, and HBR Ideacast.

He mentioned that he stays informed by subscribing to email newsletters like People Geekly and Dror Poleg, focusing on developments in employee experience, employee engagement, remote and hybrid work models, and happiness at work. These sources provide valuable updates and trends in his areas of expertise.

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Are you ready to be a part of a vibrant community of entrepreneurs and industry experts? Do you have insights, experiences, and knowledge to share?

Join the e27 Contributor Programme and become a valuable voice in our ecosystem. 

The post Spotlighting Daan van Rossum: an advocate of remote and hybrid workplaces appeared first on e27.

Distance learning has always been seen as a solution to give greater access to education, especially in communities where educational facilities are limited, or for more mature students who have to juggle school with other commitments such as work or family.

In Asia, we have been seeing the rise of edutech startups who are helping students to learn better through technology, such as Jakarta-based Zenius or London-based Quipper who has a strong presence in Asian market.

The rise of virtual reality (VR) also means that the education sector –particularly distance learning platforms such as MOOCs and online schools– will be able to integrate it to create a more meaningful learning experience for students.

This infographic courtesy of NowSourcing breaks it down for you.

Featured image credit: Tran Mau Tri Am on Unsplash.com

This article was first published in March 9, 2016

The post Back to the future: Why VR is the future face of education appeared first on e27.

UnaFinancial (formerly Robocash), a Singapore-based fintech group of companies, has announced a strategic partnership with wealth-tech company Velexa to offer a digital investment platform in the UAE.

It will enable UnaFinancial’s clients to acquire and trade multiple asset classes like equities, forex, bonds, commodities, and derivatives.

Also Read: Robocash to raise US$5M from Kilde, aims to launch online bank in SEA

In the initial phase, the platform will enable investment options and tools covering US Equities & ETFs and FX trading to novice and experienced investors.

The key functionalities of the platform include API-based connection to exchange venues, external brokers and financial service providers, besides automated trade execution.

“The UAE is ranked first among fintech centres worldwide in terms of innovation, market size, and development potential. It has a favourable regulatory environment for startups and a high level of digitalisation with the smartphone and Internet penetration of 96 per cent and 99 per cent, respectively,” said Natalia Ishchenko, CEO of UnaFinancial. “The technological solution offered by Velexa perfectly aligns with our vision of the future product.”

“We recognise the immense potential for growth and innovation in the UAE’s dynamic financial market. Together, we will reshape the future of the financial services industry in UAE, making it more accessible and user-friendly for people from all walks of life,” added Tamara Kostova, CEO of Velexa.

UnaFinancial is a group of companies developing digital financial solutions in the Middle East, Asia, and Europe. The firm claims to have generated US$139.1 million in revenue and US$13.1 million in profit as of December 31, 2022.

Also Read: Financial literacy in Southeast Asia is set to match industry growth

Velexa is a wealth-tech company focusing on democratising the wealth management industry. Headquartered in London, UK, Velexa is in Southeast Asia, Europe, and the UAE.

The post UnaFinancial, Velexa launch digital investing platform in UAE appeared first on e27.

Dennis Nguyen, the CEO of Nasdaq-listed Society Pass Inc., has stepped down from the post, the embattled e-commerce company said in a regulatory filing.

He is replaced by CFO Raynauld Liang, who previously led the investment function of L K Ang Corporate, a family office. He earlier founded Connex Capital, an IPO-focused advising company.

Also Read: Ex-CTO drags Society Pass into court for “breaching employment contract”, seeks over US$1.3M in damages

Society Pass has also appointed Yee Siong Tan as CFO. Tan is the company’s controller and previously served as financial controller for ISOTeam, a construction engineering company, and finance manager for Hoe Leong Corp., a shipping and equipment supplier.

While Society Pass said Nguyen’s resignation didn’t result from a disagreement, the development comes at a time when the data-driven loyalty company is embroiled in multiple controversies in the US.

Last month, the Supreme Court of the State of New York ordered the firm to pay approximately US$750,000 to the company’s former CTO, Rahul Narain, for breaching his employment contract. The judgement was delivered on a lawsuit filed by Narain four years ago.

The blow came just a few months after the same court ordered Society Pass to award a significant block of pre-IPO shares valuing approximately US$6.61 million, with up to an additional US$2.38 million penalty interest, to its co-founder and former CMO Thomas O’Connor for the breach of the Common Stock Purchase Warrant.

Furthermore, it was recently removed from the Russell 2000 index (a small-cap US stock market index), a blow to the company’s efforts to retain the coveted institutional investors that can greatly support Society Pass’s share price.

According to documents, Society Pass was being investigated by the US Securities and Exchange Commission (SEC) earlier this year.

Also Read: US court orders Society Pass to pay pre-IPO shares to co-founder and ex-CMO; company under SEC probe

Along with the executive appointments, Society Pass said it entered into a structured financing agreement to sell up to US$40 million in shares to Strattners. Under the agreement, Strattners can buy shares at 96 per cent of the current market price.

However, Society Pass’s most recent 10-Q filing showed that it only has US$10.9 million left in its coffers. A 10-Q filing is a financial report that all public companies must submit to the US Securities and Exchange Commission (SEC) at the end of their first three fiscal quarters.

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The post Dennis Nguyen steps down as Society Pass CEO amidst court cases, SEC probe appeared first on e27.

Christmas is time for the family. After exchanging warm embraces and greetings, your big family sits over dinner and talks about the year’s major events. Since you have just graduated from university, Aunt May turns toward you and starts grilling you on your plans for the future.

You begin to sweat. Because you just rejected a tempting job offer from a multinational bank …

To build your own startup.

Stereotypical Asian parents tend to have a certain expectation for their children’s careers. Some expect them to be doctors; some expect them to be lawyers.

Some send their kids to study computer engineering with the hope that they will take the tried-and-true path of corporation by working in Microsoft. Little did they know that their child is aiming for the long and winding road of building the next Microsoft.

Check out e27’s advice for fresh graduates planning to come out to their parents about their career choice.

Also Read: Want to get your company in the news? 8 tech journos offer advice

Step 1: Time the talk

Different parents deal with shock in their own unique ways. The key here is to understand how yours might react.

If you believe that they will be able to stay calm and collected, then sit with them over dinner and explain your goals calmly and thoroughly.

But if yours are more of the explosive type, do it when there is no chance for them to scream at you. For example, Mom has friends over and they are chatting in the living room.

You can casually walk past and tell her, “I would like to tell you something. I’ve rejected that job offer.”

Then run as far as you can while the news sinks in. Hopefully, by the time you actually talk, she will be able to deal with the shock as she has taken time to digest it.

Step 2: Explain, then listen

You finally get to talk to them. When explaining the type of business that you are doing, keep your explanation well-structured and well-researched.

Keep in mind that your parents come from a different generation, thus may not understand why people nowadays like to take pictures of themselves or, for that matter, choose not to work at a large conglomerate. Avoid making assumptions. Be very clear with terms and trends they may not recognise.

Last, but not least, listen to their reply. We hate to break it to you, but some of their concerns may actually be real, such as how are you going to support yourself with such a small income? You cannot buy a bowl of rice by trading them with your Pokemon card collection.

Also Read: Video: Bite-sized advice from e27 thought leaders

Step 3: Take baby steps

Another key point that you need to remember when explaining your goals: Don’t boast.

Don’t tell them that you are quitting your job to become the next Elon Musk when you are still figuring out how to deal with a bug on your new app.

Keep everything simple and down to earth. It may not be wise to talk about the next 10 years or what you’ll do when you get your Series B; focus on how you want to run this business to survive its first years.

It is easier to believe in a person who has realistic goals and expectations.

Step 4: Make Plan B, C, D …

Even the greatest unicorns fall off the cliff. Let your parents to know that you are aware of the risks, and that you are prepared for them.

Make a Plan B and explain it to your parents. It will be better if you can set a deadline with them. For example: If the startup is going nowhere in two years, then you are going to search for corporate jobs.

It will actually inspire you to work harder, since you know that your parents are now watching your back.

Also Read: Listen Up: Lean Startup Machine mentors offer advice

Step 5: Get them involved

If words fail to convince them, then win them over with actions. Show them the prototype of your mobile app, or even better, take them to the co-working space you have been working in. Allow them to see for themselves that you are doing real work here.

(Make sure you don’t bring them in when your partner is snoozing in the bean bag corner, though.)

Let them see how you work and ask for their comments. Oh, you know how parents are a always a bit shy when it comes to giving advice.

Step 6: Show results

If actions fail, then the only way left to convince them is through results. This may take a while, but it is the most solid way to get them to believe in you.

When Touchten was first founded, Anton Soeharyo recalled being yelled at by his mother for ‘spending days sitting in front of the computer and not getting a real job’.

He then showed her his bank account, which was filled with the money earned from developing games. That is how he managed to convince his mom that game developing is a real job with decent prospects.

When you have your own office in a building, when everybody in town is using your startup’s product, when your startup lands on e27 … that is how you –- and your parents — will know you have made it.

Keep on working towards that.

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The article was first published in December 23, 2015.

Image Credit: picjumbo

The post “Mom. Dad. I’m building a startup.” appeared first on e27.

Singapore-based VC firm Jungle Ventures has launched First Cheque@Jungle, a bespoke programme for partnering with seasoned operators at the idea, pre-seed and seed stages.

The sector-agnostic programme invests across India and Southeast Asia with limited early-stage dilution.

Also Read: HealthXCapital joins Jungle Ventures to lead healthcare investments in SEA & India

First Cheque@Jungle is based on two core concepts: focus on only a few exceptional teams with bold ideas at any given time and a sizeable first cheque with no minimum ownership criteria. It will invest at least US$2 million as 50 per cent in equity and 50 per cent as a no-cap convertible note.

“We believe that taking a minimum 25-30 per cent ownership upfront creates misaligned incentives and can harm the company in the long run. That’s why we created a disruptive model with 50 per cent of the funding in uncapped convertible notes at a fixed discount to the next round,” the VC firm said in a statement.

The firm will also lead or co-lead subsequent Series A funding rounds without any need for follow-on funding from other investors, with investments ranging from US$5 million to US$10 million per company.

Also Read: “Mom, Dad. I’m building a startup”

“Moglix, Kredivo and Livspace are prime examples of companies that started out as mere ideas when they approached the team. We believed in their vision, had the privilege of being their first cheque, and worked with them through multiple business cycles, investing in them from their early to growth stages. We deeply understand the power of being the first to believe in an idea and provide essential capital and business-building support,” it said.

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The post Jungle Ventures rolls out new programme to back idea-stage startups in India, SEA appeared first on e27.

The digital revolution has reshaped the way we shop, with e-commerce and social commerce taking centre stage. Indonesia, with its burgeoning online population and rapid digitalisation, has emerged as a hotspot for e-commerce growth. In particular, the rise of social commerce, epitomised by platforms like TikTok Shop, has been a game-changer in the Indonesian market.

However, recent regulatory developments have cast a shadow over this thriving sector. In this article, we will delve into the growth of e-commerce and social commerce in Indonesia, the prominence of TikTok Shop, and the implications of the ban regulation on this innovative marketplace.

The explosive growth of e-commerce and social commerce

According to We are Social (January 2023), Indonesia boasts a total population of 276.4 million, with a significant digital presence as 77 per cent of its populace, totaling 212.9 million individuals, are internet users. Among these, a remarkable 60.4 per cent or 167 million people are active on social media platforms. What’s striking is the level of engagement, with the average Indonesian spending an impressive three hours and 18 minutes per day on social media through various devices. These statistics underscore the nation’s substantial online presence and its robust social media culture, making it a key player in the digital landscape.

Also Read: 

E-commerce in Indonesia

Indonesia’s e-commerce landscape is on a meteoric rise. According to predictions by experts, the Gross Merchandise Value (GMV) of the e-commerce industry in Indonesia is set to soar to US$104 billion by 2025. This growth is fueled by a staggering 158.6 million e-commerce users, representing 57.9 per cent of the total population, as per the Social Commerce Report 2022 by DSInnovate.

Social Commerce in Indonesia

With 60.4 per cent of the population being active on social media platforms, this colossal user base has provided fertile ground for the emergence of social commerce, where buyers and sellers can interact freely and transact directly on social media platforms. This novel approach to shopping has attracted a massive following, with social commerce transactions contributing approximately US$3 billion to Indonesia’s total of US$8 billion GMV in 2020, as stated by Digitalpreneur Diatce G. Harahap, as stated by the Digitalpreneur Diatce G. Harahap on the Spire Insights article by technobusiness.id.

E-commerce vs Social Commerce

In line with a report titled “E-commerce in Southeast Asia 2023” released by Momentum, the cumulative sales value of TikTok Shop in 2022 did not achieve the top spot in Indonesia. According to this data, the GMV in Indonesia, encompassing six e-commerce platforms, reached US$51.9 billion or IDR803.7 trillion. The report disclosed that sales on TikTok Shop only contributed to five pe rcent, which equates to approximately IDR40.1 trillion in 2022.

TikTok Shop still trails behind Shopee, which maintains a dominant position in e-commerce revenue within Indonesia. Shopee managed to amass a total revenue of 36 per cent or IDR289.3 trillion from the sale of goods. Following closely are Tokopedia, Lazada, and Bukalapak.

Interestingly, sales on TikTok are on a steady upward trajectory despite not leading the pack. Shoplus, an analytics tool for TikTok, reported an upswing in supply and demand within the TikTok e-commerce sphere during the fourth quarter of 2022. In December 2022, the number of creators on TikTok Shop surged by 92 per cent in comparison to October, and during the same timeframe, e-commerce-related videos registered an impressive increase of 127 per cent.

Also Read: 

It is worth noting that the proliferation of influencer-based e-commerce activities, as per the report, played a pivotal role in broadening TikTok Shop’s content and expanding its reach. Consequently, the proportion of e-commerce influencers in total sales revenue in Indonesia has seen a substantial surge. The count of TikTok Shop influencers reached its zenith in December 2022, which subsequently sparked fierce competition in Indonesia.

In the fourth quarter of 2022, sales generated by TikTok Shop influencers constituted 34 per cent of the total sales in TikTok Shop Indonesia, making Indonesia the leader among other countries. Shoplus, in general, indicated that 8.4 per cent of TikTok Shop influencers accounted for a significant 86.9 per cent of the market share during the same period. In Indonesia, influencers in professional services, finance and investment, fashion, vlogs, and other niches rapidly garnered followers.

To provide context, according to CNBC Indonesia, the Gross Merchandise Value (GMV) on TikTok Shop in Indonesia over the past year tallied at US$2.5 billion. This figure formed the majority of the total GMV in Southeast Asia, which amounted to US$4.4 billion. This implies that TikTok has set its sights on transactions worth over US$5 billion (IDR75 trillion) in Indonesia for 2023. This information stems from credible sources familiar with the matter. On a broader scale, the GMV of TikTok Shop for all of Southeast Asia is projected to exceed US$15 billion, marking a remarkable triple-fold increase from the previous year.

The emphasis on Indonesia is not without reason. Insider Intelligence’s research firm reported that by Q1 2023, active TikTok users in Southeast Asia had reached a staggering 135 million, with Indonesia contributing a significant chunk, boasting 113 million users. The potential of TikTok Shop has not escaped the attention of established e-commerce giants such as Shopee, Tokopedia, and Lazada, despite TikTok Shop’s relatively recent introduction to Southeast Asia in 2021.

According to a survey by Cube Asia, users’ spending habits have shifted away from platforms such as Shopee and Lazada in favour of TikTok Shop. User spending on Shopee, Lazada, and offline stores in Indonesia, Thailand, and the Philippines witnessed declines of 51 per cent, 45 per cent, and 38 per cent, respectively. Nevertheless, it’s crucial to note that Shopee still maintains a significantly higher GMV than TikTok Shop, with Shopee’s Southeast Asia GMV reaching US$73.5 billion in 2022, while Lazada achieved a GMV of US$21 billion.

Also Read: 

The rise of TikTok Shop

 

Among the array of social commerce platforms in Indonesia, TikTok Shop stands out as a frontrunner. Alongside Facebook Shops and Instagram Shopping, TikTok Shop offers a unique blend of social media engagement and direct shopping. A Populix survey conducted in 2022 revealed that TikTok Shop is the preferred platform for the majority of Indonesian respondents who have shopped via social media. This thriving marketplace caters to a diverse range of products, with clothing, beauty products, food and beverages, and cellphones and accessories topping the list of items frequently purchased.

Challenges for TikTok Shop in Indonesia

Despite its rapid growth, TikTok Shop faces formidable challenges in its quest for sustained success. According to experts at Cube Asia, TikTok must operate flawlessly to achieve its GMV target of US$15 billion in Southeast Asia. Recent challenges include regulatory scrutiny, such as the Vietnamese government’s investigation into TikTok for disseminating negative content, and the Indonesian Ministry of Communication and Information blocking content related to “online begging.”

Jianggang Li, CEO of Momentum Works research firm, underscores that regulatory challenges aren’t confined to TikTok in the United States and Europe. TikTok must convince governments in Southeast Asia that its service benefits the local population and SMEs.

Additionally, TikTok Shop faces challenges related to product pricing and limited logistics. Products on TikTok tend to be lower-cost, leading to impulsive purchases. For pricier items such as electronic devices, TikTok has yet to gain preference. Moreover, TikTok Shop relies on third-party courier services, and Indonesia’s archipelagic nature often poses logistical challenges, particularly for deliveries to remote islands.

Roshan Raj, Head of Research at Redseer, notes that customers outside Java may feel underserved by TikTok Shop, as established e-commerce platforms possess stronger internal logistics capabilities. Consequently, TikTok’s delivery ratings still trail behind those of established players.

Also Read: 

Looming Competition

These challenges present opportunities for established players such as Shopee, Tokopedia, and Lazada to solidify their positions. The Financial Times reports that Lazada, led by Jiang Fan, has secured additional funds from Alibaba to bolster its competitive strategy. Shopee, on the other hand, is anticipated to intensify competition after two consecutive profitable quarters. The e-commerce landscape in Southeast Asia, particularly in Indonesia, is set to witness intriguing developments in the coming year.

An in-depth look at the ban regulation

In an unexpected turn of events on September 25, 2023, the Indonesian government unveiled a significant policy shift by implementing a comprehensive ban on e-commerce transactions conducted through social media platforms, as outlined in Regulation of the Minister of Trade (Permendag) No. 31 of 2023. Trade Minister Zulkifli Hasan, in a statement to the press, highlighted that the primary objectives of this regulation are to foster “fair and just” business competition while also safeguarding the data protection rights of users. This multifaceted approach aims to address a variety of pressing issues affecting Indonesia’s business landscape.

Impact on local business

One prominent concern that led to this ban was the adverse impact of social media-based e-commerce on the local small and medium-sized enterprises (SMEs). The rapid influx of imported goods, particularly from China, through platforms such as TikTok Shop disrupted the equilibrium of the market. Traders in Tanah Abang, Southeast Asia’s largest wholesale center, voiced their grievances, reporting a staggering profit loss of over 50 per cent due to their inability to compete with imported products offered at significantly lower prices on TikTok Shop.

In a recent interview with Temmy Satya Permana at tvOneNews, Assistant Deputy of Financing and Investment for Small and Medium Enterprises (SMEs) at the Ministry of Cooperatives and SMEs in Indonesia, it was revealed that Indonesia ranks as the world’s second-largest TikTok user base, with users spending an average of 3.5 hours per day on the platform. TikTok had already become a widespread habit among Indonesians even before it received official permission in May 2023. Surprisingly, he added that within just one year, TikTok’s revenue matched that of Alibaba’s 10-year earnings in China. However, concerns about pricing have emerged, as some items, such as shoes and hijabs, were sold at extremely low prices, with a majority being imports. The World Economic Forum reported that Indonesia is the largest buyer of hijabs globally, with 75 per cent of these products being imported.

Impact on Offline Business

Moreover, the “live” feature on TikTok, enabling individuals to directly sell goods, was deemed detrimental to local MSMEs that predominantly operate offline. Iyal Suryadi, a textile seller, expressed frustration over the situation, highlighting that the prices of items sold on TikTok Shop “do not make sense.” This is because goods are sold directly to consumers at factory prices, bypassing distributors or resellers, disrupting the traditional business model.

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Misuse of personal data

Another factor that drove the Indonesian government’s decision to prohibit e-commerce transactions via social media channels, including TikTok Shop, was the need to prevent the misuse of personal data. Trade Minister Zulkifli Hasan (often referred to as Zulhas) shed light on the necessity of this move, emphasising the clear distinction between social media and social commerce. He asserted that social commerce should serve as a platform for promoting and directly selling goods and services, separate from the broader realm of social media.

The amalgamation of social media and social commerce raised concerns about a potential monopoly over algorithms, which could be exploited to misuse consumer personal data for business purposes. Minister Zulhas underlined the importance of segregating these realms to prevent such misuse. By implementing the ban, the Indonesian government sought to maintain a clear boundary between the two and safeguard the integrity of consumer data.

No PMSE Permit

Furthermore, another significant reason for TikTok Shop’s closure was the absence of a necessary Trading Through Electronic Systems (PMSE) license. TikTok, despite being a widely used social media platform in Indonesia, was registered as an Electronic System Provider (PSE) with the Ministry of Communication and Information Technology (Kominfo). However, it lacked the requisite PMSE license, a critical permit for conducting e-commerce transactions through electronic devices or procedures.

The distinction between PSE and PMSE licenses is essential. PSE licenses encompass the use of electronic systems for both public and non-public services by state administrators, individuals, businesses, and the general public. In contrast, PMSE licenses are specifically tailored for online trading activities carried out through electronic means, essentially enabling companies to engage in e-commerce.

Tragically, TikTok Shop’s absence of a PMSE license rendered it incapable of facilitating direct buying and selling transactions on the TikTok platform. In light of these regulatory and compliance issues, the Indonesian government’s decision to ban TikTok Shop aligns with its commitment to upholding legal and data protection standards while fostering a fair and competitive business environment within the country.

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Impact on merchants and affiliates

Unsurprisingly, this ban has sparked mixed reactions among stakeholders. TikTok Indonesia expressed its commitment to adhering to the new regulations while highlighting concerns for the millions of local sellers and creator affiliates who rely on TikTok Shop for their livelihoods. The platform reportedly said it has received complaints from local sellers and sought clarification from authorities regarding the ban’s implementation.

Proponents of the TikTok Shop ban argue that it levels the playing field for traditional merchants and curtails the onslaught of online businesses that undercut prices. Market Promotion Manager Herry Supriatna from Tanah Abang Market welcomed the ban, foreseeing healthier price competition and the potential for increased turnover for traditional traders.

Similarly, textile seller Iyal Suryadi and seller Mr. Raden from Tanah Abang Market have welcomed the move, emphasizing the adverse impact of cheap online prices on their businesses. They propose restrictions on the sale of items through social media rather than an outright ban to accommodate those who have adopted TikTok Shop as a selling channel.

Conversely, some argue that TikTok Shop has been a lifeline for businesses, especially during the challenges posed by the COVID-19 pandemic. Sellers such as Fahmi Ridho believe that online platforms offer a way for stores to recover and adapt in a changing landscape.

Andre Oktavianus, a children’s clothing business owner, credits TikTok Shop for a dramatic increase in income and nationwide reach. He highlights how the platform’s social media features enable improved product quality and consumer engagement.

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Content creator Wenny Wijaya echoes this sentiment, stating that TikTok Shop has provided her with an opportunity to increase her income, transcending her role as a housewife.

Public dilemma on the TikTok Shop ban

During a recent interview with Raymond Chin at tvOneNews, a business consultant, several critical points regarding the state of TikTok Shop and its impact on the Indonesian market were discussed. Chin highlighted the remarkable strength of China’s manufacturing capabilities and supply chains, which have allowed products imported from China to flood the Indonesian market at exceptionally low prices. This phenomenon has raised concerns about predatory pricing as local businesses in Indonesia struggle to compete with the cost-effective manufacturing power of China.

Despite TikTok Shop achieving a Gross Merchandise Value (GMV) of 2.5 billion dollars last year, it still lags far behind other e-commerce giants with GMVs of around 50 billion dollars. However, Chin predicts a significant upswing in TikTok Shop’s performance, potentially growing four to five times its current value in the coming year.

The dilemma lies in balancing the desire for consumers to access affordable and high-quality products with the need to create a fair competitive landscape for local Small and Medium-sized Enterprises (SMEs). Chin emphasized the pivotal role that SMEs play as the backbone of the Indonesian economy and suggested that policies and regulations should be put in place to support their growth and competitiveness.

On a more positive note, Chin acknowledged the positive impacts of TikTok Shop, which has emerged as a new marketing platform. This development has led to the rise of content creators and local sellers, with some indigenous brands achieving remarkable success, with up to 80-90% of their sales coming from TikTok.

In conclusion, Chin believes that social commerce, exemplified by TikTok Shop, represents an innovative frontier in the market. Rather than advocating for its closure, he suggests that the platform should be subject to proper regulation to ensure fair competition and equal opportunities for all players in the market.

In conclusion

The ban on e-commerce transactions through social media platforms, particularly affecting TikTok Shop, represents a significant regulatory shift in Indonesia. As the first Southeast Asian country to implement such a ban, Indonesia’s decision has sparked debates and discussions among stakeholders. While the ban aims to protect traditional businesses and curb predatory pricing, it also disrupts the livelihoods of millions of sellers and creator affiliates who rely on TikTok Shop.

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The long-term impact of this ban remains uncertain. Some argue that it will drive businesses back to established e-commerce platforms such as Shopee, Lazada, and Tokopedia, which offer more trusted options for online purchases. Meanwhile, others contend that the ban may stifle innovation and economic growth by limiting opportunities for small entrepreneurs and content creators.

In this ever-evolving landscape, Indonesia’s approach to regulating social commerce will continue to shape the future of e-commerce in the country and serve as a case study for other nations grappling with similar challenges.

How Orderfaz can help enable Social Commerce on TikTok

As TikTok continues to evolve as a platform for social commerce, with features such as FYP, Live Stream, and TikTok Ads, Orderfaz emerges as a compelling solution for Tiktok Shop Merchants. Our platform offers a range of features designed to empower users and enhance their success in the realm of social commerce:

1. Checkout Link: Every product listed by our users is equipped with a unique checkout link. This checkout link can be seamlessly integrated into livestreams or advertisements, enabling customers to complete their purchases with a single click. This technology streamlines the shopping experience, as buyers only need to fill out their information the first time they use an Orderfaz link.
2. WhatsApp Keyboard: For sellers who prefer to finalise transactions through WhatsApp, our platform provides a smart keyboard compatible with both Android and iOS devices. This keyboard simplifies the customer service process, offering features such as AutoText, Send Checkout Link, Send Invoice, Send Shipping Rates, and Order List.
3. Landing Page Builder: To captivate potential buyers and provide them with comprehensive information about products, Orderfaz offers a versatile landing page builder. Sellers can create customised landing pages to showcase their products, explain their unique features, usage instructions, and the positive impact their products can have on customers.
4. Storefront: Our Storefront feature empowers users to establish their own online shops effortlessly, without the need for coding skills. Sellers can share their storefront links on their social media profiles, allowing potential customers to explore their offerings. Additionally, these links can be conveniently shared via messaging apps such as WhatsApp, serving as a convenient “Catalog” for potential buyers.

With these powerful features, Orderfaz is poised to transform the social commerce landscape on TikTok, enabling sellers to provide a seamless shopping experience, streamline customer interactions, and effectively showcase their products to a wider audience. Embrace Orderfaz to thrive in the dynamic world of social commerce on TikTok.

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The article was written by Orderfaz Founder & CEO Reynaldi Gandawidjaja for DailySocial and was first published on October 5, 2023.

Image Credit: RunwayML

The post The evolution and regulation of social commerce in Indonesia: The TikTok Shop ban appeared first on e27.