TikTok e-commerce grows fourfold in ASEAN, narrows gap with Shopee

TikTok, the viral short video app owned by China’s ByteDance, is becoming one of the largest e-commerce platforms in Southeast Asia, a market long dominated by local players like Shopee and Alibaba’s Lazada, an annual study released Tuesday showed.

The app’s e-commerce platform TikTok Shop increased its gross merchandise volume (GMV) nearly fourfold from $4.4 billion in 2022 to $16.3 billion last year, the fastest growth rate among regional rivals, Singapore-based consultancy Momentum Works reports.

Combined with Indonesia’s Tokopedia — in which TikTok took a majority stake last year — TikTok’s e-commerce platform overtook Lazada to become the second largest player in the ASEAN region, with an estimated 28.4% market share as of last year, the report said.

The region’s total e-commerce GMV hit $114.6 billion in 2023, up 15% from a year earlier, the report said. Shopee retained its top position with a 48% share, followed by Lazada at 16.4%, with TikTok and Tokopedia each taking 14.2%.

Momentum Works CEO Jianggan Li said TikTok has become a “very relevant player” in Southeast Asia, where the company has pledged to invest billions of dollars.

“This year, depending on the integration they have with Tokopedia, they could very much become the No. 1 player in Indonesia,” Li said.

Since its e-commerce debut in 2021, TikTok has launched a hiring spree in Southeast Asia, where incumbent players have reduced headcounts in an effort to become profitable. By 2023, TikTok quadrupled its employees to over 8,000 and became on par with Lazada, Momentum Works said.

In particular, TikTok grew its e-commerce feature by leveraging its livestreaming function, where influencers and merchants show everything from beauty and fashion products to home appliances to help users make purchases in real time.

Shopee, which had been cutting costs to become profitable, went on the offensive to defend its market share from the heightened competition with TikTok. In August, Shopee parent company Sea said it would “ramp up” investments in livestreaming and logistics capabilities.

But TikTok, which has come under scrutiny in the U.S. and Europe, also has faced setbacks in Southeast Asia. In Indonesia, TikTok Shop was forced to halt its service after the government prohibited online shopping transactions on social media.

Just a few months later, TikTok said it would invest more than $1.5 billion and take a 75% stake in Tokopedia, the leading e-commerce player under Indonesian tech group GoTo, in order to restart its online shopping business in the country.

TikTok and Tokopedia have grown to hold a 39% market share in Indonesia, just behind Shopee at 40%. In Vietnam, TikTok Shop became the second largest player with a 24% market share.

Momentum Works derived GMV estimates from paid orders at major digital retail platforms operating in six major Southeast Asian economies — Indonesia, Thailand, Vietnam, the Philippines, Malaysia and Singapore — as well as industry interviews and its own estimates.

Source: Nikkei Asia

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