TikTok is wading into South-East Asia’s e-commerce wars

IN MARCH TikTok chief executive Shou Zi Chew faced angry lawmakers in Washington, who grilled him for five hours on topics ranging from misinformation to mental health. The threat of a ban in America, the short video app’s biggest market, is looming. Other Western governments are making similar noises. TikTok, which is owned by a Chinese firm called ByteDance, has already been locked out of India, another major market, from 2020 on national security grounds.


View the Full Image

SEA Faring

Contrast that with the reception Mr Chew received in Jakarta in June. He delighted a crowd in the Indonesian capital that included government officials with his plans for the company in Southeast Asia, promising to invest “billions of dollars” in the region over the next few years. TikTok, which moved its global headquarters to Singapore in 2020, hopes to bolster its success with nearly 700m consumers in Southeast Asia.

That’s because TikTok’s ambitions in Southeast Asia go beyond silly dance videos. In 2021 it launched TikTok Shop, which allows users to buy products directly from the app. According to Momentum Works, a research firm in Singapore, last year products worth about $5bn were sold on its platform. The target is $20bn this year, three-quarters of which comes from Southeast Asian wallets.

This provision comes in e-commerce at a volatile time for the sector in the region. Shopee, which accounted for almost half of the $100bn or so in goods sold online last year in South East Asia (see chart 1), reported two-quarters of sales on its platform were down. The market value of its Singaporean parent company, Sea Group, is a tenth of the $200bn it reached in October 2021. Sea has cut staff, retreated from ventures outside South East Asia and, in August, asked it is for investors to cope with losses as. it boosts spending in the face of growing competition. Lazada, a Singapore-based e-commerce platform that has probably never turned a profit, is on its fifth CEO in recent years. In March its Chinese parent, Alibaba, added more traffic by splitting itself into six companies.

Can TikTok capitalize on its competitors’ troubles? The app is definitely a good fit for the online shopping habits of Southeast Asia. It already has more than 300m users in the region. A study by Bain, a consultancy, and Meta, which owns Facebook and Instagram, found that nearly half of consumers there use social media, particularly short video and messaging apps, to find products while shopping on line. As in China, the home of “social commerce,” the line between entertainment and commerce is blurring among “mobile-first” shoppers, noted Fred Liu of Hayden Capital, an investment firm. To reduce its reliance on live-streamed product reviews, TikTok is testing a marketplace tab in its app, which allows sellers to list their items on the platform without having to pay influencers to plug products into their videos.

Don’t count out the regional holders just yet, though. While TikTok Shop is dominated by things best suited for video promotions and impulse buys, such as clothes and cosmetics, its competitors offer a wider range of goods, from gadgets to furniture. Vion Yau of Momentum Works estimates that the average order value on TikTok is around $5, compared to $8 at Shopee and $10 at Lazada.

Shopee, Lazada and Tokopedia, another local champion, also built their own logistics networks and payment systems to get around Southeast Asia’s peninsular and archipelago geography, and often shabby infrastructure. This allows the companies to operate more efficiently than TikTok, which relies on external suppliers to store and ship its products, giving it less control over the shopping experience and eating into margins. And while Southeast Asians use social media apps like TikTok to discover new products, they are less likely to buy them there. According to the report by Bain and Meta, more than half of shoppers switch to old-school e-commerce sites at the time of sale, which attracts better quality and faster delivery times.

TikTok can overcome these obstacles. Thanks to its Chinese parent’s $220bn valuation, its pockets are deeper than most. But Shopee’s belt tightening has given Sea a cash buffer to defend its turf. Lazada received an $845m injection from Alibaba in July. And the local incumbents aren’t TikTok’s only competition. Last month, Temu, a company of Pinduoduo, another major Chinese e-commerce firm, quietly launched its online store in the Philippines. The battle for Southeast Asian online shoppers is just beginning.

To stay on top of the biggest stories in business and technology, sign up for the Base lineour weekly newsletter for subscribers only.

TikTok-is-wading-into-South-East-Asia-se-commerce

View the Full Image

TikTok-is-wading-into-South-East-Asia-se-commerce

Denial of responsibility! vismuseum.org.in is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – at loginhelponline@gmail.com The content will be deleted within 24 hours.

Read original article here

Leave a Comment