TikTok E-commerce Venture Records Massive Success
.According to a recent report, TikTok‘s foray into online shopping has been highly successful, as its e-commerce affiliate has gained a significant market share in Southeast Asia within just one year of its launch.
The TikTok Shop, taking advantage of the vast user base of the popular video-sharing app, managed to expand its business in 2022 after initially testing the market in Indonesia in 2021. Momentum Works, a Singapore-based consultancy specializing in startups, highlighted that although TikTok Shop trailed behind more established competitors like Shopee and Lazada, it experienced the fastest growth rate.
The gross merchandise value (GMV), which includes the total value of goods sold, including cancellations, returns, and refunds, skyrocketed from a mere $600,000 in 2021 to $4.4 billion in 2022, marking a sevenfold increase.
Weihan Chen, Head of Insights at Momentum Works, explained that TikTok’s existing captive audience, primarily seeking entertainment, has provided a foundation for the conversion of attention into purchases and GMV.
Following its success in Indonesia, TikTok Shop aggressively expanded into five other Southeast Asian markets, leveraging the large populations of TikTok users in these regions. The company also invested in enhancing its e-commerce capabilities. TikTok is owned by the Chinese tech giant ByteDance.
Overall, the GMV of the top nine e-commerce platforms in the region reached nearly $100 billion in 2022, a 14% increase compared to the previous year. Leading the market were Singapore-based Shopee and Lazada, a subsidiary of China’s Alibaba Group. Shopee, a unit of Sea Ltd, accounted for $47.9 billion, representing a 13% growth.
Lazada, although in second place, experienced a slight decline from $21 billion in 2021 to $20.1 billion. Tokopedia, exclusively serving the Indonesian market, secured the third spot with $18.4 billion. Indonesia remains the largest e-commerce market in Southeast Asia, contributing to 52% of the region’s total GMV.
Following the easing of Covid-19 restrictions, the return of offline shopping has resulted in a moderation of e-commerce sales. However, the report suggests that the sector will continue to grow.
Additionally, it predicts that Southeast Asia may benefit from Chinese brands and manufacturing companies expanding into other countries as they reduce their reliance on the US market and face increasing competition domestically.
This potential development could significantly impact Southeast Asia’s e-commerce landscape, which has long suffered from a lack of product variety.
