Byte-sized shopping: TikTok dances into ASEAN e-commerce scene

TikTok, the social media phenomenon owned by ByteDance, is now a formidable force in e-commerce. According to a recent report by Momentum Works, published in Nikkei Asia, TikTok Shop’s gross merchandise volume (GMV) soared from US$4.4 billion (around 158 billion baht) in 2022 to a staggering US$16.3 billion in 2023.

This explosive growth has catapulted TikTok to second place in the ASEAN e-commerce market, snagging a 28.4% share.

TikTok’s ascent is even more impressive considering its strategic move to acquire a majority stake in Indonesia’s Tokopedia last year. The report reveals that the combined market share of TikTok and Tokopedia now stands at 14.2%, with Tokopedia effectively becoming TikTok Shop in all but name. This integration, happening post-Indonesian elections, has seen the TikTok Shop team overhaul systems and processes, driving growth and efficiency.

Despite Shopee maintaining its lead with a 48% market share, and Lazada dropping to third place with 16.4%, TikTok’s rapid rise is remarkable. The total e-commerce GMV in Southeast Asia hit US$114.6 billion in 2023, a 15% year-on-year increase, highlighting the region’s booming online retail sector.

Momentum Works notes that TikTok Shop has not only taken a significant chunk of Shopee’s potential growth but has also demonstrated remarkable agility. It quickly navigated a ban in Indonesia, converting Tokopedia’s stakeholders from adversaries to allies within two months. This swift action underscores TikTok’s ability to adapt and innovate in response to regulatory and market challenges.

Beyond traditional e-commerce, TikTok is diversifying its offerings with a pilot programme for local services in Indonesia and Thailand. This initiative targets group-buying packages for dining merchants, leveraging TikTok’s platform to attract both merchants and consumers. The company is also ramping up hiring and infrastructure development across the region to address local challenges, including supply chain management and regulatory compliance.

As TikTok expands its footprint in Southeast Asia, it faces global regulatory hurdles, particularly in the United States, where it might be forced to sell to a US-approved buyer or face a ban. Despite these challenges, TikTok’s innovative approach and strategic partnerships position it well for sustained growth in the region.

Vietnam and Thailand emerge as the fastest-growing e-commerce markets, while Indonesia remains the largest, contributing 46.9% to the region’s total GMV. This shift underscores the rising influence of social media platforms in e-commerce, signalling fierce competition ahead in Southeast Asia’s digital marketplace, reported The Nation.