TikTok disrupts Southeast Asian e-commerce, Shopee and Lazada’s positions are uncertain

TikTok disrupts SE Asian e-commerce, uncertain impact on Shopee and Lazada

BusinessDialogue has learned that according to foreign media reports, the aggressive expansion of TikTok Shop in Southeast Asia poses an increasingly large threat to Shopee under the Sea Group and Lazada under Alibaba.

By 2022, TikTok Shop will have successfully expanded to six Southeast Asian countries, including Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand.

“TikTok continues to grow rapidly in Southeast Asian countries. We estimate that TikTok’s gross merchandise value (GMV) will reach about 20% of Shopee’s by 2023. TikTok’s rapid growth has put pressure on Shopee. Therefore, Shopee has defensively increased its sales and marketing expenses,” said Shawn Yang, an analyst at the Blue Lotus Research Institute, in a recent report on the Sea Group.

According to internal data obtained by the technology media The Information, TikTok Shop’s GMV in Southeast Asia surged more than four times in 2022, reaching $4.4 billion. The report stated that TikTok Shop’s goal is to reach a GMV of $12 billion by 2023.

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It is worth noting that TikTok Shop’s current GMV is far less than that of Shopee and Lazada. In 2022, Shopee’s GMV reached $73.5 billion, while Lazada’s GMV was $21 billion.

Reportedly, due to the flagship game Free Fire under the Sea Group being banned in India and the Garena gaming division unable to develop popular games, the group’s revenue continues to decline. Therefore, the Sea Group is eager to increase revenue through its e-commerce department, Shopee.

Currently, Shopee is expanding its business in Malaysia. After closing its Poland site in January, Shopee has completely withdrawn from the European market. In the Latin American region, Shopee only retains its business in the Brazilian market.

TikTok’s entry into e-commerce eliminates commissions, impacting Shopee and Lazada’s position

A spokesperson for TikTok recently stated that “TikTok Shop” continues to grow rapidly as more and more sellers use the platform to reach new customers. The spokesperson also stated that TikTok is refocusing its e-commerce business (TikTok Shop) on the Southeast Asian market.

According to data from market research company Insider Intelligence, as of May, TikTok had 135 million users in Southeast Asia alone.

Data from Statista shows that TikTok has 113 million users in Indonesia, which is second only to the United States.

Sachin Mittal, Director of Telecoms and Internet Research at DBS Bank, pointed out that impulsive buying through watching content is an advantage of TikTok.

According to a survey by online retail research firm Cube Asia, consumers in Indonesia, Thailand, and the Philippines have reduced their spending on Shopee (-51%), Lazada (-45%), and Offline (-38%), by shopping on TikTok Shop.

Jonathan Woo, Senior Analyst at Phillip Securities Research, stated that TikTok is now investing heavily to attract buyers and sellers, and this strategy is showing initial results.

To encourage sellers to join the platform, TikTok Shop waived commission fees when it launched in Singapore in August. Sellers only need to pay a 1% payment fee.

Data from application analysis company Apptopia shows that the TikTok Shop seller center app has been steadily increasing in downloads over the past year.

“Overall, I think TikTok Shop has the potential to be as big as Shopee or Lazada, although it may take quite some time,” said Woo, because the GMV gap between TikTok Shop and Shopee, Lazada is still very large.

Data from Similarweb shows that Shopee is currently the largest online marketplace in Southeast Asia, with a traffic share of between 30% and 50% in the past three months. Lazada ranked second, with a traffic share of between 10% and 30%.

The author ✎ Nicole/AMZ123

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