Build, buy, or do both? TikTok Shop’s logistics dilemma

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Hello reader,

One of my goals for 2023 is to curb impulse spending. That’s already pretty challenging for someone who doesn’t really have a brain-to-checkout filter and relies a lot on retail therapy. But it’s gotten even harder with the arrival of TikTok Shop in Singapore.

There’s something about seeing an influencer model a bag in a video and then clicking on a link to purchase it – all without leaving the platform. It’s so easy to buy something without thinking twice.

I’ve held out pretty well so far: I haven’t bought anything on TikTok Shop yet, but it may only be a matter of time.

Anyway, as TikTok Shop expands in Southeast Asia and continues to tempt many people like me, it has to consider another piece of the ecommerce puzzle: logistics. My colleague Jofie goes into this in today’s premium story.

Today we look at:

• TikTok Shop’s logistics dilemma
• A SoftBank subsidiary’s plans to list on the Nasdaq
• Other newsy highlights such as the closure of two business units at PropertyGuru and a climate innovation competition in Vietnam

Premium summary

Build, buy, or something else?

Image credit: Timmy Loen

As TikTok Shop gains ground in Southeast Asia, it needs to figure out its logistics situation. Having its own logistics unit could be crucial to furthering its ambitions in the region, but is it necessary?

• All about control: An in-house arm would help TikTok Shop reduce its operating expenses. It would give the company better control over the delivery experience, making product returns and other shipping-related issues easier to handle. However, it will take a few years before it can build up capabilities equal to those of Shopee and Lazada.
• Pay to grow: Not everyone agrees that having your own logistics is necessary. Some industry experts say that given how it’s still in its infancy, TikTok Shop should focus on marketing, brand onboarding, and account management. Plus, using third-party logistics (3PL) players would enable it to expand into new markets and scale faster.
• An option: TikTok could develop in-house logistics for Tier 1 and Tier 2 cities while still relying on 3PLs for Tier 3 cities. But for now, what’s really on the cards remains anyone’s guess.

Read more: TikTok Shop’s logistics dilemma: to build or not to build

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