TikTok Shop has set SEA on fire within months

Aditya Hadi also contributed to this report.

In Vietnam, Khanh Vu’s TikTok Shop store, which sells Chinese housewares, has generated sales worth 1.3 billion dong (US$55,000) over the past month – that is 3x higher than what his Shopee store made.

In Indonesia, Bella Julianatha, who sells casual clothes for women aged between 25 and 34, started using TikTok Shop in November 2021 after being approached by a TikTok representative. Since then, TikTok Shop has already become her top-selling channel, says Julianatha.

Tech in Asia first dove into TikTok’s ecommerce bet in Southeast Asia in April. Since then, the short-video giant has moved quickly and aggressively in the region to roll out new features, offer incentives, and seal new partnerships with ecommerce enablers and logistics partners.

With setbacks in the UK and a delay in its expansion into the US and Europe, TikTok Shop is clearly eyeing Southeast Asia as the safest ground to disrupt traditional marketplaces and advance ByteDance’s overseas ambition.

“TikTok Shop choosing this region is a smart, calculated strategic move that makes complete sense and has impeccable timing,” says Paul Srivorakul, co-founder and group CEO of aCommerce.

But given the fickleness of consumers and the cautionary tale of Shopee’s struggles in the aftermath of heavy incentives, will TikTok Shop’s growth be sustainable?

‘Impeccable’ timing

At a time when Shopee is on a cost-cutting spree (the latest being its Latin America business) and Lazada potentially distracted by its pivot toward Europe, TikTok Shop has every reason to double down on Southeast Asia.

Based on TikTok’s advertising data for July 2022, the region is home to about 265 million TikTok users aged 18 and above. Four Southeast Asian countries – namely Indonesia, Vietnam, the Philippines and Thailand – rank among the top 10 countries with the most active TikTok users.

Notably, online shopping has outranked gaming in the list of Southeast Asian consumers’ top online activities, according to the annual Sync report from Meta and Bain & Company. One reason for this, the report found, is that ecommerce players have evolved by blending shopping with entertainment.

TikTok estimates that “shoppertainment” is a US$1 trillion commerce opportunity in the Asia Pacific and expects Indonesia, Japan, and South Korea to contribute 67% of gross merchandise (GMV) in shoppertainment by 2025.

“Unlike other regions, where people shop only when they need an item, shopping is a true fun activity in our region,” says Srivorakul.

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