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Benjamin Cher · · 3 min readShopee, Lazada may struggle to fill void left by TikTok Shop
TikTok’s ecommerce dreams in Southeast Asia have been jolted as governments find fault with it. This has potential implications for its ecommerce rivals in the region.
Malaysia has complained about defamatory and misleading content on TikTok, Indonesia about the platform’s impact on small businesses, and Vietnam about “toxic” content.
Of these grouses, the most troublesome is likely to be Indonesia’s. The country recently decided to ban ecommerce transactions over social media platforms.
Image credit: Timmy Loen
TikTok’s clever blend of ecommerce and social media has serious signs of promise. Users watch entertaining videos and shop as they go – a modern-day version of the Home Shopping Network.
Li Jianggan, founder and chief executive of consultancy Momentum Works, said the model posed serious competition to pure-play retailers such as Shopee (owned by New York-listed Sea Group) and Lazada.
“People don’t come to Shopee for entertainment. People come to Shopee to buy things, so the traffic and amount of time people spend on Shopee is very different from TikTok,” he said.
See more: TikTok’s live-commerce boom: hustler’s paradise or fleeting trend?
Great news for TikTok, not so great news for Sea.
Furthermore, the rise of TikTok Shop threatens to upset the balance that the likes of Lazada and Shopee are trying to achieve between margin and market share, said Florian Hoppe, Asia-Pacific lead at Vector, Bain & Company’s digital-focused consulting arm.
“Lazada and Shopee were all trying to get to healthier competitive models and find a somewhat profitable way to serve the ecommerce market,” he added. TikTok Shop threatened to disrupt that by spending heavily on subsidies.
A TikTok-shaped hole
TikTok’s ecommerce arm has since shut its doors in Indonesia. Yet it isn’t clear that its competitors will be able to fill the void created.
Li of Momentum Works said some Indonesian merchants who used to sell on TikTok are turning to traditional order-taking methods such as WhatsApp rather than using rival TikTok equivalents such as Shopee Live.
TikTok has not said it is giving up, though. The company might launch a TikTok Shop app that is separate from its social media app.
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TikTok must also decide whether Southeast Asia’s political dynamics is worth the commitment.
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