In Southeast Asia, TikTok Invests Billions In E-Commerce

(CTN News) – ByteDance-owned TikTok is reaping dividends from its e-commerce business initiative and plans to expand its footprint in Southeast Asia over the next few years by investing billions of dollars.

It has millions of TikTok users and generates more than 325 million monthly visitors to the app.

As part of a forum organized by Jakarta to highlight the social and economic impact of the app in the region, CEO Shou Zi Chew stated that “we will invest billions of dollars over the next few years in Indonesia and Southeast Asia.”

“TikTok will invest in training, advertising, and supporting small vendors looking to join its e-commerce platform TikTok Shop.”

According to Chew, it has gained more users and expanded beyond advertising into e-commerce, enabling consumers to purchase goods directly from the app during live broadcasts.

According to Momentum Works, TikTok Shop expanded its business in 2022 after testing the waters in Indonesia in 2021, taking advantage of the legions of users of the popular video-sharing app.

Although TikTok Shop has lagged behind older competitors such as Shopee and Lazada,

Its gross merchandise value (GMV) has more than doubled from just $600,000 in 2021 to $4.4 billion in 2019.

In Indonesia, the region’s largest economy, TikTok is owned by a Chinese company and employs 8,000 people in Southeast Asia.

According to data from consultancy Momentum Works, e-commerce transactions across the region amounted to nearly $100 billion in 2017. In the Asian region, Indonesia accounted for $52 billion in e-commerce transactions last year.

As of 2022, TikTok facilitated $4.4 billion in transactions across Southeast Asia, an increase from $600 million in 2021, however it still fell well short of Shopee’s $48 billion in regional merchandise sales, according to Momentum Works.

“You can think of this as TikTok already having a captive audience who are coming onboard for entertainment and trying different means to convert them and their attention into purchase and revenue.”, said Weihan Chen, head of insights at Momentum Works.

According to Chen, “TikTok Shop aggressively expanded into five additional Southeast Asian markets, many of which boasted large populations of TikTok users, and invested heavily in improving its e-commerce capabilities.”.

With 52% of Southeast Asia’s total gross merchandise value (GMV) coming from e-commerce, Indonesia remains the region’s largest e-commerce market.

Additionally, the report observed that the return of offline shopping after the COVID-19 restrictions were lifted led to a moderation in e-commerce sales, although growth is expected to continue.

Further, the report mentioned that the region may benefit from Chinese companies expanding overseas, as they will reduce their reliance on the US market and be able to escape rising competition at home.

This could be a game changer for Southeast Asia’s e-commerce landscape, which for a long time has struggled with a lack of variety of products.

SEE ALSO:

Twitch’s New ‘Partner Plus’ Program Pays Streamers 70% Of Subscriptions