Beware of Shopee and Lazada!  TikTok Wants To Colonize Southeast Asia

Beware of Shopee and Lazada! TikTok Wants To Colonize Southeast Asia

A sonCNBC Indonesia


Friday, 26/05/2023 12:55 WIB

Jakarta, CNBC Indonesia – TikTok Store’s aggressive expansion into Southeast Asia could threaten big e-commerce players like Sea Group’s Shopee and Alibaba’s Lazada.

Launching CNBC International, Thursday (25/5), this move coincides with the parent company, ByteDance, which is trying to test markets outside the United States (US) and India as an alternative source of income for the company.

For information, TikTok Store is an e-commerce marketplace for the short video app TikTok. TikTok itself is owned by a Chinese technology company, ByteDance.

This TikTok e-commerce app allows marketers, brands and content creators to display and sell their products to users.

In 2022, the TikTok Store will expand to 6 countries in Southeast Asia, namely Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand.
“TikTok continues to grow rapidly in Southeast Asia. We estimate that TikTok’s Gross Product Value/GMV in 2023 will reach nearly 20% of Shopee’s, which we assume is the reason for Shopee’s increase in sales and marketing since April,” Shawn Yang , analyst. from the Blue Lotus Research Institute, in the latest report on the Ocean Group, quoted by CNBC International, Thursday (25/5).

According to internal data obtained by the technology media Habari, TikTok Store’s GMV, which is the total value of products sold, has more than quadrupled to 4.4 billion dollars in Southeast Asia in 2022.

TikTok Store is reportedly targeting a GMV of $12 billion by 2023.

In fact, the GMV of TikTok Store is currently only a fraction of the GMV of Shopee and Lazada.
According to available data, Shopee’s GMV will reach $73.5 billion in 2022, while Lazada’s GMV will reach $21 billion by September 2021.

Threats to the Giants

A TikTok spokesperson told CNBC International that the TikTok Store “continues to grow rapidly” as users big and small use the platform to reach new customers. TikTok is focusing on the continued development of TikTok Stores in Southeast Asia.

According to market research company Insider Intelligence, as of May, the number of TikTok users in Southeast Asia alone has reached 135 million.
According to Statista, Indonesia has the second largest number of TikTok users after the United States.

According to the population, Indonesia, as the most populous country in Southeast Asia, has 52% of the population is young, and has around 113 million TikTok users.

“Impulse buying [pembelian impulsif] from viewing content is the advantage that TikTok has,” Sachin Mittal, head of telecom and internet industry research at DBS Bank, told CNBC International.

Sea Group is relying on its e-commerce division, Shopee, to improve the group’s financial results, while its gaming division, Garena, continues to see a decline in revenue due to a lack of exciting games and the continued banning of its flagship game, Free. Fire, in India due to national security threats.

Shopee is currently expanding its market in Malaysia and continues to strengthen its operations in Brazil after exiting several markets in Europe and South America.
At the same time, TikTok is currently implementing a massive ‘money burn’ campaign as an incentive to attract buyers and sellers to the TikTok Store.

According to a survey conducted by online retail research firm Cube Asia, users who shop at the TikTok Store reduce their spending on Shopee (-51%), Lazada (-45%), Offline (-38%) in Indonesia, Thailand and the Philippines. .

Data from website analytics company Similarweb shows that Shopee is currently the largest online marketplace in Southeast Asia, with a traffic share of between 30% and 50% in the region in the past three months.

At the same time, Lazada takes second place with a traffic share between 10% and 30%.