TikTok Shop, the e-commerce marketplace of the short video app TikTok, has emerged as a rising threat to major e-commerce players in Southeast Asia, such as Shopee and Lazada. As ByteDance, the parent company of TikTok, pushes the app into markets beyond the US and India, TikTok Shop enables merchants, brands, and creators to showcase and sell their goods to users. TikTok Shop’s GMV has soared more than four times to $4.4 billion in Southeast Asia in 2022 and is aiming for a target of $12 billion by 2023. Its growth has prompted Shopee to defensively increase sales and marketing, according to a recent report. However, Shopee and Lazada remain the largest players in the region, with Shopee netting $73.5 billion in GMV in 2022, and Lazada’s GMV reaching $21 billion for the year through September 2021, according to public figures. While TikTok Shop may be cutting into their market share, experts believe that they can weather the competition, with Shopee in a stronger position than Lazada. Despite this, TikTok Shop’s growth appears to be unsustainable, as it is currently burning cash to grow its market share and does not have end-to-end capabilities like its rivals.

Impulse buying from watching content is an advantage TikTok has.

Sachin Mittal
HEAD OF TELECOM & INTERNET SECTOR RESEARCH, DBS BANK

In conclusion, while the rise of TikTok Shop poses a challenge to major e-commerce players in Southeast Asia, significant growth alone does not guarantee long-term success. Only time will tell if TikTok Shop can maintain its momentum and make a significant dent in the established market players’ market share.

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