SINGAPORE: Shopee and Lazada have long dominated the online selling market in South East Asia, but this dominance now has a new threat in the form of TikTok Shop, as the app continues to gain popularity across the globe despite security concerns.
A recent CNBC article explored this question, quoting experts who said, “TikTok Shop has the potential to be as big as Shopee or Lazada,” while acknowledging that this may take some years to happen.
The company’s aggressive foray into South East Asia is undeniable, with TikTok Shop launching in Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand last year.
The key ingredient that may give TikTok Shop the edge over other e-commerce platforms is “impulse buying from watching content,” the piece quotes Sachin Mittal, head of telecom and internet sector research at DBS Bank, as saying.
Blue Lotus Research Institute analyst Shawn Yang said the video app continues to grow rapidly in South East Asia.
“We estimate that TikTok’s 2023 [gross merchandise value] will reach 20%~ of Shopee, which we suggest prompted Shopee to defensively increase sales and marketing since April,” Yang added.
And while its GMV, or the total value of goods sold, for last year was already at an impressive US$4.4 billion (S$5.95 billion), the company’s goal is reportedly to see this nearly triple to US$12 billion (S$16.2 billion) for this year.
These numbers are impressive but still small compared to Shopee (US$73.5 billion GMV in 2022 or S$99.4 billion) and Lazada (US$21 billion GMV in 2022 or S$28 billion).
However, there is no doubt that the growing number of TikTok users in South East Asia will help the company reach its goals. CNBC says that after the US, Indonesia has the highest number of TikTok users and noted that 52 per cent of its 113 million strong population are the youth, TikTok’s chief demographic.
But whether TikTok’s meteoric spread across the globe will be curbed because of concerns over data security remains to be seen.
On May 17, Montana Governor Greg Gianforte signed a bill banning TikTok in the state, the first ever to do so. The Montana bill bans TikTok from operating within its state lines, and violators could face fines of as much as $10,000 per day. /TISG
Send in your scoops to email@example.com