The COVID-19 pandemic kickstarted many eCommerce trends in Southeast Asia, with one of the biggest social media sites in the world, TikTok, seizing the chance to create a new revenue stream. It launched several eCommerce businesses on its platform to over 1 billion users. Since 2020, an exponential increase in Southeast Asia eCommerce activity saw total sales reach USD 89.67 billion in 2022, an increase of USD 15.31 billion from the previous year. Projections show that the sector will likely exceed the USD 100 billion record by 2023 due to eCommerce users in the region potentially growing by 85% and reaching 400 million by 2025.
Changing eCommerce trends in Southeast Asia
The ASEAN eCommerce market amounted to approximately USD 120 billion in 2021, a massive 2300% growth rate in 6 years from 2015’s USD 5 billion revenue. The pandemic brought an unprecedented shift in people’s shopping behaviour, creating local/ international merchants, C2C, B2C and B2B eCommerce models.
What is the future of ecommerce in Southeast Asia according to 55’s Ben Poole
Electronics was the most profitable category, followed by fashion/textiles, home furnishings, and baby products. TVs, smartphones and laptops were among the top sellers. With the incredible growth and innovations consolidating the prosperity of this online economy. Trends such as live-streaming have become prevalent, particularly on various social media platforms. Social sellers use live streaming to showcase their products and actively interact with the customer to answer any relevant questions.
Other developments in the eCommerce market space include BOPIS (Buy Online Pickup in Store), expedited shipping, and BNPL (Buy Now, Pay Later). Fintech has opened up multiple payment options, creating a rapidly growing trend considered a key factor to success in eCommerce. The best solution for many companies is to merge trade with technology and optimise every step of the fulfilment process.
The application of augmented reality (AR) to the eCommerce world has also altered the online shopping experience. AR offers customers an in-depth look at the product using their smartphone devices to see how a specific product would appear in their homes. This innovative solution of integrating AR in eCommerce stores successfully increases the conversion rate because it gives customers more confidence to purchase the product.
TikTok’s move into the eCommerce sector
TikTok has constantly been updating and expanding its LIVE function since 2021. The popular short video app allows creators to live stream and engages more organically with their audiences. Several features have become popular, including the ability to go live with others, host Q&As, and use moderators and advanced keyword filters. The app is now ready to bring intense competition to other giant live platforms like Instagram and Facebook.
Dropping its newest feature, the “TikTok Shop“, earlier this year, the company now offers a display feature where products are directly accessible with a simple click. The feature allows creators to promote and sell their products directly on the platform.
As most of its users are young, aged between 18 and 24 years old (43.7%), female (57%), and based in Southeast Asia (226.8 million), the eCommerce feature provides a ready market for those targeting this demographic.
It primarily launched the online shopping feature in Indonesia and the United Kingdom early last year, amidst rising tensions over data privacy policies and increased regulatory scrutiny in Europe. The ByteDance-owned platform has also recently conducted a series of online shopping events in Southeast Asia. It held an “8.8 Sale” campaign in Singapore in August, which resulted in an unprecedented daily gross volume (GMV) triple compared to average daily levels a week before the event.
TikTok also ran a similar campaign in Malaysia, The “Sama Sama! Hot Deal!” event, at the end of July this year. Again, the platform witnessed a daily GMV surge of 85%, according to a report by TikTok Shop on its official WeChat account. This was the first grand promotional attempt from the platform in their expansion plan for other ASEAN countries like Vietnam, Thailand and the Philippines. The company plans to have another regional campaign, called “Singles’ Day”, in November and will also launch the “Double 12” in December.
The recent eCommerce trends in Southeast Asia have paved the way for TikTok to enter the online sales game. It charges the lowest commissions as it tries to dominate the competition at 1%, compared to the 10% fees on other platforms. The social media platform is up against stiff competition from established eTailers such as Shopee and Lazada. They also offer live-streaming features but lack traffic due to the absence of content creation and consumption. Facebook Live, where many brands promote their products, does not have an online shopping feature like TikTok and thus falls short.
As the Southeast Asia eCommerce boom continues, social commerce will become increasingly ubiquitous, and TikTok is perfectly poised to explore this as a revenue stream. With the clout behind the platform and ByteDance allowing it to experiment and research eCommerce possibilities, TikTok is likely to expand its interest in this sector.