TikTok has emerged as a frontrunner in the ever-evolving social media landscape, captivating millions of users worldwide with its short-form, engaging content. It has become increasingly vital to examine the app’s profound influence on consumer behaviour, particularly in the realm of eCommerce in Southeast Asia, to understand consumer behaviour dynamics.
By recognising and understanding the impact of TikTok and consumer behaviour on eTail, businesses can unlock powerful insights to tailor their marketing strategies, tap into emerging trends, and effectively engage with their target audience.
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TikTok’s ambitious eCommerce expansion
In response to growing global concerns over data security and to bolster its position in Southeast Asia, China’s ByteDance announced a significant investment plan for the short video app. The company plans to inject billions of dollars into the region over the coming years, reaffirming its commitment to the market. This ambitious move comes amid mounting scrutiny from various governments and regulators who fear potential data harvesting and geopolitical implications associated with its Chinese ownership.
According to Momentum Works, eCommerce transactions amounted to nearly USD 100 billion in 2022, and Indonesia contributed a significant USD 52 billion of the total. TikTok has played a notable role in this dynamic market, facilitating USD 4.4 billion in transactions across the region in 2022, a substantial increase from the mere USD $600 million recorded in 2021. Despite this remarkable growth, the company’s eCommerce performance still lags behind competitors like Shopee, which reported an impressive USD 48 billion in regional merchandise sales in 2022.
The China-based company intends to invest in various key areas to solidify its position in the region’s burgeoning market. These include training initiatives, advertising efforts, and supporting small vendors. The platform currently boasts a significant presence in Southeast Asia, employing around 8,000 personnel and hosting 2 million small vendors who sell their products in Indonesia, the largest economy in the region.
Unravelling TikTok’s impact on the eCommerce landscape
TikTok has caused a revolution in the realm of eCommerce and online shopping. Its vast user base and captivating video format have attracted businesses seeking to engage with customers more effectively and reach new audiences. With 40% of its user demographic comprising individuals aged 16 to 24, it offers a simple pathway to engage and attract a fresh, young audience. The platform’s algorithm prioritises engaging content, offering even small businesses with limited budgets a chance to reach a diverse audience.
Short-form videos and challenges have opened up novel opportunities for brands to showcase their products and foster a dedicated community. A single video can swiftly become a viral sensation, granting brands unprecedented exposure and driving substantial traffic to their eCommerce websites. Capitalising on popular trends and challenges allows businesses to create viral content that garners millions of views and amasses a large following.
For instance, in May 2019, Chipotle launched a “lid flip challenge” on TikTok, where users had to show off their skills by flipping the lid of a Chipotle bowl and landing it perfectly. The challenge quickly went viral and resulted in over 100,000 user-generated videos, which received over 230 million views.
In 2022, the video-focused company unveiled its in-app eCommerce feature, TikTok Shop, enabling users to browse and purchase items directly within the app. Brands can showcase their products in an easily accessible storefront, simplifying the discovery and purchase process for users without needing to leave the app. Moreover, strategic partnerships with select merchants and integration with popular eCommerce platforms like Shopify streamline the setup of storefronts for brands.
How TikTok and eCommerce trends are reshaping traditional brick-and-mortar businesses
With the vibrant short video platform continuing to enthral millions, it has emerged as a powerful tool for businesses to connect with younger audiences and revolutionise their marketing strategies. The platform’s engaging content format, paired with its vast user base, presents a unique opportunity for brands to expand their reach and amplify their brand awareness in ways previously unimagined.
Moreover, its seamless integration with eCommerce has redefined the shopping experience, luring customers away from physical stores towards the convenience of virtual marketplaces. As a result, it has gradually enticed customers away from the confines of brick-and-mortar stores towards the allure and convenience of virtual marketplaces.
The symbiotic relationship between TikTok and consumer behaviour significantly impacts eCommerce in Southeast Asia. Its influence on consumer preferences and purchasing patterns is beginning to shape the region’s market dynamics. As the company invests billions to bolster its eCommerce business, other Southeast Asia and beyond companies must adapt their strategies to leverage this influential platform. Embracing the platform opportunities aligns businesses with shifting consumer behaviour, positioning them at the forefront of the region’s revolution and allowing them to grow with their audience.