Whose lunch is TikTok Shop eating? Charting recent market share moves in Southeast Asia’s e-commerce space

A popular recent theme in our conversations with brand teams has been the rapidly changing channel landscape of e-commerce in the region. One specific topic – TikTok Shop –  towers above the rest and presents new questions; what does it mean for our brand, how should this channel sit alongside our other channels, and (for those who are not selling there already) should we launch this year? Read on to hear our view.

From offence to defence: TikTok Shop is already impacting the market share split of Southeast Asia’s e-commerce platforms

We started picking up on the rise of TikTok Shop around mid-2022. While especially pronounced in Indonesia and in the fashion and beauty categories back then, it has since spread to more markets and more product types.

Our hunch was always that a lot of this revenue was cannibalising other e-commerce channels rather than “net new”, and in a new survey conducted among consumers in Thailand, the Philippines, and Indonesia we had a chance to validate this hypothesis. Here is what we learned:

• 85% of surveyed consumers who use TikTok Shop indicated that their spending on the channel has made them reduce their spending on other online and offline channels
  
   
• Across Southeast Asia, Shopee and Lazada appear to be the most impacted platforms with about half of surveyed shoppers indicating that they have reduced their spending there; these platforms may not have experienced a big drop in their overall GMV yet as TikTok Shop’s absolute numbers are still much smaller, but that could change going forward
  
   
• If TikTok Shop is able to maintain its momentum, its impact will also be felt across a wider set of online and even offline channels

The implication for brands is clear: Launching TikTok Shop is no longer purely an offensive and innovative move, but in many instances also a required defensive move to retain total e-commerce impressions and market share in the quarters to come.

Not yet selling on TikTok Shop? Two questions to answer before going all-in

If you are considering whether to enter TikTok Shop this year, our advice is to solve for two questions, in sequence:

1. How large is the commercial opportunity for our brand on TikTok Shop?
   
    
2. What capabilities will we need to establish if we decide to launch?

To tackle the first, there are different ways to size the current commercial opportunity. For instance, the TikTok app publicly shows a top seller list of various product categories in all active markets, which can help indicate rough price trends and unit sales volumes for popular products.

For a more rigorous approach we offer a complete market data set for TikTok Shop across the six largest economies in Southeast Asia, including category- and competitor-level insights into recent sales, assortment, pricing, promotions and brand content.

Please reach out on https://phibious.com/cube-asia to learn more.