TikTok Shop is projected to grab a 13.2% share of the Southeast Asian e-commerce market in 2023, according to Momentum Works’s report titled “The TikTok Shop Playbook: How ecosystem stakeholders should respond to the e-commerce insurgent.”
The report showed that TikTok Shop has demonstrated impressive growth in Southeast Asia since 2021: growing from $0.6 billion GMV in 2021 to $4.4 billion in 2022 and is on track to hit the $15-billion target in 2023.
Following its aggressive push in Indonesia, TikTok Shop expanded into five more countries in Southeast Asia last year: Thailand, Vietnam, Malaysia, the Philippines, and Singapore.
It is currently present in nine markets, including all major markets in Southeast Asia, the UK, Saudi Arabia, and the US.
“The competitive landscape is dynamic and can be evolving fast. The US market could potentially be much bigger for TikTok Shop in the future and help TikTok unlock greater commercial opportunities than all the Southeast Asian markets combined, if they play their cards right,” the report noted.
Beauty and personal care are the best-selling categories on TikTok Shop, accounting for 84% of the units sold and 70% of the GMV.
TikTok’s sister company Douyin has disrupted e-commerce market orders in China together with Pinduoduo, sending Alibaba’s market share down from >80% to <50% within six years.
Globally, TikTok Shop is becoming a threat to incumbent e-commerce marketplaces, including Shopee & Lazada in Southeast Asia as well as Amazon in the US and the Middle East.
“Ultimately, change is the only constant. Whether TikTok Shop is a threat to incumbent platforms might not be a standalone question at all. The bigger narrative is that in e-commerce, where leading players seem to have a network effect and structural advantage, disruption can still happen and the incumbents should always remain focused and vigilant.” said Weihan Chen, Insights Lead at Momentum Works.
Earlier, Momentum Works’s report “E-commerce in Southeast Asia 2023” showed that Southeast Asia’s e-commerce GMV hit $99.5 billion in 2022, and around half of that is attributable to Shopee.
The report showed that while there were strong headwinds supporting the e-commerce sector in 2022, growth and competition, too, continued. The market is still dominated by Shopee, while TikTok Shop is fast catching up with other e-commerce players.
In the next five years, the Singapore-based venture outfit projects that Southeast Asian e-commerce’s total GMV will reach $175 billion under normal circumstances, or $232 billion under the best-case scenario.