TikTok to pour billions into SEast Asia amid e-commerce boom

As ByteDance-owned TikTok is reaping dividends from its e-commerce business initiative, the company plans to expand the venture's footprint by investing billions of dollars in Southeast Asia over the next few years, reports showed Thursday. 

This region has millions of TikTok users and it generates more than 325 million visitors to the app every month.

"We're going to invest billions of dollars in Indonesia and Southeast Asia over the next few years," TikTok CEO Shou Zi Chew said at a forum it organised in Jakarta to highlight the social and economic impact of the app in the region, adding that "it would invest in training, advertising and supporting small vendors looking to join its e-commerce platform TikTok Shop."

Chew said content on its "platform was becoming more diversified as it adds more users and expands beyond advertising into e-commerce, allowing consumers to purchase goods through links on the app during live streaming."

According to the report from Momentum Works, TikTok Shop capitalised on the legions of users of the popular video-sharing app to expand its business in 2022 after testing the waters in Indonesia in 2021.

Despite its lag from older rivals such as Shopee and Lazada, TikTok Shop posted the fastest growth rate, expanding its gross merchandise value (GMV) — the total value of goods sold, including cancelled, returned and refunded orders — sevenfold to $4.4 billion last year from just $600,000 in 2021.

A Chinese-company-owned TikTok has 8,000 employees in Southeast Asia, and 2 million small vendors selling their wares on its platform in Indonesia, the region's biggest economy, the CEO added.

E-commerce transactions across the region reached nearly $100 billion last year, with Indonesia accounting for $52 billion, according to data from consultancy Momentum Works.

TikTok facilitated $4.4 billion of transactions across Southeast Asia last year, up from $600 million in 2021, but it still trailed far behind Shopee's $48 billion of regional merchandise sales in 2022, Momentum Works said.

Weihan Chen, head of insights at Momentum Works, told AFP: "You can think of it as TikTok already having a captive audience coming onboard for entertainment trying different means to convert them and their attention into purchase and GMV."

Chen added: "From Indonesia, TikTok Shop aggressively expanded into five additional Southeast Asian markets, many of which boasted large populations of TikTok users and invested to improve its e-commerce capabilities.”

Indonesia remains Southeast Asia's largest e-commerce market, accounting for 52% of the region's total GMV.

The report also remarked that the return of offline shopping after COVID-19 restrictions were lifted led to a moderation in e-commerce sales, but it is expected to continue growing.

It further mentioned that the region may benefit from Chinese brands and manufacturing firms expanding into other countries as they reduce reliance on the US market and escape rising competition at home.

"That might be a real game changer for Southeast Asia’s e-commerce landscape, which has for a long time suffered from a lack of variety of goods," it said.