TikTok Shop, the major threat of Shopee and Lazada in Southeast Asia

Shopee and Lazada have managed to position themselves as the major leaders in the e-commerce sector in Southeast Asia. However, this could end. ByteDance, TikTok’s parent company, performed Large financial investments to promote TikTok shop in Southeast Asia.

TikTok Shop is the tool that TikTok has launched in some countries to launch the sale of products directly through its platform and help brands reach their consumers. Countries where they have a presence include the United States and India.

TikTok Shop has been present in six countries in Southeast Asia since 2022: Singapore, Malaysia, Indonesia, Philippines, Vietnam and Thailand. Areas where Shopee had garnered a large presence in recent years but has been on the defensive since April due to TikTok Shop’s increase in sales, according to CNBC. “TikTok continues to grow rapidly in Southeast Asian countries. We estimate that the gross value of TikTok goods will reach about 20% of Shopee in 2023“, said Shawn Yang, analyst at the Blue Lotus Research Institutein a recent report on Sea Group, the owner of Shopee.

The news outlet said TikTok Shop’s GMV skyrocketed more than four times in 2022, reaching $4.4 billion in Southeast Asia. They also shared that the company aims to reach $12 billion in GMV by the end of the year.

According to market research firm Insider Intelligence, the number of people using TikTok in Southeast Asia is now 135 million. We are approaching the country with the most users, the United States.

One of TikTok Shop’s most powerful strategies when entering a new market is to eliminate commissions and opt to charge a 1% fee on each purchase. Shopee charges more than 5% for each sale.

Shopee has a strong GMV

TikTok Shop’s current GMV represents a small fraction compared to that of Shopee ($73.5 billion in 2022) or Lazada ($21 billion by September 2021). However, a survey by Cube Asia found that consumers who spend money in the TikTok shop, reduce their spending on Shopee (-51%), Lazada (-45%) and offline (-38%). So Shopee must keep working to prevent his fall from the throne.

Sea Group relies on its Shopee e-commerce division to do well in this area as its gaming company continues to underperform. His gaming company Garena, one of the brand’s strongest divisions, is seeing sales fall due to the ban of its most famous game, Free Fire, in India.

Meanwhile, Shopee is working to expand its presence in Malaysia and Brazil after closing operations in many countries, such as Spain.

While in the United States, TikTok is fighting to avoid being banned in the country. March, TikTok CEO Shou Zi Chew appeared before the US Congress to defuse tensions, but it wasn’t enough to stop Montana from banning the platform. TikTok was also banned in India in 2020.

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