According to a report released Thursday, TikTok’s foray into e-commerce has been successful, with its online sales subsidiary gaining significant market share in Southeast Asia in just one year since its launch. TikTok Shop capitalized on the huge number of users of its popular video-sharing app to expand its business following a test run in Indonesia in 2021, according to a report by Singapore-based consultancy Momentum Works.
Although it has not caught up with established competitors such as Shopee and Lazada, TikTok Shop experienced faster growth and increased its gross merchandise value (which includes the total value of goods sold, including cancellations, returns, and refunds) seven times by 2022, reaching $4.4 billion, compared with the $600,000 recorded in 2021.
Weihan Chen, director of insights at Momentum Works, commented to AFP that this can be interpreted to mean that TikTok already had a captive audience in entertainment and sought to turn its attention to shopping.
TikTok’s strategy of combining its popularity as a video content platform with online shopping functionality has proven effective in Southeast Asia. Leveraging its existing user base, the platform has successfully attracted consumers to TikTok Shop and has experienced considerable growth in terms of the value of merchandise sold. Although it still has some way to go to compete with the e-commerce giants in the region, its rapid growth indicates significant potential in the Southeast Asian online market.
TikTok’s successful foray into e-commerce highlights the power of social media and its ability to influence users’ consumption habits. By leveraging its video platform, TikTok has been able to connect users with products and brands in an engaging and entertaining way. This opens up new opportunities for marketers and brands looking to reach a diverse and engaged audience in Southeast Asia.