Why TikTok is finding success in Southeast Asia while hurdles mount in West

HONG KONG — Short video hit TikTok has just finished a series of online shopping events in Southeast Asia, as it pivots to the region amid increased regulatory scrutiny in the West as geopolitical tensions rise between Beijing and Washington.

The ByteDance-owned platform has just wrapped up an “8.8 Sale” campaign in Singapore, concluding last week to mark the country’s National Day. The effort “has set a strong foundation for future campaigns in Singapore”, a TikTok representative said in a statement.

The week-long promotion of TikTok Shop, a marketplace built into the TikTok app that facilitates transactions while users watch short video and live streams, took place between Aug 4 and 10. It saw daily gross merchandise volume (GMV) triple compared to average daily levels a week before, the representative said, without disclosing the exact figures.

The relative success of its e-commerce push in Asia, which is largely a replica of its business model in China of embedding e-commerce into live streaming and short video, is in stark contrast with a similar experiment in the UK, where a clash of working cultures and different market conditions have led to an exodus of local employees.

In Singapore, the live streaming and a host of special deals appears to have worked for TikTok. Mobot, Singapore’s largest bike and scooter brand, hosted live shopping every day during the campaign, notching up sales of S$135,000, according to Mr Bobby Lai, the company’s brand manager. “The numbers really came as a surprise”, said Mr Lai.

A similar campaign was also run in Malaysia, with merchants gaining greater exposure via TikTok’s large user base in the country. The “Sama Sama! Hot Deal!” event, which took place between July 25 and Aug 5, saw daily GMV surge by 85 per cent over the week before, according to an announcement by TikTok Shop on its official WeChat account. The GMV for Chinese merchants who sold to Malaysian TikTok users during the campaign grew by 95 per cent, it added.

The series of events were TikTok Shop’s first grand promotional attempt since it expanded to five more Southeast Asian countries in the spring, namely Vietnam, Thailand, the Philippines, Malaysia and Singapore. The online shopping feature was first launched in Indonesia and the United Kingdom early last year.

The Southeast Asia market has become a key focus as TikTok faces renewed scrutiny of its data privacy policies and as it struggles with retail programmes in major Western economies.

The company has abandoned plans to expand its online retail operations in the United States and major European markets like Germany, France and Italy, following its UK initiative’s failure to meet targets, according to a report last month by the Financial Times. In June, TikTok also came under fire from employees at the social media platform’s London offices amid allegations of excessive workloads and a comment made by a male executive about maternity leave.

Still, TikTok Shop’s online retail activities in the UK are expected to continue. In a WeChat post last month, TikTok Shop touted its sales campaign in the country between June 27 and July 3.

TikTok is planning another campaign in Southeast Asia, called “99”, in September, a campaign for the huge “Singles’ Day” event in November, and the “Double 12” in December. Merchants from China can join and have been advised to cater to local culture, such as to wait for the consumers to pay once they receive the parcel, instead of having the order paid in advance, according to TikTok Shop’s posts on WeChat.

However, TikTok is up against stiff competition from Shopee and Alibaba Group Holding’s Lazada. In Malaysia, Shopee held a market share of 71 per cent in terms of traffic in the third quarter of 2021, followed by Lazada with 18 per cent and PGMall with 9 per cent. The share in Thailand was 57 per cent for Shopee, while Lazada and Central Online took up 35 and 2 per cent respectively, according to e-commerce aggregator iPrice Group.

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Mr Mike Seah, a TikTok merchant who regularly advises industry peers, said although Shopee remains the top dog in Southeast Asia, competition there is getting more fierce as subsidies decrease and more merchants flock in. Mr Seah said that TikTok is a disruptive platform because live streaming “helps goods to reach consumers”, which contrasts with Shopee and Lazada, which “help buyers to find goods”.

As a newcomer to e-commerce, TikTok currently charges the lowest commissions at 1 per cent, compared with about 10 per cent on other platforms. “But merchants need to share their revenue with influencers”, Mr Seah said.

“TikTok’s subsidies to sellers and assistance to sellers, have been the most aggressive”, said Mobot’s Lai. When Mobot conducted its live streaming there was a dedicated TikTok team behind the scenes that helped with the product issues and subsidies. “We have never had this kind of support from other platforms before”, said Mr Lai.

Mr Lai said that Shopee and Lazada, which also provide live-streaming features, “lack traffic” because they are not content platforms, while Facebook Live, where Mobot started to promote goods at least two years ago, does not have a shopping feature which asks people to make orders via WhatsApp. SOUTH CHINA MORNING POST