Singapore - TikTok's nascent venture into online shopping is paying off, with its e-commerce affiliate gaining a substantial market share in Southeast Asia just a year after its launch, a report said Thursday.
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, Momentum Works, a Singapore-based consultancy focused on startups, wrote.
While it lagged older rivals 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 dollars (3.5 billion pounds) last year from just 600,000 dollars ( about 470.000 pounds) in 2021.
"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," Weihan Chen, head of insights at Momentum Works, told AFP.
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, Chen added.
TikTok is owned by Chinese technology giant ByteDance.
Overall, the GMV of the region's nine top e-commerce platforms was valued at almost 100 billion dollars (78.8 billion pounds) in 2022, up 14 percent on-year, led by Singapore-based Shopee and Lazada, a subsidiary of China's Alibaba Group.
Shopee, a unit of Singapore's Sea Ltd, accounted for 47.9 billion dollars (37.8 billion pounds) of that, a 13 percent increase, the report said.
Lazada was at a distant second with 20.1 billion dollars (15.8 billion pounds), down from 21 billion dollars (16.6 billion pounds) in 2021.
Tokopedia, which solely serves the Indonesian market, was in third place with 18.4 billion dollars (14.5 billion pounds).
Indonesia remains Southeast Asia's largest ecommerce market, accounting for 52 percent of the region's total GMV.
The return of offline shopping after Covid-19 restrictions were lifted led to a moderation in ecommerce sales, but it is expected to continue growing, the report said.
It noted 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 ecommerce landscape, which has for a long time suffered from a lack of variety of goods," it said.(AFP)