Since 2020, an exponential increase in ASEAN’s eCommerce activity has registered a total sales of USD89.67 billion, representing an increase of USD15.31 billion from the previous year, reports Tech Collective, an online resource for technology and start-up news. The sector is projected to exceed the USD100 billion record by 2023 due to the increase in eCommerce users in the region, potentially reaching 400 million by 2025.
Changing eCommerce trends
The ASEAN eCommerce market amounted to approximately USD120 billion in 2021, a massive 2300% growth rate in 6 years from 2015’s USD5 billion revenue. Clearly, the pandemic brought an unprecedented shift in people’s shopping behavior, creating local and international merchants, C2C, B2C and B2B eCommerce models.
Electronics was the most profitable category, followed by fashion/textiles, home furnishings, and baby products. TVs, smartphones and laptops were among the top sellers. With the incredible growth and innovations in the online economy, trends such as live-streaming have become prevalent, particularly on social media platforms. Social sellers use live-streaming to showcase their products and actively interact with customers to answer any relevant questions. Other developments in the eCommerce market space include BOPIS (Buy Online Pickup in Store), expedited shipping, and BNPL (Buy Now, Pay Later). Fintech has also opened up multiple payment options, creating a rapidly growing trend that’s considered a key factor to success in eCommerce.
AR and eCommerce
The application of augmented reality (AR) to the eCommerce world has altered the online shopping experience. AR offers customers an in-depth look at the product using their smartphones to see how a specific product appears in their homes. The potential of integrating AR in eCommerce stores successfully increases the conversion rate as it gives customers more confidence to purchase the product.
TikTok’s move to the eCommerce sector
TikTok has constantly been updating and expanding its LIVE function since 2021. The ultra-popular short video app allows creators to live-stream and engage more organically with their audiences. Several features including the ability to go live, host Q&As, and the use of moderators and advanced keyword filters are gaining popularity.
As most of TikTok users are young, aged between 18 and 24 years old (43.7%), female (57%), and based in Southeast Asia (226.8 million), the eCommerce feature provides a ready market for those targeting this demographic. TikTok launched the online shopping feature in Indonesia and the United Kingdom early last year. The ByteDance-owned platform also recently conducted a series of online shopping events in the region. It’s “8.8” Sale Campaign in Singapore last August resulted in an unprecedented daily gross volume (GMV) triple compared to average daily levels a week before the event.
TikTok ran a similar event in Malaysia, under the “Sama Sama! Hot Deal!” campaign. Again, the platform witnessed a daily GMV surge of 85%. This was the first grand promotional attempt from the platform in their expansion plan for other ASEAN countries like Vietnam, Thailand and the Philippines.
What’s on the horizon?
The recent eCommerce trends in Southeast Asia have paved the way for TikTok to enter the online sales game. It charges the lowest commissions at 1% to dominate the competition compared to the 10% fees on other platforms. The social media platform is, however, up against stiff competition from established eTailers such as Shopee and Lazada. They also offer live-streaming features but lack traffic due to the absence of content creation and consumption. Facebook Live, where many brands promote their products, does not have an online shopping feature like TikTok and thus falls short.
As the Southeast Asia eCommerce boom continues, social commerce will become increasingly ubiquitous, and TikTok is perfectly poised to explore this as a revenue stream.