TikTok, an app developed by ByteDance in China, gained popularity as a social media platform for sharing short videos. Over time, it grew into a global powerhouse and is set to expand further by introducing the TikTok Shop feature.
Did you know that TikTok has 732 million active users worldwide? Although launched only 7 years ago, it has become the 7th most popular social media platform.
Recently in 2022, TikTok entered the E-Commerce market in Southeast Asia by introducing the TikTok Shop feature. This move has potentially enabled the platform to earn a profit of up to 150 billion.
According to a survey conducted by Cube Asia, those who shop on TikTok Shop tend to spend less on other e-commerce platforms like Shopee (down by 51%) and Lazada (down by 45%).
It’s fascinating how small E-commerce features on social media platforms can lure customers away from bigger platforms such as Shopee and Lazada.
Discover why TikTok should consider adding a Shop feature despite its current popularity as a social media platform. This informative article by Techsauce also highlights the 5 key reasons why TikTok Shop could potentially compete with established e-commerce platforms like Shopee and Lazada.
Why is TikTok adapting as an e-commerce platform?
Did you know that TikTok was launched in 2016 and has quickly become the most downloaded platform in 2020, taking only four years to achieve this feat?
As its popularity grows globally, the application becomes a double-edged sword. Several countries are concerned about potential threats, such as the leakage of confidential information or the app’s content threatening national security.
The trend of banning TikTok has been observed in many countries. However, the Indian ban in 2020 had the most significant financial impact on TikTok, as India is its largest growing market outside of China.
Last year, TikTok generated a staggering 8,960 million baht solely from its operations in India. However, with the recent ban in India, TikTok will likely experience a significant revenue decline. One way for TikTok to stay afloat is to explore new markets and expand its reach.
According to a recent survey by ByteDance, TikTok has gained immense popularity in Southeast Asia, with the app becoming the most downloaded in countries such as Indonesia, Thailand, Malaysia, and the Philippines. This presents a lucrative opportunity for the company to invest in this new market. The survey also revealed that 94% of businesses in the region use TikTok to market and sell their products, which prompted the development of the TikTok Shop feature tailored for this market. This not only helps small businesses generate additional income but also has the potential to generate more revenue for TikTok.
5 reasons why the TikTok Shop has become a dark horse E-Marketplace
TikTok has expanded from a platform for sharing short videos to an E-Marketplace, making a strong entrance into the Southeast Asian market. What advantages does TikTok possess that make established players like Shopee and Lazada take notice? Let’s explore.
1. No commission charged attract merchants and customers
During the initial launch of TikTok Shop, merchants were not charged any commissions. This strategy attracted more sellers to the platform, resulting in products sold at lower prices than other E-commerce platforms. This affordability factor has contributed significantly to the popularity of TikTok Shop in Southeast Asia within a short period, benefiting customers who can enjoy the convenience of purchasing items at a cheaper cost.
2. Live Shopping, complete trading in one app
Live shopping has been a popular way for sellers and customers to interact in real-time, even before the introduction of the TikTok Shop. Many people prefer to buy products from live shopping rather than traditional online shopping.
However, TikTok Live Shopping has two key features that make it even more appealing to shoppers. Firstly, all transactions are completed within the app. This is made possible by connecting to a shopping basket from TikTok Shop, allowing customers to easily purchase items while watching a Live. This eliminates the need to migrate to other e-commerce platforms, making the buying and selling process seamless.
Secondly, stores offer exclusive discounts for their Live Shopping events, often greater than regular discounts or promotions. This creates a sense of urgency for customers to “Buy now, think later”. In a recent TikTok survey, 67% of app users admitted purchasing something they had not planned to buy while watching Live. Many businesses also report a 74% increase in sales thanks to Live Shopping.
3. Sincere Marketing via TikTok Influencer
TikTok is a platform with numerous influencers whose followers are drawn to their creative clips and entertaining stories. With the recent introduction of TikTok Shop, ‘TikTok Influencer Marketing’ has emerged as the platform’s biggest strength. The main reason for this is that it is more authentic than traditional advertising. This is because most TikTok Influencers are regular people who have gained popularity through their video clips rather than celebrities. As a result, they can communicate with consumers genuinely and sincerely, which doesn’t come off as a blatant advertisement.
4. Sell a laugh, and attract customers with creative videos.
TikTok is a popular app for sharing short, humorous video clips with great potential for promoting products. With its various effects and trending music, TikTok can create engaging and innovative product promotion videos that attract a wide audience. Unlike Shopee and Lazada, which rely on static product images or short videos, TikTok allows businesses to showcase their products in a more fun way. Most importantly, TikTok videos that demonstrate creative product use or feature popular music trends are more likely to be watched until the end and result in increased sales. 94% of businesses report that creating content on TikTok has driven more sales than any other platform.
5. The clip is easy to stream. It’s like getting free advertising space.
TikTok’s foundation as a social media platform makes it easy to stream content, allowing it to reach a large audience. If your clip becomes a trend, other TikTok creators can make reply clips, which is why it has become a favorite of small and medium businesses. Unlike hiring famous people to market for them, making a clip on TikTok has a high chance of making their business a trend and increasing sales without increasing costs. Recent surveys show that 96% of businesses have gained more customers by marketing through TikTok.