TikTok Shop Watch #5: Southeast Asia
What is driving and limiting Bytedance's e-commerce growth in these markets?
Contents
Things that caught our attention
Introduction
Last week, we continued our periodical reports on TikTok Shop with an exploration of its progress outside Asia. This week, we will take a closer look at its development in Southeast Asia, currently TikTok Shop’s most important region.
Even if you are not active in the Southeast Asian region, we think it’s worth your time to watch TikTok Shop’s developments there. Just as Douyin serves as a blueprint for what Bytedance aims to achieve in Southeast Asia, so too are TikTok’s experiences in Southeast Asia a blueprint for a rollout in Europe and the Americas.
If you are not familiar with TikTok’s initiatives in Southeast Asia, we suggest reading our December 2023 and January 2025 reports first.
In addition to utilising source material from our partner, Six Degrees Intelligence, we have also collaborated with Momentum Works on this report. We have incorporated some of the relevant slides from their highly recommended E-commerce in Southeast Asia 3.0 report. This report contains a wealth of information on the Southeast Asian e-commerce market, and we recommend obtaining a copy if you want to delve deeper than just TikTok Shop.
The free section of the report below contains an overview of the current status of TikTok Shop in Southeast Asia. Paid subscribers get full access to this report and will learn …
What drives TikTok Shop’s growth in the Southeast Asian market.
TikTok’s strategy to cope with logistical challenges in Southeast Asia.
How TikTok Shop plans to improve live commerce penetration in the region.
TikTok’s goals and expectations for profitability in 2025 and beyond.
And much more …
Become a paying subscriber to unlock the full report and support our in-depth research into key China tech trends.
Ed Sander, Tech Research Analyst
TikTok Shop in Southeast Asia
In the Southeast Asian countries where TikTok Shop is active, Momentum Works reported the following GMV growth figures among leading e-commerce platforms in 2024.
Source: E-commerce in Southeast Asia 3.0 report by Momentum Works
While Indonesia remains the largest e-commerce market, strong growth in other countries has led to a decrease in its share of Southeast Asian e-commerce, from 52% in 2022 to 44% in 2024.
TikTok has hundreds of millions of users in Southeast Asia. In contrast, the number of daily active TikTok users in the United States fluctuates between 100 million and 150 million, while the number of daily active users in the United Kingdom is between 35 million and 38 million.
TikTok Shop's business development in Southeast Asia can be described as rapid and extensive. Currently, its business covers six countries in Southeast Asia, including Indonesia, Thailand, Vietnam, the Philippines, Malaysia, and Singapore. TikTok Shop first entered the Southeast Asian market in December 2020, choosing Indonesia as its first country of operation. Subsequently, between 2021 and 2022, it gradually expanded its business to the five other Southeast Asian countries.
TikTokShop has achieved good results in the Southeast Asian market, with a total GMV of $32 billion and net sales (after deducting returns and cancellations) of $24.4 billion in 2024. The region is experiencing rapid growth, but the performance of each country varies. Vietnam, Thailand and Indonesia (including Tokopedia, see below) performed relatively well, with Vietnam performing exceptionally well. However, the Philippines, Singapore, and Malaysia fell short of expectations.
In Q1 2025, TikTok Shop Thailand's GMV more than tripled year-over-year, with Indonesia and Vietnam also surging over 150%. Globally, the platform reached $10 billion in GMV—a 42% increase—led by Thailand's $2.5–$3 billion GMV and a 217% quarterly growth rate, surpassing the U.S. and Indonesia. [2]
By June 2025, the region's total daily sales were expected to reach approximately $140 million. Specifically, Thailand is $38 million, Vietnam is $35 million, Indonesia (excluding the part merged with Tokopedia) is $29 million, the Philippines is $19 million, Malaysia is $17 million, and Singapore is between $1.15 million and $1.2 million.
In anticipation of potential regulatory headwinds similar to those in Vietnam and Indonesia, TikTok Shop has announced a $8.8 billion investment over five years to enhance Thailand’s digital infrastructure, including data centres and content hubs. Thailand is Southeast Asia's fastest-growing e-commerce market, with TikTok Shop reaching $5.9 billion in sales last year and more than 3 million Thai sellers on the platform. [3]
TikTok Shop has relaxed its entry requirements across Southeast Asia, eliminating e-commerce experience requirements for merchants. Now, any merchant with a valid business license from mainland China or Hong Kong is eligible to join. At the same time, individual sellers only need a permit, along with some operational history, to quickly open a store. [2]
However, since 2025, many cross-border and local sellers from China have reported that operating on TikTok Shop in Southeast Asia is challenging. Southeast Asian e-commerce has already been operating with thin profits, and the platform has further increased its fees. The platform's comprehensive rate has risen from the low-price subsidies of the past to a level similar to that of Shopee. [1]
Indonesia
Currently, the Indonesian market accounts for about 35% to 40% of TikTok Shop’s total revenue. According to third-party tracking data consulted by Momentum Works, even though TikTok’s subsidy level has been reduced, the monthly GMV of TikTok Shop in Indonesia has exceeded the level before the temporary ban in October 2023. [1]
In Indonesia, the demand of consumers in second- and third-tier cities on short video platforms has been further stimulated. These consumers were previously less active on e-commerce platforms. Through precise recommendations and live broadcast interactions, TikTok Shop provides merchants with new opportunities to reach these consumers, thereby gradually increasing market penetration. [1]
In the Indonesian market, although Shopee's growth rate is not as fast as TikTok Shop’s, its absolute value is still higher. Meanwhile, Lazada's growth rate and absolute value are lower than those of TTS. These data show that despite some challenges faced by TTS, it still maintains a strong growth momentum in the Southeast Asian market.
The Indonesian market is undergoing significant changes. The market share of international goods is declining, while the proportion of locally produced goods is increasing. This change is partly due to the impact of Chinese state-owned enterprises on the local market, which has led the Indonesian government to take measures to protect local merchants, resulting in the removal of certain products. Merchants who perform well in the local market are mostly from mainland China, and these merchants usually expand in overseas markets at the corporate level.
Challenges in Indonesia continue. In late June, the Indonesian government implemented a rule requiring all e-commerce platforms to directly collect and transfer taxes from millions of Indonesian sellers to the government, at a rate of 0.5%. [4]
Status of the Tokopedia Merger
TikTok and Tokopedia established a joint venture in Indonesia. The $1.5 billion merger enabled ByteDance to relaunch TikTok Shop in Indonesia while navigating local regulations, keeping the country a key battleground against rivals Shopee and Lazada.
As a result of the merger, TikTok Shop is facing some challenges in data statistics. The merger resulted in some traffic being diverted to Tokopedia, and the TikTok Shop system did not record some GMV. This made it impossible to fully monitor the actual situation after the merger. For example, the average daily sales data mentioned above does not include Tokopedia's data for the Indonesian market.
This situation has an impact on TikTok's performance statistics in the Indonesian market, where TikTok Shop did not meet its targets. However, if the data of the Indonesian joint venture and Tokopedia is taken into account, Indonesia has actually achieved its intended goals.
TikTok Shop cut several hundred jobs in Indonesia following its merger with Tokopedia, trimming teams across logistics, operations, marketing, and warehousing. Further cuts may follow in July, reducing the combined workforce from about 5,000 to roughly 2,500. Despite the downsizing, TikTok says it ‘remains committed to investing in Indonesia and Tokopedia for sustainable growth’. [5]
Tokopedia and TikTok Shop have officially launched an integrated Seller Centre, giving Indonesian sellers a single dashboard to manage both platforms. The integration streamlines inventory sync, reduces errors, and expands sellers' access to TikTok's audience alongside Tokopedia's local market. Early users report faster deliveries and sales jumps, with some seeing GMV grow by over 50% within weeks. [6]
However, not all merchants are this happy. Rest of World recently published an article [4] revealing further struggles caused by the merger.
ByteDance is reportedly not investing in Tokopedia, and its sales volume is decreasing.
Tokopedia merchants have been asked to create videos and livestreams, while they previously only had to list products on Tokopedia. They also report revenue drops and algorithmic sidelining after integration with TikTok.
Merchants report being pressured to integrate their Tokopedia dashboards with TikTok’s, despite this being marketed as a voluntary option. Those who made the switch have lower site visits, higher fees and ad costs and less control over delivery as they are unable to choose reliable couriers or opt out of free shipping and cash-on-delivery options.
Thousands of merchants have moved to a little-known platform called … Toco.
The rest of this report is available to paid subscribers only.
Operating models
The market operation model in Southeast Asia is divided into two types: local sales and cross-border e-commerce. Although cross-border e-commerce accounts for a small proportion of overall sales, it is worth noting that in Indonesia, due to policy restrictions, the proportion of cross-border e-commerce is zero.
In the coming year, the e-commerce markets in Southeast Asia are expected to see some important changes and the proportion of traditional e-commerce and social e-commerce in the Southeast Asian market may change.
Currently, local businesses contribute 92% of the revenue, while the revenue of cross-border merchants accounts for only 8%. Language barriers make it challenging for cross-border sellers to engage in live commerce. In addition, under the traditional e-commerce model, which primarily relies on price wars, cross-border sellers are typically traders and therefore lack competitive pricing advantages.
The managed model has not been introduced in this region; however, TikTok was planning to launch a managed model in Southeast Asia at the end of 2024, aiming to attract Chinese factories to supply goods directly and reduce the overall price level of the platform. Additionally, many Chinese factory-type enterprises have yet to establish a presence in the Southeast Asian market, which has significant potential. However, the fully managed model has not yet been implemented, and this adjustment may not take effect until next year.
Live commerce
In the Southeast Asian market, the market share of live commerce is smaller than that of traditional shelf e-commerce and short video e-commerce. In the field of content e-commerce, live streaming accounts for 25%, while short videos account for 35%. The advancement of content e-commerce requires higher-quality talents, advanced technology, and support from incubators.
According to Momentum Works, the size of the live commerce market in SEA is 14% of the total platform market, or $17.6 billion. Sales generated through short videos account for another 6%. While not as high as China’s 30% penetration of the e-commerce market, live commerce is doing significantly better than the 10%-20% in the US in 2024. [7]
Source: Based on the E-commerce in Southeast Asia 3.0 report by Momentum Works
Besides TikTok Shop, live commerce is also available on Shopee, but the share of Shopee’s live commerce in total GMV is lower than on TikTok Shop. Shopee also doesn’t have shoppable short videos. Momentum Works describes the difference in approach between the two platforms as follows: [7]
“TikTok’s roots are in discovery-led content, and that strategy is carried through to live commerce. TikTok Shop Live sessions are typically engaging, fast-paced, and often spontaneous. Consumers typically encounter products while browsing, leading to impulse purchases driven by compelling hosts, trending moments, or viral deals. The host ecosystem is diverse, drawing from TikTok’s wide base of creators such as influencers, user-generated content (UGC) creators and also sellers/brands.”
“In contrast, Shopee Live’s approach is commerce-first. Consumers typically visit the platform with clear purchase intent, and live sessions function as an additional conversion channel. Its strategy leans towards high-impact Mega Live events, which are often celebrity-led and supported by mega campaigns and time-bound promotions. While these help drive short-term spikes, Shopee is also investing in building a more scalable pool of live hosts.”
Source: E-commerce in Southeast Asia 3.0 report by Momentum Works
“In Southeast Asia now, top KOLs still lead in their markets. However, TikTok Shop has begun diverting traffic towards smaller creators and directly to brands, while Shopee is building its own ecosystem of creators through Shopee Live and its affiliate program. Initially, platforms need top KOLs to attract brands and consumers, as well as serve as role models to inspire other creators to join. As live commerce penetration deepens, platforms will inevitably allocate traffic to a broader base of creators at the expense of top KOLs.” [7]
Momentum Works found that, regarding the development of live commerce, the markets of various countries have shown distinct local characteristics. Vietnam's service agencies and talent system are deeply inspired by the Chinese model, and only slight modifications are needed in the localized language to be closer to consumer needs; Thailand has formed a more visually attractive brand lifestyle by relying on its already strong creative industry; Indonesia focuses on small and medium-sized businesses, and MCN agencies (see below) have achieved different live commerce paths by optimizing supply chains and promotion strategies. In other words, over the past 2-3 years of development, the live commerce ecosystem in each country has been exploring a path tailored to its market and culture. The content-driven model of TikTok Shop has provided a solid foundation for the ecological construction of these markets. [1]
Growth drivers
The growth momentum of the Southeast Asian market mainly comes from four aspects:
Improving the penetration rate.
Increasing the number of users.
Improving the purchase frequency.
Increasing the amount of each consumption (AOV).
The overall penetration rate of e-commerce in Southeast Asia remains relatively low. According to Momentum Works' 2024 statistics for its Southeast Asian e-commerce platform, the overall penetration rate of e-commerce in Southeast Asia’s retail market is approximately 10-12%, which is significantly lower than China's 30%. For instance, the penetration rate of platform e-commerce in Vietnam, which has experienced the fastest growth (annualised growth of over 50%), accounts for less than 10% of total retail sales. There is still considerable room for growth. [1]
In Southeast Asia, growth mainly depends on the increase in the number of users and the increase in purchase frequency, while the impact of the average order value is negligible. In particular, improving the conversion rate of users acquired from TikTok is a key goal. The purchase frequency of Southeast Asian users is showing a clear upward trend.
In recent years, the purchase frequency of users in Southeast Asia has shown a significant growth trend. Data show that in 2024, the average number of purchases made by users in the region in half a year increased to 3.4, a significant rise from 1.5 times in 2023. Notably, by the first quarter of 2025, this figure had further increased to 3.9 times.
In terms of pricing, TikTok's average order value in Southeast Asia is $8.10, which is lower than Shopee's average order value of $14.10. In the Indonesian market, TikTok Shop’s average order value is $7.20, compared to $9.10 without Tokopedia, which is the lowest in Southeast Asia, where the average is $14.40. In comparison, Shopee's AOV is $12 and Lazada's is $10.20. TTS's low AOV is primarily due to the price subsidy strategy adopted by the platform in its early stages, which aimed to attract users.
To improve purchase frequency, the company's strategy in Southeast Asia primarily focuses on promoting daily consumer goods suitable for frequent purchases, such as toilet paper. The company has taken several measures, including ensuring the lowest prices for daily necessities and increasing subsidies, which effectively enhance customer loyalty.
In Southeast Asia, fast-moving consumer goods account for the largest share of sales. The key to rapid success is to increase its market share and enhance user awareness. The price transparency of fast-moving consumer goods is relatively high. For example, the market price of toilet paper or wet wipes is about $1.20, and a discount of $0.12 can attract price-sensitive consumers. As a high-frequency consumption commodity, FMCG can not only attract new users to join, but also promote the continued purchasing by existing users.
Challenges in customer acquisition and retention
TikTok faces multiple challenges in its e-commerce market operations in Southeast Asia. First, TikTok has not demonstrated a clear advantage in attracting new users. Although the cost of acquiring customers on its platform is relatively low, it is still not the lowest in the industry. This difference in customer acquisition costs will impact efficiency and user retention during large-scale promotions.
Notably, TikTok performs poorly in terms of user repurchase rates. Data shows that within 180 days, the average number of purchases by TikTok users is only 3.9 times. While it has significantly increased since 2024, Shopee’s users make 5.5 purchases per half-year. This gap reflects that TikTok has obvious shortcomings in user retention and promoting repeat purchases.
One of the main reasons for this is user perception. Most users still regard TikTok as a video platform rather than a shopping website. When there are specific shopping needs, consumers prefer to choose specialised e-commerce platforms. This cognitive difference presents a significant challenge to the development of TikTok's e-commerce business. To address this situation, TikTok may need to consider separating its e-commerce function into a standalone application. Otherwise, it will be challenging to change users' inherent perception of its platform, which will continue to affect its long-term development strategy in the Southeast Asian e-commerce market.
Subsidies
TikTok's development strategy and competitive situation in the Southeast Asian market are pretty aggressive. It provides subsidies in three ways:
Reducing product prices (for consumers)
Subsidising logistics costs (for consumers)
Providing commercial traffic support (for merchants)
In terms of shipping subsidies, new users can receive a subsidy of about $0.50 per order. For existing users, when they repurchase, they may be eligible for similar subsidies depending on their industry. As for whether customers need to pay additional shipping costs, it depends on how the merchant handles the postage. Usually, merchants choose to bear the shipping costs; if they do not include shipping, the logistics costs are paid by the user. These subsidy strategies have undoubtedly had a significant impact on TTS' average customer spending, keeping it at a low level in the Southeast Asian market, thereby attracting a large number of users.
Similar to its situation in the United States, TikTok is also loss-making in Southeast Asia. The platform charges a 2% commission and provides about 20% subsidies.
Competitors
Momentum Works reported the following developments in GMV of the major platforms in Southeast Asia:
Source: E-commerce in Southeast Asia 3.0 report by Momentum Works
Together, these four platforms made up 94% ($120.4 billion) of the total e-commerce market ($128.4 billion) in the six countries.
Market leader Shopee increased its market share from 48% in 2023 to 52% in 2024. The combined TikTok Shop and Tokopedia GMV now makes up a 27.6% market share. [7]
Source: Based on data from the E-commerce in Southeast Asia 3.0 report by Momentum Works
Note: other sources close to TikTok shared significantly different market share figures, with considerably lower shares for Shopee and Lazada and a higher share for smaller players. See the chart below. Differences in measuring definitions could cause the discrepancies.
In countries such as Thailand and Vietnam, where the e-commerce market is rapidly developing, Shopee, Lazada, and TikTok have emerged as major competitors. Although other platforms also exist, they are smaller in scale and relatively less competitive. This competitive landscape reflects the market's trend toward concentration and the dominant position of the leading platforms.
Take, for instance, Vietnam, where Shopee and TikTok Shop dominated the online retail market in Q1 2025, capturing a combined 97% share, according to data from Metric. Shopee held the top spot with 62%, down from 68%, while TikTok Shop surged from 23% to 35%. Lazada's share fell to 3%, and Tiki's was too small to register. The four platforms generated a combined GMV of 101.4 trillion VND ($3.92 billion) for the quarter, up 42% YoY. Metric expects Q2 GMV to grow another 15% to 116.6 trillion VND ($4.5 billion). [8]
TikTok Shop is primarily targeting an incremental market, rather than competing with the existing markets of Shopee and Lazada. Interestingly, when TikTok Shop suspended its business in Indonesia for more than two months in 2024, many live-streaming sellers reported that this part of user demand did not transfer to Shopee and other e-commerce platforms but simply disappeared. [1]
Because the market penetration of e-commerce is relatively low and there is a lot of incremental growth, Momentum Works believes that the competition between TikTok Shop and Shopee is not and should not be a life-and-death competition, but a relationship of mutual prosperity and symbiosis by promoting infrastructure and operational efficiency, improving consumers' shopping experience, and achieving more, faster, better, and cheaper. In 2025, both TikTok Shop and Shopee will focus on the long-term, more promising incremental market. This is not only a strategic choice for the two companies, but also the future development direction of the entire Southeast Asian e-commerce market. [1]
In this regard, Momentum Works notes that each platform still has a lot to do. For example, how to convince consumers to safely place large purchases other than 3C standard products on e-commerce platforms, how to effectively stratify consumers to make promotion and conversion more efficient, how to convince mature brands to make greater investments in e-commerce channels, and how to improve the richness of products on e-commerce platforms through supply chain connections while taking into account local political and business sentiments. Each of these requires each major platform to seriously and long-term invest in human, material and financial resources for product operations. [1]
TikTok and Shopee have an overlap of 80%-90% of top sellers. Although the overlap rate of local merchants on Shopee and Lazada is low, large merchants, regardless of nationality, typically choose to operate on multiple platforms to cope with market competition. Shopee's merchants are gradually expanding to other platforms. Due to the high entry standards of TikTok Shop, the number of merchants is relatively small compared to its competitors, such as Shopee. Nevertheless, TikTok Shop has covered most of the major sellers. In general, the e-commerce market in Southeast Asia has matured, and top sellers dominate sales in major categories.
Starting from 2024, Shopee and Lazada will no longer use profitability as the primary assessment criterion; instead, they will focus on market share and sales growth. This suggests that the focus of market competition has shifted to competing for market share, and as a result, various platforms may increase subsidies, making profit prospects uncertain.
Product categories
In terms of product structure, beauty and skin care products account for the most significant proportion in the Southeast Asian market and hold a leading position. It is followed by clothing products, which also have a considerable share. In contrast, the proportion of household products is relatively small. In addition, there are some small categories in the market, such as jewellery, crystals, and personalised products, but these products account for a small proportion.
The Southeast Asian market has successfully implemented the personalisation function, and this function is now being expanded to the US market. Personalisation services primarily include exclusive designs of clothing patterns and accessories.
In the Southeast Asian market, brand merchants account for a relatively small proportion, while most merchants are factories or white-label suppliers. This is in sharp contrast to the US market, where merchants can be clearly divided into branded and non-branded categories. China's exports to Southeast Asia account for a high proportion of GMV, whether sold through local merchants or cross-border merchants, with a share exceeding 80%. However, in Indonesia, this proportion has dropped to about 65% due to local policies.
TikTok’s cross-border team is responsible for attracting merchants from mainland China. In contrast, the local team focuses on recruiting Chinese merchants and local merchants who already have experience on other platforms. Over the past three years, many cross-border merchants have relocated their businesses to Southeast Asia, becoming localised operators and a significant sales force for the platform.
Logistics
There have been some critical developments in the competitive landscape of the Southeast Asian e-commerce market. Shopee has significantly improved its logistics infrastructure in 2024, reducing the delivery time of cross-border packages to 7-10 days, while local delivery is now completed within 2-4 days. ShopeeExpress can achieve this by building its own warehousing system and adopting a model similar to JD.com or Amazon FBA. ShopeeExpress's advantage lies in its direct delivery model, while J&T is known for its low-cost and high-quality fulfilment services.
In the European and American markets, although DHL and Amazon FBA have performed well in all aspects, other delivery service providers, such as FedEx, UPS, and USPS, although they offer lower prices, cannot provide the same service quality as FBA. In contrast, the level of logistics infrastructure development in the Southeast Asian market is equivalent to that of China around 2010. Therefore, the platform must establish integrated logistics capabilities in the early stages to attract and retain users.
TikTok's logistics infrastructure is not as complete as Shopee's. Although TikTok is expected to outperform Lazada in some Southeast Asian markets this year, a significant gap remains compared to Shopee. To attract Shopee's users, TikTok needs to offer better logistics services. However, logistics construction requires a lot of capital and manpower, which makes it challenging to complete in the short term.
TikTok currently has no plans to fully build its own logistics system, but chooses to use ‘certified warehouses’ as a temporary solution. These certified warehouses are operated by Longteng and Export Easy, the main local third-party warehousing companies, and provide low-cost and efficient services. Warehouse certification information will be made public, and merchants can choose to settle to obtain more traffic and subsidies.
Currently, there are approximately 40 to 60 certified warehouses in Southeast Asia, each with an area ranging from 50,000 to 70,000 square meters. TikTok Shop plans to gradually promote its own warehousing and distribution system after June 2026. Under the certified warehouse model, merchants can choose their last-mile delivery method. The platform displays quotations from multiple last-mile logistics service providers for reference, but merchants are free to choose other partners to reduce costs. This flexibility enables merchants to control operating costs better and optimise their logistics strategies.
In the long run, TikTok needs to establish its own warehousing and distribution system in the Southeast Asian market. Currently, although certified warehouses have temporarily resolved the issue, their efficiency is not as effective as that of large self-operated warehouses. At this stage, Southeast Asia adopts a model of cooperation among multiple companies. Still, due to inconsistent standards, it can easily lead to delays and post-sales issues in the warehousing and distribution process. To improve efficiency and reduce disputes, it prefers an integrated, self-operated model in the future.
Source: E-commerce in Southeast Asia 3.0 report by Momentum Works
As the Momentum Works report shows, Shopee’s SPX Express and market leader J&T Express captured over half of all parcels, consolidating the bulk of the growth in parcels. In Southeast Asia, platforms choose the logistical service providers, not the merchants. Lazada and Shopee operate their own in-house logistics, while J&T Express aligns closely with TikTok. [7]
TikTok Shop is reducing the rates it pays per parcel. J&T Express’ 35.8% drop in revenue per parcel from $1.10 in 2021 to $0.71 in 2024 illustrates this squeeze. Smaller third-party players get pushed out of the market. [7]
When formulating logistics strategies, companies prefer to cooperate with J&T (Jitu) or local logistics companies because these companies are not only large in scale, but J&T's price advantage helps to reduce costs. J&T's single-piece delivery fee is more competitive than the $2.20 cost of other companies. However, J&T's delivery time is typically 3 to 4 days, and for remote areas, it may take 5 days, which is slower than some competitors. J&T's operating efficiency is affected by the local infrastructure conditions and the quality of its employees. To mitigate customer complaints and economic losses, J&T has implemented compensation measures, which have a direct impact on its profits.
At this stage, if logistics costs are significantly lower than those of other platforms and the prices of goods are more attractive after subsidies, consumers will pay less attention to delivery speed. For example, suppose a pair of socks is sold at $0.80 after subsidies, with a shipping fee of $1.50, for a total price of $2.30. In contrast, the competitor's price is $1.20, with a shipping fee of $2.50, resulting in a total price of $3.70. In this case, the price difference is significant, and the price of goods has a greater impact on consumers' purchasing decisions.
Outlook
The e-commerce market in Southeast Asia has shown an astonishing growth rate in recent years. The penetration rate of e-commerce in the region has continued to rise, making it one of the fastest-growing e-commerce markets globally. Specifically, from 2023 to 2024, the natural growth rate of online transaction volume in Southeast Asia exceeded 20%, which is much higher than the 5% growth rate in the United States during the same period.
Looking ahead, it is expected that by 2025, the online transaction volume in Southeast Asia will continue to increase at a natural growth rate of 26%-27%. This remarkable growth trend is primarily attributed to factors such as the region's low initial online penetration rate, the rising smartphone penetration rate, and the high proportion of young population.
The company is currently investing heavily to expand its market share, which means achieving profitability in the short term will be challenging. Generally, TTS is weighing the balance between short-term market expansion and long-term profitability, and this strategy may have a significant impact on the company's financial situation and investor expectations.
The current subsidy rate is as high as 22%, and the commission for a single transaction is low (2%), which makes it difficult to achieve profitability. In addition, TTS has about 8,000 employees in Southeast Asia, which also brings high labour costs. TT has a low chance of achieving profitability in the Southeast Asian market in 2025. In fact, it will be difficult for TikTok's business in Southeast Asia to reach profitability before at least the end of 2026, and profitability is not currently its primary goal.
TikTok Shop plans to continue and strengthen its commodity and logistics subsidy strategy in Southeast Asia. The primary reason for this is that the company focuses more on GMV indicators than on profits, attracting new customers and increasing the purchase frequency of existing customers through price discounts, thereby expanding its market share. TTS believes that Southeast Asia is the most secure market for its global growth target in 2025. Especially in the case of negative growth in the US e-commerce market and delayed development progress in other emerging markets, Southeast Asia has become a key region to help close the GMV gap.
Looking ahead, TikTok has set a GMV target of $50 billion for 2025, up from $32 billion, with an expected realisation rate of 95%. Although this goal is ambitious, it does not seem out of reach considering TikTokShop's rapid growth momentum.
Bytedance is known for setting very ambitious - some would say unfeasible – targets, but overall, the goal setting in Southeast Asia is relatively realistic, and some of the region's goals have been exceeded in recent years. This suggests that TikTok Shop’s development strategy in this area is yielding positive results and laying a solid foundation for future growth. TTS is confident in its sales target in Southeast Asia and believes that it can achieve it smoothly.
Regarding the development trend of the Southeast Asian e-commerce market, there is a view that the situation in Indonesia may have a significant impact; however, the key is to monitor the development speed of major countries closely. Currently, TikTok’s primary focus on market expansion is on Thailand and Vietnam.
Local services
In June, Daxue Consulting reported that TikTok Shop had launched ‘TikTok Go’ in Indonesia. TikTok Go is a monetisation feature designed to help creators earn money by promoting local businesses. This entry into local services is not unlike what Bytedance has done in China with Douyin. The table below shows the differences between regular affiliate programs in TikTok Shop and TikTok Go. [9]
Source: Daxue Consulting [9]
Daxue Consulting identified three hurdles for TikTok GO:
Heavy vouchering risks training users to wait for deals, eroding long-term margins.
Recommending relevant nearby services requires finer location data than product feeds.
Only 12% of Indonesian SMEs can create conversion-ready content. TikTok needs agency/MCN partnerships to replicate Douyin’s ecosystem in China.
Which brings us to …
Bringing in the MCNs
The development of Douyin e-commerce in the Chinese market has undergone two significant stages. Between 2021 and 2022, Douyin's e-commerce sector experienced rapid growth. Initially, a jeweller switched to become an online anchor and successfully attracted a large number of fans. Subsequently, in the second stage, a large number of (internet) celebrities participated in live streaming, using their extensive influence to increase user stickiness.
Currently, the primary challenge facing TikTok Shop in the Southeast Asian market is entering the next stage, which involves cultivating influential anchors, particularly celebrity KOLs. To drive business growth, the platform needs to create a systematic and replicable MCN anchor recruitment, introduction, training and promotion system (MCNs are companies that recruit, manage and support online content creators and provide production facilities like studios). The key is to establish a layered anchor training system to achieve mass production of high-quality content. Such a strategy will help TikTok Shop capitalise on more opportunities and drive growth in the Southeast Asian market.
TikTok's ecosystem expansion plan in the Southeast Asian market includes several key strategies. First, it plans to set up demonstration live broadcast rooms in the region to promote its successful live broadcast model. Second, TikTok intends to establish MCN agencies in Southeast Asia. The main goal of these agencies is to cultivate and support anchors while building an ecosystem of top talent. The anchor craze in Southeast Asia has led to the establishment of several MCN agencies, which provide essential support for e-commerce anchors on these platforms.
Source: E-commerce in Southeast Asia 3.0 report by Momentum Works
TikTok One, the official AI creator docking platform of TikTok, has begun internal testing in Thailand. This reflects the fact that influencers have reached a sufficient scale in the Southeast Asian market. Influencers’ sales have a significant contribution to the GMV of TikTok Shop in Southeast Asia. According to data from Ebrun and FastMoss, in September and October 2024, the sales GMV of 20 influencers on TikTok Shop in Southeast Asia exceeded $1 million. The fan stickiness of local influencers is often higher than that of platforms and brands. However, local influencers often face challenges with poor video delivery, slow response times, and a lack of awareness about streaming. [10]
This wraps up our TikTok Shop Watch #5. We anticipate continuing to share updates on TikTok Shop’s developments in the future through this series of reports.
Key Takeaways
Southeast Asia is TikTok Shop's most important region and a blueprint for global expansion, achieving a total GMV of $32 billion in 2024 and aiming for $50 billion in 2025, driven by exceptional growth in Vietnam, Thailand, and Indonesia.
The Tokopedia merger in Indonesia enabled TikTok Shop's relaunch, but has presented challenges in data monitoring and led to some merchant dissatisfaction, despite the introduction of an integrated Seller Centre.
Live commerce plays a significant role in Southeast Asia's e-commerce market, accounting for 14% ($17.6 billion) of total platform GMV, with TikTok's discovery-led content strategy differing from Shopee's commerce-first approach.
Growth in the region is primarily driven by an increase in user numbers and purchase frequency, with the average number of purchases per user rising. However, TikTok's average order value and purchase frequency remain lower than those of Shopee, partly due to its early price subsidy strategy.
TikTok faces challenges in customer acquisition and user retention in Southeast Asia, as many users still perceive it primarily as a video platform rather than a shopping destination, which impacts repeat purchases.
Leaders like Shopee dominate the e-commerce market, and TikTok Shop primarily targets incremental market growth rather than direct, "life-and-death" competition, seeking a symbiotic relationship through improved infrastructure and efficiency.
TikTok's logistics infrastructure is not as developed as Shopee's, relying on 'certified warehouses' and partners like J&T Express, with plans to gradually implement its own warehousing and distribution system after June 2026.
TikTok Shop is prioritising market share expansion over short-term profitability in Southeast Asia, maintaining high subsidy rates and a low commission, with profitability not expected before the end of 2026, despite ambitious GMV targets.
To drive the growth of live commerce, TikTok is replicating China’s ecosystem of MCN anchor recruitment, introduction, training and promotion system.
Sources
This article has been compiled from an analysis of exclusive expert interviews within the Six Degrees Intelligence network, supplemented by insights from the articles listed below.
Images by Tech Buzz China’s Ed Sander, unless stated otherwise. These images may not be reproduced without Tech Buzz China's prior consent.
[1] Momentum Works (via Paidai Cross Border E-commerce) 2025-04-14 [2] Chinesellers 2025-06-16 [3] Chinesellers 2025-03-03 [4] Rest of World 2025-07-14 [5] Bloomberg 2025-05-30 [6] Chinesellers 2025-06-24 [7] Ecommerce in Southeast Asia 3.0 by Momentum Works 2025-06. This report uses statistical data by Metric and Tabcut. [8] Chinasellers 2025-05-01 [9] Daxue Consulting 2025-06-22 [10] 36Kr 2025-03-12