In Depth: TikTok’s Foray Into Southeast Asian E-Commerce Is No Slam Dunk

Rapidly growing market holds great potential, but the ByteDance unit faces competition from homegrown rivals backed by Tencent and Alibaba

A woman poses for the camera at the TikTok Southeast Asia Impact Forum 2023 in Jakarta on June 15. Photo: Bay Ismoyo/VCG

TikTok, the world’s biggest short-video app, is pushing into the e-commerce business in Southeast Asia, stirring a new round of competition in the fast-growing market.

“We are going to invest billions of dollars in Indonesia and the rest of Southeast Asia over the next few years,” TikTok CEO Shou Zi Chew said at a forum in Jakarta in June.

TikTok, the global short video sensation backed by China’s ByteDance Ltd., will pour $12.2 million over the next three years into supporting more than 120,000 small businesses and entrepreneurs in the region, Chew said.

Southeast Asia, an 11-nation region with 682 million people and combined GDP approaching $4 trillion, is expected to be the next growth engine for e-commerce businesses, thanks to the region’s growing population and improving infrastructure.

The region has become one of the fastest-growing economies in the world. According to Frost & Sullivan, Southeast Asia’s nominal GDP expanded from $2.96 trillion in 2018 to $3.53 trillion in 2022, with a compound annual growth rate of 4.5%. The economy is projected to reach $5.19 trillion in 2027. What makes the region more promising is its fast-growing youth population. According to the World Economic Forum, more than half of Southeast Asia’s population is under 30.

As much potential as the region holds, making money from e-commerce in Southeast Asia will be no slam dunk for TikTok. It is going up against homegrown rivals backed by Chinese e-commerce titans Tencent Holdings Ltd. and Alibaba Group Holding Ltd. There are regulatory, social and cultural complexities across the region. And TikTok will have to navigate political and data security risks while also upgrading warehousing, logistics and digital payment capabilities.

According to a joint report by Google, Singapore sovereign wealth fund Temasek Holdings Pte. Ltd. and management consultant Bain & Co. Inc., total e-commerce gross merchandise volume (GMV) in Southeast Asia surged from $10.9 billion in 2017 to $131 billion last year, a compound annual growth rate of 64%. By 2025, the regional GMV is expected to reach $211 billion.