Disclaimer: Unless otherwise stated, any opinions expressed below are solely the author’s.
For the past few years, my comments on regional ecommerce have revolved around the competition between Shopee and Lazada. The ambitious startup from Singapore ended up ousting the former market leader, even though it got the support of China’s Alibaba.
And just when it seemed that the battle was settled, that Shopee would dominate Southeast Asia and its rivals were scrambling for the breadcrumbs they left behind, TikTok – of all brands – decided to enter the fray.
But what does a social media company know about running an online store? How can industry veterans match?
Well, the thing is that those veterans have to pay to get the eyeballs they own. And if so, why not sell directly to them?
Location, location, location
No one can sell anything if people don’t know about it. You have to make yourself known or, better yet, put your business where people already are. That’s the source of the famous real estate law—location rules everything else.
But it also works in the digital world. It doesn’t matter how attractive your offer is, or how strong or cheap your product selection is, if no one knows about your existence.
So, big ecommerce companies first had to spend billions of dollars to get themselves in front of potential buyers—and now continue to spend more to keep them coming back.
Furthermore, size and brand awareness are no guarantee of lasting success, as the Lazada case proves.
However, even its successful competitor, Shopee, still operates within the same rules. But what if a competitor injects itself before customers can see it?
That’s what TikTok is trying to do. It’s like a landlord who used to rent a place to other companies, but now he has reserved part of it for himself and competes with them.
This is a catch-22 situation for those in charge. On the other hand, they are effectively paying a direct competitor to reach the same audience that TikTok can freely reach through its platform. On the other hand, they can’t just leave, because TikTok remains the gateway to millions of potential customers.
Meanwhile, TikTok benefits from both sides of the equation. It earns revenue through advertising while also generating revenue through direct sales to consumers.
Given the rapid growth, this strategy seems to be paying off. Including Tokopedia, which TikTok took over in 2024, the company now commands about 30% of the Southeast Asian e-commerce market. Shopee still leads with a 52% share, but the question is whether it can maintain that dominance.
Making money out of boredom
In the consumer world we live in, most purchases are made on impulse. You see something cool, fun, stylish, and you want it.
Over the past few years, short, engaging, viral videos have become one of the most powerful tools for creating demand. Traditionally, however, acting on that idea required an extra step: clicking a link or searching for a product on a marketplace like Shopee.
In fact, most traditional e-commerce platforms are built around the goal. Consumers often visit them with a specific purpose in mind, whether it’s to search for a product, compare prices, or make a purchase that they’ve already decided on.
The TikTok store works differently. It creates a desire before the search takes place.
The creator tests the product. The live broadcast host shows you. A short video shows the before and after effect. The discount appears while the viewer is watching. The buy button is not placed after the search query, but within the attention span.
That’s a problem for Shopee and Lazada because search-based marketplaces tend to reward scale, content and price. TikTok rewards attention, storytelling and momentum.
A seller does not necessarily need to be listed for the best products. You need a video that’s dynamic—and converted within the TikTok Store, right after a consumer’s interest is piqued.
Millions of people who swipe short clips are often exposed to new products, which they can now buy instantly. The entire ecommerce experience of going to a third-party app or website and completing your checkout there has just been reduced to a few taps during your social scrolling time.
In other words, TikTok’s approach to ecommerce not only fulfills a need but also creates it, and monetizes it before the competition has a chance.
This is where it becomes very dangerous for existing ecommerce platforms.
Although there are some necessary goods that we buy regularly, people who don’t usually visit Shopee, Amazon or Lazada, consumer demand needs to be constantly updated with something new.
And all those new products are introduced in various forms of content. These days, most of the video is the medium that TikTok dominates, especially in Southeast Asia.
Therefore, not only is it the owner of a large communication channel, but it is able to create new trends before competitors know about it.
Can it replace large online markets entirely? Probably not. But it can dominate access to the latest, most attractive brands or create more of its own, a bit like Shein does through tight integration with Chinese manufacturers.
If it continues its success, it could redefine ecommerce forever and inspire other social media giants to follow suit.
- Read other articles we’ve written on tech giants here.
Featured Image Credit: airdone/depositphotos
