TIKTOK Shop, the e-commerce arm of ByteDance’s social media platform, is expected to triple its e-commerce market share in South-east Asia to 13.2 per cent in 2023 from 4.4 per cent in 2022, said consultancy Momentum Works.

This will make it the fourth-largest e-commerce player in the region by gross merchandise value (GMV), behind Tokopedia with 13.9 per cent, Lazada at 17.7 per cent, and Shopee, which is set to top the market with a 46.5 per cent share of GMV.

The consultancy said this market share estimation is based on two factors – that TikTok reaches its GMV target of US$15 billion in South-east Asia in 2023, and that the other e-commerce players continue to see growth rates similar to 2021 and 2022.

In a report on Monday (Aug 21), Momentum Works noted that TikTok Shop has shown “impressive” growth in South-east Asia, and the region also makes up most of its global GMV. TikTok Shop’s business grew from US$0.6 billion in GMV in 2021 to US$4.4 billion in 2022, and is set to reach a US$15 billion target in 2023.

“This will put TikTok Shop in the same league as established players Lazada and Tokopedia,” Momentum Works said.

The consultancy derived its data from interviews with platforms, logistics and payment players in each country in the region, as well as consumers and other ecosystem stakeholders. These were then cross-checked with numbers disclosed by platforms and calibrated to obtain the final numbers.

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The report’s coverage of e-commerce included key marketplaces such as Shopee, Lazada and TikTok Shop, and excluded brands’ own platforms in the online retail market.

TikTok Shop has operations in all major South-east Asian markets – Singapore, Indonesia, the Philippines, Vietnam, Malaysia and Thailand – as well as in the UK, US and Saudi Arabia.

Momentum Works highlighted four characteristics of TikTok Shop that distinguish it from other e-commerce players.

First, unlike standalone e-commerce apps, TikTok Shop is an in-app feature of a social media platform. This means that it enjoys natural traffic via TikTok, which exceeded one billion monthly active users globally in 2022. This helps TikTok Shop save on costs to acquire and retain users.

Second, TikTok’s e-commerce sales are also mainly driven by recommending content to its users, in contrast to conventional marketplaces where users search for products.

Third, the platform is content-driven, with creators and multi-channel networks playing vital roles in the ecosystem.

Fourth, TikTok Shop does not have payment and fulfilment infrastructure, although it is working in that direction. Reuters reported earlier this month that TikTok is in the process of obtaining a payment licence in Indonesia.

In China’s e-commerce market, TikTok’s sister company Douyin and Chinese agriculture-focused online retailer Pinduoduo are already making waves. Within six years of their moving into the market, Alibaba’s market share had shrunk from more than 80 per cent to less than 50 per cent, according to Momentum Works.

While TikTok Shop is fast emerging as a serious contender against incumbent e-commerce majors such as Shopee and Lazada in South-east Asia, Momentum Works also sees TikTok competing with Amazon in the US and Middle East.

“Ultimately, change is the only constant. Whether TikTok Shop is a threat to incumbent platforms might not be a standalone question at all,” said Weihan Chen, Momentum Works’ insights lead.

“The bigger narrative is that in e-commerce, where leading players seem to have a network effect and structural advantage, disruption can still happen, and the incumbents should always remain focused and vigilant.”