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Author: Zhou Yueming

Editor: Miao Zhengqing

TikTok's live e-commerce development in Southeast Asia seems to have reached a new climax.

On August 22, according to foreign media reports, the total transaction volume of TikTok shop live broadcasts in Thailand has increased by 500% in the past 8 months;

On July 26, according to the "Online Retail Market Report for the First Six Months of 2024" released by the e-commerce data platform Metric, in the first half of this year, TikTok Shop sales in Vietnam increased by more than 240%.

However, while its e-commerce business is booming, TikTok's local life business in Southeast Asia does not seem to be developing so smoothly.

Previously, it was reported that TikTok's local life business has been tested in Indonesia and Thailand, and only some users can see related group buying packages in their information flow, mainly from catering businesses.Some accounts on TikTok have already started promoting content related to TikTok Local Services (TTLS for short). ByteDance has also posted job openings related to TikTok local life.

“In fact, TikTok started preparing for this project as early as the beginning of this year, which is no secret in the industry.” Li Jianggan, founder of Momentum Works, a venture capital firm that has been deeply involved in the Southeast Asian market, told Huxiu.

“However, in Indonesia, the three guilds mainly participated in the internal testing of TikTok's local life services, but the conversion effect was said to be not ideal."Industry insiders revealed to Huxiu.

In China, ByteDance has completed its layout from e-commerce to local life with Douyin, and overseas, TikTok has also become an e-commerce dark horse. So, can TikTok reproduce the development trend in China? Today, there are still many challenges.

It is still difficult for mainstream giants to emerge

Before TikTok entered the market, there were already some local life service platforms in Southeast Asia.

For example, Chope, a restaurant reservation platform founded in 2011 and headquartered in Singapore, Eatgo, a restaurant reservation platform founded in 2013, and Hungry Hub, a Thai online food ordering and delivery service platform founded in 2013, all offer discounts to consumers for use when dining in restaurants.

Most of these institutions are concentrated in the catering industry. After all, the catering market in Southeast Asia is quite large.

According to a report by Mordor Intelligence, it is estimated that the Southeast Asian food service market will reach US$192.43 billion in 2024, with a compound annual growth rate of 12.65%. The "2022 Mobile Food and Beverage Status Report" released by Data.ai pointed out that Indonesia, Thailand, the Philippines, Malaysia, Vietnam and Singapore are also among the top 25 markets in the world in terms of time spent on food and beverage applications.

However, although there are many players,The overall market is still relatively fragmented, and no mainstream giants have emerged. "Li Jianggan said.

There are many reasons for this situation.

In Li Jianggan's opinion, an important reason is that although the Southeast Asian catering market is huge, the advertising needs of merchants have not been fully developed.

In contrast, from 2011 to 2016, the domestic mobile Internet developed rapidly, and the influence of online traffic became increasingly greater. In addition, with a large amount of capital investment, several large local life platforms emerged in China. Occupying a certain position on these platforms greatly increased the customer flow of merchants. Therefore, a large number of catering merchants paid more and more attention to Internet platforms and were willing to invest a lot of advertising fees.

But this is not easy to achieve in Southeast Asia.

First of all, Southeast Asia is not a unified large market. There are significant differences among Southeast Asian countries, including culture, language and economic development level, which makes it more difficult to have a unified layout.

also,China’s development in the 2010s was faster than expected, and a massive influx of capital drove the rapid rise of super platforms, a phenomenon not common in other countries. Even in the United States, there is no particularly mainstream group buying platform.

therefore,Online group buying models are still not mature enough in Southeast Asia.

For consumers, the group buying concept is not strong enough in Southeast Asia, and there is currently no widely used platform similar to the group buying platform in China. Therefore, in daily consumption, group buying is not a common or widely accepted shopping method.

Lisa, who runs a restaurant in Bangkok, Thailand, told Huxiu that her restaurant has also registered with hungry (a Thai restaurant reservation platform), but only a handful of customers come to the store every week to consume through hungry’s discounts.

andFor restaurants, many local Southeast Asian owners are not very aware of online promotion. They pay more attention to the offline location of the store or advertisements in shopping malls.

For merchants who are familiar with such online platforms, they mainly use Google search engine optimization (SEO) to increase their online exposure. In addition, they also use social media platforms (such as Instagram) to promote their businesses by posting advertisements or cooperating with influencers. Some more advanced merchants will also contact advertising agencies or influencer agencies to use the private domain traffic of these platforms for marketing. However, overall,This type of online promotion has not been widely popularized.

Many merchants are also in a state of confusion.On the one hand, they hope that the platform can provide more ways to acquire customers, but on the other hand, they are worried that the platform’s voice will become too strong in the future.

For MCN organizations that produce content, although the expert store visits business has existed for a long time, its level of commercialization still lags behind that of China.

Louis, the founder of Ibooming, an MCN agency that has been deeply involved in the Indonesian market, told Huxiu:In Southeast Asia, including Indonesia, celebrities have long been recommending restaurants and hotels on platforms such as YouTube. However, these activities usually lack a complete online transaction closed loop, so the conversion effect is not as good as expected.

Due to the lack of a complete closed-loop transaction, local life services have been difficult to achieve positive profits. If it relies solely on slot fees, it is difficult to maintain the development of this business. Therefore, the company chooses to concentrate resources on e-commerce expert distribution, which has greater profit potential. Local life services require a large investment, including manpower and funds, and these investments must be able to support the continued profitability of this business line.

In this environmentLocal brokerage companies and internet celebrity agents are mostly a hodgepodge, with no fixed model to focus on a specific niche. For example, there are currently no professional companies in Indonesia that specialize in local life services or store exploration content production.Most agencies are comprehensive and do not have a fixed model to focus on a certain type of content.

They may be exposed to various types of projects at the same time, including CPM, CPS, live streaming, and even guest appearances.This is different from the Chinese market, which has formed a huge market with comprehensive local life coverage and clear segmentation that can support the development of independent segmented tracks.

Can TikTok replicate its past success?

So in the Southeast Asian environment, can TikTok replicate the development speed of Douyin in China by developing local life business in Southeast Asia?

In China, Douyin launched local life-related businesses in 2021 and quickly completed the layout from in-store to takeout. In terms of delivery, Douyin cooperated with SF Express, Dada, and Flash Express.Official data from Douyin shows that the total transaction volume of Douyin's life service platform increased by as much as 256% in 2023, and its stores covered more than 370 cities.

In 2024, Douyin continued to adjust its business. In terms of organizational structure, the original three departments of in-store catering, in-store comprehensive, and hotel and travel were reorganized into three major regions: North, Central, and South, as well as the NKA department that serves large chain merchants across the country.It is reported that Douyin's sales in the life service sector in the first quarter of 2024 exceeded 100 billion yuan, a year-on-year increase of more than 100%.

As for TikTok, "it mainly depends on how great its strategic determination is. Technical problems can be solved," said Li Jianggan.

However, based on the current feedback from the industry,The trial of local life business did not cause much waves.

"In Indonesia, there are currently three main guilds participating in TikTok's internal testing, but the conversion effect is said to be not good." An industry insider revealed to Huxiu.

Moreover, these three guilds mainly accepted official subsidies to test the business, and did not really invest in it spontaneously. They only carried out activities such as store visits with official financial support and charged pit fees. Therefore, this does not prove that they have a deep understanding or interest in the business. Most of these guilds are run by Chinese bosses and may be considered to have a better understanding of local life services, but the actual implementation effect remains to be seen.

But it is worth noting that although TikTok’s local life business in Southeast Asia has not made much splash yet, some industry insiders believe that there may be competition among giants in the future.

One of the main reasons is that Grab, a local Internet giant in Southeast Asia, recently announced the acquisition of Chope.Southeast Asia local restaurant reservation platform), which is a signal for its entry into the group buying business.

Industry insiders speculate that Grab's acquisition of Chope is intended to increase its touchpoints with merchants and gradually expand its advertising business. Since developing a new system is costly and risky, acquiring a mature platform can better integrate resources and improve service depth.

During the pandemic, Grab's food delivery business grew rapidly, and the company focused its main attention on its core business, thus failing to be distracted by other integrations.Nowadays, by acquiring platforms with existing user bases, we can effectively increase advertising business and platform transaction volume, which has a positive effect on overall strategic development.

"The competitive situation in the Southeast Asian market is inevitable," said Li Jianggan.

Grab has achieved considerable penetration in the food delivery business, but its share of the entire catering market is still relatively low, much lower than that in China.Therefore, Grab needs to further enhance its penetration on the merchant and user sides through advertising and other means. Grab has been looking for ways to increase the penetration of its catering business. They already have a large number of takeaway restaurants, which gives them a certain advantage when expanding their group buying business. In addition, Grab may also reuse existing teams to promote the development of new businesses.

For TikTok, the main challenges it faces lie in its organizational structure and the determination of its core leaders, rather than the difficulty of recruiting merchants.These technical problems can be solved with sufficient investment and effective management.