[This is an abridged version of an article from EqualOcean News]
Recently, it has been reported that TikTok is quietly testing local services in Indonesia and Thailand. According to informed sources, some fortunate users have already encountered carefully designed group-buying deals in their feeds, primarily focusing on dining merchants. This move has quickly attracted widespread attention and discussion in the market, especially considering TikTok’s previous experience in Indonesia’s e-commerce sector.
Looking back at TikTok’s e-commerce journey in Indonesia, it has been a tumultuous chapter in the history of Chinese companies expanding abroad. In 2021, TikTok e-commerce officially entered the Indonesian market and quickly created a buzz with its powerful short-video ecosystem and live-streaming sales model. Statistics show that GMV (Gross Merchandise Volume) for TikTok Shop in Southeast Asia surged over 400% in 2022, reaching an impressive $4.4 billion. For a moment, it seemed TikTok had found the key to unlocking the Southeast Asian market.
However, the good times didn’t last. In November 2023, the Indonesian government suddenly introduced new regulations prohibiting social media platforms from engaging in e-commerce transactions. This policy hit TikTok Shop hard, forcing TikTok to announce the closure of its e-commerce business in Indonesia. The once-flourishing TikTok e-commerce presence came to an abrupt halt.
TikTok e-commerce’s business model primarily consists of three major components: live-streaming sales, short video recommendations, and self-operated stores. Live-streaming sales are its most distinctive feature, allowing influencers to showcase and recommend products in real-time, leading to rapid transactions. Short video recommendations leverage TikTok’s vast content ecosystem, seamlessly integrating products into users’ feeds. Self-operated stores are more akin to traditional e-commerce, where merchants open shops on the platform, allowing users to browse and purchase products directly.
The new local services trial resembles moving offline merchant services online, using short videos and live streaming for display and sales. This model is similar to those of platforms like Meituan and Ele.me, but TikTok’s unique content ecosystem may offer it a differentiated advantage.
It is understood that TikTok’s local services are currently in an internal testing phase. Some astute local e-commerce service providers have already begun actively preparing, forming teams, and expanding their influence, aiming to gain a foothold in this emerging market.
In Thailand, some TikTok accounts have issued official calls for merchants to join the new TTLS (TikTok Local Services) platform, branding it as a new stage for merchants.
Job postings reveal TikTok’s ambitious plans for its local services business. The company’s official website lists numerous positions closely related to local services, covering core Southeast Asian cities like Singapore, Jakarta, and Bangkok. The positions range from ecosystem governance and strategic analysis to product management and business development. This indicates TikTok is building a comprehensive team and capability for local services.
Notably, the “Business Development Director” position in Jakarta is tasked with building commercial ecosystems from scratch in sectors such as dining and tourism. Candidates are required to have outstanding market expansion skills and the ability to design customized marketing plans. This underscores TikTok’s commitment to its local services business.
Industry trends suggest that local services are a high-growth sector globally. According to authoritative forecasts, global delivery market revenue is expected to rise steadily in the coming years, potentially reaching $1.45 trillion by 2027. Southeast Asia, with its dense population and significant youth demographic, represents a promising market for local services.
With its large user base and highly active user ecosystem, TikTok is well-positioned to cultivate new growth areas in this fertile ground. However, opportunities come with challenges. In the Southeast Asian market, TikTok will face intense competition from established local service platforms, delivery platforms, and travel booking services. These competitors have certain advantages in terms of supply chains, service systems, and user bases. /// nCa, 23 August 2024 (originally published at EqualOcean, 16 August 2024)