In this feature, we highlight a number of startups in Southeast Asia that are capitalizing on the growing trend of social and live commerce, amidst the ongoing competition between TikTok and Shopee. For our Founder audience, we hope you find some valuable insights in this piece.

E-commerce rivalry intensifies: TikTok and Shopee ramp up investments

Shopee has shifted its focus to profitability, achieving EBITDA positivity since Q4 2022. Following three quarters of emphasis on efficiency, in their recent earnings call in August, Shopee announced their decision to “start re-accelerating our investments in growth“. They are prepared to take risks that may lead to losses, a move motivated by TikTok’s aggressive regional expansion.

Over the past year, TikTok has emerged as a major e-commerce player in key Southeast Asian markets, posing a challenge to incumbents like Bukalapak and Lazada in Indonesia. While TikTok aims to surpass Lazada by the end of 2022, the latter plans to strengthen its position with a fresh investment of US$845 million, focusing on infrastructure and merchant services.

With Temu venturing into the Philippines market, competition is escalating, indicating a surge in investments and funding across the value chain. Instead of prioritizing rapid growth, these giants are now emphasizing investments in crucial elements like product quality, service excellence, and content quality, offering promising opportunities for startup founders.

Image source: AppWorks

Exploring product quality opportunities: Harnessing manufacturing capabilities in Southeast Asia

In Southeast Asia, major e-commerce platforms witness an Average Order Value (AOV) ranging from US$5-10, significantly lower than China’s US$15-50 and Taiwan’s US$50-70. Elevating AOV and securing a larger wallet share from consumers are key objectives for these platforms.

One approach to tackle this challenge involves diversifying and enhancing the quality of product offerings. While a majority of products on platforms like Shopee and TikTok are sourced locally, a TikTok Southeast Asia representative noted that domestic product quality often falls short compared to Chinese cross-border sellers.

Similarly, a member of the Shopee Business Development team highlighted that local manufacturers excel in fulfillment speed and cost, but Chinese manufacturers maintain a competitive edge in product quality and cost structure. This creates an opportunity for Southeast Asian manufacturers to enhance their quality and cater to the growing demand, presenting attractive prospects for tech startups facilitating this transition.

Also Read: Decoding the shift: The new era of B2B marketing

Seizing the moment, Inflow, a startup based in HCM City, connects global fashion brands with Vietnamese apparel manufacturers, guiding them on improving product quality, fulfillment efficiency, design, and R&D processes.

Khanh Lê, the Founder and CEO, emphasized, “There is immense potential in the robust apparel manufacturing resources in Vietnam and Southeast Asia for global brands. Our mission is to unlock this potential for brands of all sizes worldwide.

Exploring service quality opportunities: Enhancing merchant profitability

Improving logistics infrastructure and boosting merchant profitability are key areas for enhancement on e-commerce platforms, with platforms like Shopee and TikTok expanding their affiliate programs to support merchants.

Drawing insights from the more mature e-commerce industry in Taiwan, where platforms like 91APP have succeeded by assisting merchants in establishing online stores and leveraging robust marketing tools, startups can focus on enhancing marketing effectiveness for online merchants and influencers on platforms like TikTok.

For instance, Partipost, a startup expanding across Southeast Asia, provides a platform for influencers to participate in marketing campaigns posted by social commerce merchants, enabling businesses to cultivate enduring brand ambassadors and audiences on various social platforms.

Tony Jen, Co-Founder of Partipost, highlighted the importance of nurturing the influencer community and deploying effective marketing strategies across platforms like TikTok.

Exploring content quality opportunities: Enhancing content for Southeast Asian audiences

Investing in content quality and tailoring content for local relevance are crucial aspects of social commerce, with startups like Hepmil Media Group in Singapore leading the way in doubling revenues and establishing themselves as key players in the social media content space across Southeast Asia.

Karl Mak, Co-Founder of Hepmil Media Group, highlighted the growth of creators in Southeast Asia and the need for localized content to engage audiences effectively across platforms.

The focus for the future, according to Hepmil Media Group, is on expanding their regional network and refining their creator incubation strategy to foster the next generation of creators that resonate with local audiences.

Navigating e-commerce competition: Tips for startup Founders

As TikTok and Shopee intensify their investments in Southeast Asia, startups have an opportunity to offer innovative solutions that address market needs in a scalable and efficient manner. By prioritizing product-market fit and sustainable growth, startups can create a strong foundation for long-term success amidst the evolving e-commerce landscape.

Also Read: Tried-and-tested marketing strategies for startups across all stages in Singapore

Founders should focus on building relationships with customers and empowering them, as well as creating a strategic advantage that sets them apart from centralized platforms. By taking a holistic approach to content creation and audience engagement, startups can navigate the competitive e-commerce landscape successfully.

In conclusion, maintaining a clear vision and executing on a sustainable growth strategy will be critical for startups aiming to thrive in the dynamic e-commerce space shaped by the rivalry between industry giants like TikTok and Shopee.

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This article was first published on September 19, 2023.

The post TikTok vs Shopee EC battle in SEA: Unveiling strategies for startups appeared first on e27.