15.8 C
Johannesburg
Saturday, June 15, 2024
More

    Latest Posts

    TIKTOK’S NEXT BIG ACT: TAKING ON AMAZON

    In a shophouse located in Northeast Jakarta, a unique scene unfolds. Salespeople, numbering in the dozens, take turns showcasing and selling various products such as cosmetics, contact lenses, and hair accessories. Inside, a woman assists a potential customer in selecting the perfect shade of lipstick to complement her skin tone, while a man enthusiastically announces the latest discount on vitamin tablets.

    This lively marketplace, however, isn’t a typical flea market—it’s a live-streamed shopping experience within TikTok, the immensely popular short-video app owned by China’s ByteDance. TikTok Shop, the app’s fastest-growing feature, has garnered a devoted fan base in Southeast Asia and become a gold rush for entrepreneurs hoping to strike it rich.

    For TikTok, the app’s success in the region is of utmost importance as it confronts the possibility of a ban in the United States due to national security concerns. Additionally, it presents an opportunity for the company to challenge Amazon.com in a way no other social media platform has attempted, as long as it can continue operating in the US.

    TikTok’s video platform is already attracting users and advertisers away from Meta Platforms (formerly Facebook) and Google. Indonesia, where TikTok Shop was first launched and remains its largest market, has played a pivotal role in its success. The country’s young, tech-savvy population enthusiastically embraced the combination of short videos and in-app shopping when the feature was introduced in 2021. Analysts predict that TikTok Shop’s gross merchandise value will reach $20 billion by the end of this year, quadrupling from the previous year.

    If the momentum continues, industry experts believe TikTok could transform itself into a formidable competitor, drawing consumers and advertisers away from Meta Platforms and Google. Hank Wang, who manages a team of approximately 50 live-streaming hosts in the bustling Jakarta shophouse, is convinced that TikTok has the potential to revolutionize the retail industry and elevate entrepreneurs like himself to the status of e-commerce giants.

    As a former venture investor who relocated from Shanghai to Jakarta seven months ago, Wang founded his company, Flame Media, despite not speaking the local language. He directs his team to sell products on behalf of cosmetics and consumer goods manufacturers like L’Oreal, earning a share of the profits in return. Wang aspires to be the next Forrest Li, the China-born founder of Sea Ltd, the largest internet company in Southeast Asia. He firmly believes that TikTok and social commerce will pave the way for the emergence of the next generation of tech unicorns in the region.

    In June, TikTok CEO Shou Zi Chew visited Jakarta and pledged to invest billions of dollars in Southeast Asia over the next few years. He met with a prominent Indonesian minister, wearing a traditional batik shirt, and also visited local small businesses that had TikTok accounts. This visit stood in stark contrast to Chew’s earlier experience in Washington, where he endured a five-hour hostile hearing. During the hearing, politicians grilled him on Chinese influence over TikTok’s business, the potential impact of its videos on children’s mental health, and the looming possibility of a ban ahead of the US presidential elections.

    TikTok Shop’s launch in Indonesia, Southeast Asia’s largest economy, coincided with ByteDance’s efforts to expand beyond China, where the company faces regulatory and economic obstacles. Initially positioned as an underground feature for well-informed Indonesian youth, the global e-commerce project was given the code name “Magellan XYZ,” alluding to the 16th-century explorer Ferdinand Magellan’s quest to find a route to the Spice Islands, which are part of present-day Indonesia.

    In its early stages, the initiative attracted young live-streamers, some fresh out of school, who used their own mobile phones to sell products like Tupperware and sunscreen. The timing of the launch during the month of Ramadan, when many people were staying at home due to the COVID-19 pandemic, contributed to its immediate success.

    Since then, TikTok Shop’s operations have become more sophisticated. Agencies like Wang’s Flame Media facilitate connections between brands and live-streaming hosts while setting up studios. Some businesses receive a TikTok account manager who provides guidance on content and promotions, while others benefit from trained performers or influencers who help brands reach millennials and Gen Z users. Nevertheless, the videos on TikTok Shop still maintain an amateur and improvised feel compared to meticulously curated Instagram accounts, and this authenticity is considered a significant factor in its popularity. Shoppers feel a genuine connection with the sellers, which adds to the appeal of the platform.

    Suanto, who goes by Kohcun online, is one of the most prominent Indonesian influencers on TikTok Shop, with his improvised, casual style attracting over a million followers. The 36-year-old was previously known for his gadget reviews on YouTube, but he now live-streams on TikTok Shop for six hours each day, peddling Samsung phones and Louis Vuitton bags. The money he earns from commissions and brand deals is around three times what he got through YouTube, he said.

    “TikTok has the big advantage using their creators because it’s more entertaining, it’s more natural,” said David Nugroho, CEO of Jakarta-based DCT Agency, which manages 600 TikTok personalities and is one of the biggest TikTok Shop partners in the country.

    Today, TikTok says it has more than 100 million monthly users in Indonesia, who on average spend more than 100 minutes on the app every day.

    Main Image: AFP via Getty Images

    Latest Posts

    Don't Miss

    Stay in touch

    To be updated with all the latest news, offers and special announcements.