Discover answers to key questions from our recent TikTokShop Report premiere event. In this episode into topics like TikTokShop’s strategic focus, its potential in the U.S. e-commerce market, and why TikTok is making this bold move.

Listen in to gain invaluable insights and stay ahead in the dynamic world of e-commerce. Below, you can find the player to tune in and even access an automatically generated transcript for your convenience. Don’t miss this deep dive into the future of e-commerce on TikTok!

Episode transcript:

San 0:00
Good morning, everyone. Happy Wednesday. Welcome back to the impulso podcast. We are back with our in depth episodes. And because you guys loved our TikTok Shop episodes so much, it’s actually our most downloaded, most listened to episode and the one that we get talked about the most to. So we’re going to bring you an updated version of that TikTok Shop episode with the authors of our tic tock shop playbook report that just came out earlier. Well, last month as of when this recording will come out. It came out earlier last month in August of 2023. And we’re excited to bring you a little bit more in depth news on what’s going on with tick tock shops and updates since our last episode. And basically everything you need to know about this latest ecommerce player in Southeast Asia. So once again, we have five of us in the room today. We’ve got Dalia – Hey, Dalia.

Dalia 0:51
Hello, everyone.

San 0:53
We have everybody’s favorite Jianggan..

Jianggan 0:55
Oh, hi. Hi.

San 0:57
And we’ve got Vion here with us and Wei Han. Remind me who wrote this report?

Weihan 1:12
We did

San 1:12
It was the two of you. So we’ve got both the author’s here today. So basically, what I’m hearing is any question I have about TikTok Shop? I have the answer in the room. We try to answer. All right, why on take it away? What are you going to tell us about TikTok Shop today?

Weihan 1:27
I think just a brief introduction. So we have been having a lot of media inquiries as well as we have been having many people asking us about what’s going on with TikTok Shop. So all this plus the market sentiments really inspired us to come up with this report. And in our report, we have actually crowdsource a couple of questions in which people are actually interested in finding out a bit more on so we have parts about answering why is TikTok betting so heavily on E commerce, what’s the strategic focus, why the key differences and what products sell well, and how it builds up its ecosystem, we also dive into get a different perspective, focusing on North American consumers. So those are the key portions that we cover in the report. And we also have like a bonus section for brands if they’re interested in guiding in terms of their thought process on whether they should or should not work with TikTok and if they will move TikTok, should they or should not do TikTok shop?

San 2:37
I swear this tone of surprise is not because I haven’t read your report. But I’m so amazed that we’ve got crowdsource questions because that’s literally every question I have about TikTok so tell me what is I’m actually not I’m just surprised that Mr. Chu is not on this list of questions. Mr to, but yes, please take it away. Tell us why is tick tock bending so heavily on E commerce?

Vion 3:01
Short answer, it has just a large group of user who spend a lot of time on. So 1 billion monthly active users, you can expect that almost all of us on Tik Tok. So the next question would be how do you monetize of this group have a big group of user who spent a lot of time on it?

Jianggan 3:20
I think because video format means that means that the more time that users spend on it, the more expensive it becomes for data because you have to do it very rarely you have all this like bandwidth, cost, server cost, etc. So how to monetize that effectively, has been a question so they have done advertising, which I think in in China we’re doing it works out very nicely, but internationally, they have competitors like meta, right? And depending on how you look at it, I think meta has been on the conversion rate of measured in different ways on for advertising omega is better than then tick tock across categories across mostly categories, actually, so So the question is that I mean, what can you do to differentiate? And of course, they’ve done it fairly successfully in China with ecommerce I think last year was 200 billion GMV 20 28 billion GMV in China. So obviously, obviously, this is the this is the pathway that they think could potentially work outside China as well and they’re betting heavily on it. I

San 4:24
just looked at my screen time to see what Jianggan said was true. If TikTok is somewhere that people spend a lot of hours and I’m so embarrassed. There’s only one app that comes above TikTok and I will not be naming everyone take a look and see how embarrassing it is for me.

Jianggan 4:40
I don’t even know what that is.

San 4:43
I spend on average three hours and 20 minutes a week on TikTok Shopand I’m not that addicted toTikTok. That’s crazy because I know people spend a lot more time on TikTok than I do and I feel like

Weihan 4:56
that’s that’s a lot I spend on average at least an hour putting on TikTok Right, yeah, and the number has increased because every time I do the report I’m contributing quite a lot.

San 5:08
I’m learning something new, right?

Jianggan 5:10
Which is good. I mean, I know my team members are actually putting the time on where they’re researching my screen time then we look at it the most used is WeChat by a wide margin compared to the second most use, which is Gmail.

San 5:28
Oh gosh, that doesn’t surprise me.

Weihan 6:26
I’m just curious how those who actually use tick tock right what is the type of content that you’re actually seeing? Or what do you commonly see articles on yours or your friends for your page?

San 6:28
So honestly, to bring it back to E commerce a little bit the thing that I do the most on TikTok is watch TikTok and then buy things but I don’t buy things on TikTok I watch so many influencers and people using products are very organically huge I mean I I’m not that gullible I know that it’s probably paid advertising and brand partnerships and things but they’re using products organically that I want so I go off the platform and then I buy them that is the most common thing that I do on TikTok. But that’s honestly where most of my product discovery happens is on TikTok . That’s most of what the content I see is

Weihan 7:23
Any particular category?

San 7:25
Anything from clothes I ordered speakers for my room off of TikTok a lot all of my makeup recommendations come from TikTok I ordered two dresses, a pair of shoes I discovered new shoe brands I ordered personalized stationery letter writing kits because TikTok is just it’s bad for my wallet but not because I buy things on TikTok which is so ridiculous.

Dalia 7:50
Now that I think of it, I realized that a majority of TikToks that I see are connected to experiences, to something that I find relatable. I don’t think TikTok inspires me to buy stuff.

San 8:06
But you’re right actually experiences are a lot of them. I’m going on vacation right now. And basically everything that I’m doing on this vacation was recommended on TikTok.

Weihan 8:30
Do you think if TikTok shop itself started giving you vouchers or something were to experience certain places like maybe you see this tick tock content creator, doing a whole itinerary about a vacation and then say, Oh, here’s a link for you to click on it. You can get tickets for this

San 8:50
Weihan, are you doing research on me right now?

Weihan 8:54
Because what Tiktok currently does is mostly physical products. Yes. So we do have people from our community asking about oh, how is sales of virtual products vouchers going to be like so I’m just trying to understand for Dalia, since you mentioned experiences, if Tik Tok actually brings up creates like, do das back end development in terms of adding on this another product offering that they have to take Topshop? What what? Why would you our reaction to it before you buy off it?

Dalia 9:25
I think I would be really interested in that because honestly, that constitutes the majority of videos I’m seeing right now, because I’m relatively new in Singapore and I’m watching every recommendation basically, and if for example, someone would offer me a voucher. I’d be very glad.

San 9:41
Tik Tok is a great place because it’s short video format. It’s a great place to almost experience something secondhand and then be able to dive if there was something in it for me as the consumer like you said a discount or voucher or something. Absolutely. 100% The other thing is a lot of the major influencers on tik toks don’t have TikTok product linked Are videos. So if I could buy something on TikTok , I would, but I generally have to go off the app to buy it. Whether it’s a discount code or voucher or something, you generally have to go off the app to buy it.

Jianggan 10:13
So you’re basically saying that if Tik Tok shop becomes Groupon, we’ll use it. Maybe neurologists Redman group was the is the grandfather of vouchers. So tiktoks cousin, sister company in China doing there has been doing a lot of bartering this year, so this will be launched assault on Meituan right? Meituan is the largest food delivery on platform in China. But I think a few people outside China will know that is also a third largest group by company in China. So is where restaurants F&B local services and advertise for their businesses. Right. So, a lot of vouchers are given. And I think I think the doing I mean, having a lot of screen time and a lot of users and trying to capture some of that. I do remember, January or February you have analysts in China saying that Meituan is in trouble because Because Because someone is attacking their cash cow. for like half a year down the road, you realize that first Meituan mounted a very strong defense, not only they did a lot of activities in life, I mean, they hired lots of people from Alibaba, etc, etc, to build their live product. Some of the FMB and local services owners who I’ve spoken to told us that that the vouchers they have dished out on doing the conversion rate is not that high. So what do I mean by by conversion rate people bring that voucher to the shops and and hey, I want to redeem this voucher. Maybe we call it redemption, right? That redemption rate is not very high. So which was kind of defeats the purpose of people like don’t give me a lottery in the first place. I don’t know exactly what’s the consumer behavior behavior, or what’s the which part of the commission process is broken, but this is what’s being reflected on the market.

Weihan 12:19
So I guess, Tik Tok would probably still be focusing on building physical products. So just curious beyond what do you think sells best on TikTok Shop?

Vion 12:29
I mean, based on at least based on what we hear just now. fashion, beauty, health, probably health, right. And I think you probably also comes down to a lot of what the influences or the sellers are really pushing. Ultimately, you need the supply to be shown to consumer that then you see oh, this is interesting. This could be something I buy in and you stop buying. Yeah, at this stage, I will see it as more of a supplier or supply driven.

San 12:56
Yes, I think that’s absolutely right. Because I feel like a lot of the things consumers want aren’t on Tik Tok. Like a lot of the videos, you know, it’s an underrated place to get vouchers in Singapore. Oh, that is an underrated place to get vouchers in Singapore. It’s the place that I get vouchers the most. But it has, by far objectively the most benefit to the consumer.

Jianggan 13:15
What is that, Chris plus?

San 13:17
is Singapore Airlines created Chris Chris rewards programs app, it’s called Chris plus. And for every purchase, you essentially get nine miles per dollar pay with the Chris Plus app. And you can also buy vouchers, but then you double on your credit card rewards. So if my credit card is giving me three miles per dollar, and I’m buying something that’s nine miles per dollar, essentially, I’m getting 12 miles.

Jianggan 13:37
I feel like miles is an ingenious way of of hooking up the consumers at a very low cost. Because I mean, if you get 1.2% discount voucher, would consumers be interested? But that’s exactly what you’re getting with the miles.

San 13:57
I mean, I don’t know if it’s conning me, but I spent so much money on Chris, let’s just Yeah, miles.

Jianggan 14:01
Yeah, it gives people something to look forward to. Because you you know that okay. At that certain miles, I’m going to redeem a ticket and business class ticket somewhere. I mean, it’s something that people aspire to. But if you actually do mathematical calculations, realize there’s a pretty pretty, pretty good business model, right? Because you really don’t spend much and you consumers feel that that is much, much, much more valuable than what they’re actually getting.

Weihan 14:26
So that’s kind of like them, their loyalty program.

San 14:29
It is such an effective one.

I don’t know how many Shopee coins I have. Nor do I really care. Like when I checked out I’m like, oh, whatever, if they have some I’ll use of because the products are like $5. So my Shopee coins are gonna be like 20 cents off. It’s like really not a huge differentiator. For at least $5, I’m okay with the 20 cents. But when I think about rewards, when you want to buy something that’s more, because the price point, I guess of the products that I’m buying on websites like that are a lot lower. I feel like the rewards come more in handy. When it’s either something that I purchase a lot like rideshare apps, those rewards count because I can use them and I see it effectively reducing my cost or high purchase product, something that’s really expensive, then I see those rewards points coming in. So I guess it depends on the category that TikTok is going to be.

Oh, yeah. We will go back to our questions that have been crowdsourced I can’t get over the fact that they were crowdsourced. But what is TikTok’s strategic focus and E-commerce that was question two, and as a whole five pages dedicated to it? So don’t give away the whole cow, What exactly is their strategic focus on E-commerce? I guess? Why did they pivot?

Weihan 16:33
I guess just like Vion mentioned, they’re trying to monetize, right? Yeah. So and they have launched in a couple of markets right now, I think about seven to nine. So what they want to do is to expand the reach. So we do know that TikTok Shop, even though they are in certain markets, that e-commerce site is actually not reaching as much as compared to e-commerce. So the focus will be how they should be transforming these normal users or social users into e-commerce users. They came up with multiple capabilities to introduce users to TikTok shop. So initially, they started with the videos. So you have the yellow shopping cart on the site, which allows you to directly click on it, and to buy and then afterwards, they have also released the specialized tab called shop tab on the interface. So it’s easier for users to actually go directly to the shop, because sometimes you screw up a couple of videos, you lose the link, but you’re still thinking about a product that you saw previously. So the shop tab will be extremely helpful. So these are all conversion points. And note that this shop tab is currently not available in all markets yet. It’s out in most Southeast Asian markets. But if you’re looking at Singapore, if you’re looking at the US, UK, I’m not too sure about Saudi Arabia. But all this remaining market still doesn’t have it. It’s not in Singapore, right? It’s not easy testing about it. And the other one is to actually increase the E-commerce scale. So we do know that the CEO of Tik Tok, they say that they are committed to invest billions of dollars and combine in order to expand that TikTok Shop. And we also hear news of them doing trying to do like consignment models in other countries. They’re trying to like expand the I guess they’re also trying to expand that ecosystem in a sense, like they’re really trying to come up with logistic partnership with logistic companies on the ground to really try to push for better services and better capabilities for the users in us to really try to get this through and also to somehow help alleviate the political pressure. Yeah.

San 19:01
I mean, I guess as someone who’s lived in it, has anyone here lived in the US?

Jianggan 19:06
Does Mexico con No. Okay. Yeah.

San 19:09
That would be North America, but not for us. I mean, I’ve lived in the US for a couple of years here and there. And I I just curious, what is the consensus do North American consumers I know that was one of the questions on the report, would they watch videos and buy things? Because I just, I don’t know something about live commerce to me doesn’t sound like it would work in the US. But that’s again, we talked about this on our last episode. It’s, that’s a gut reaction, not a database reaction. That’s just something that’s in my little gut. And so I’m just wondering, what’s the consensus on that? Do you think they would or what does the report say?

Weihan 19:46
I guess, if you were to look at it in terms of live comments, of course, people like it will work. I don’t think so. We’ve got Yeah, but then if you were to look back at something that is a very similar concept, TV shopping

San 19:59
Hmm, good lord, TV shopping really takes me back to being four years old. The table for them to get to see the similarities, somewhat, but like, when was the last thing I jumped on? When was the last time you have a TV?

Jianggan 20:23
I’ve not seen a TV for for a while. So I don’t know. But but but I do remember that, the TV shopping was actually big when people didn’t have other choices, right? And the benefits of TV is that you can actually demonstrate a product, you can test it. You can I mean, as someone a time you always have like no two people right at one people. One of the presenters was like, calmly explained to the ball, the benefits and the other ones is going ballistic buy now buy now whatever. Right? I mean, I mean, if if, if you think about life commerce, it’s especially invoke his emotions but with a different way. And of course with with conversion is much faster. Rather, we can review you can check out with one button instead of like an old record a phone number and call someone and an operator has to like the answer cortex on order find a way for you to pay special attention noise is hidden is so back to the question. Will it work in North America? I don’t know. I think I think lots of people are saying that he will not because they have not seen it. But isn’t that logic? problematic? It doesn’t work? Because I’ve not seen it.

Okay. Yeah, so. So basically, I think there’s a problem that logic and word work, we don’t know, because there are many things which need many factors when it needs to come together for it to work seamlessly and at scale. And I think as far as I see it, I mean, tick tock, as the platform is in the driving seat to create these conditions to create this ecosystem, to create this habit for users, where they do a good job will pop up with the deal and decide whether it will work or not. I mean, it’s not. It’s not it’s not like, you know, deterministic, right? Oh, yes, will work or no, it will not work. I think it depends.

Weihan 23:00
I think it depends. If you’re you, if you look at the life views, especially in Southeast Asia, develop them just like by going at this disco, I guess you just need some time for all this, let’s say life centers to actually gain certain kinds of skills, because I know that in China, how they sell it’s pretty different Kol or key opinion leaders that they’re actually very good at saying specific things that inspires you or entices you to buy. They don’t go like, Oh, this is going at this price by now by now. It’s, it’s not so in a sense, superficial, like they will try to say something more. So that’s one part of it. But if you look at the content wise, if they’re trying to sell via the content videos, obviously some of them it can be pretty staged because they want to showcase but yeah, I think if most of the influencers on doing this, they actually have been doing it for multiple years. Yeah, it’s just like previously, let’s say they’re doing on Instagram. Yeah, it’s just product placement them taking photos. But then because now it’s a brand new format, it’s a video format, it’s much easier for them to really showcase what they’re doing and it’s less it’s less likely for them to be able to fix certain things as compared to just aesthetic photos because they can actually see the products in real time.

Jianggan 24:25
That takes hard work right under this I think we’ll start with the recording recording Indonesia like somebody did like livestream and got like two point something million US dollars of sales over one session. USD, I would expect this this record to be broken again very soon, because there’s so many people trying to do different things. But there was an interesting debate a few a few years ago in China saying that there are so many celebrities who try to sell online and most of them failed. And the Congress So for some of my friends is that because they are celebrities, they tend to be lazy. I mean, lazy in the sense that they would mean their skills and the place where they spend the energy and their hard work is somewhere different, right? So we’d live setting, you need to play Sorry, I’m bloody sorry for sort of my wording. You need to actually talk to the camera selling a product selling multiple products, you talk talk, talk, try to interact with people give a comment and stuff. And that requires certain owners a skill set but certain sort of character that you are comfortable doing that do it naturally. And he did so well. And you are willing to listen to your sake or whatever you just use just carry ahead. It is

San 25:39
hard work. There’s a huge ecosystem around even user generated content creator content, influencer marketing is huge, huge ecosystem and economy around it is new. And it’s, it’s come out about in the last few years, but it’s definitely not something to be discounted. And it’s queuing on I’m conscious of our time here. But Wei Han, could you answer the last question on the list of these Wei Han and Vion on both of you? On this list of crowd sourced questions? What is what does this mean for Tik Tok and its ecosystem? And how can TikTok Shop build its ecosystem from here? Toss up any guys?

Vion 26:15
If it comes back to what we’ve had mentioned, just now, what’s the strategic focus? Right? As if you talk to people even in this room, many of us have not bought from tic toc a lot, right? Or we have tried ones but not you know, yeah. Like on a high frequency. So probably comes down to how do you keep converting people first, get them to buy? Second, get them to keep buying? You’re right. So that that comes with the first point? How do you increase conversion? And second, to the earlier point, as well? How do you build more supply? Yeah, because ultimately, if you have more differentiated product, I will say because otherwise, people will just be like, you’re you see interesting stuff, you go some other places to buy? How can I create differentiated products? So that people’s Yeah, this is interesting, and make them motivated, or you have that impulse buy to buy right away? So two points. One, how do you build the supply? Second, how do you increase the conversion? And if we take some learning from doing in China, so I was talking to our colleague, Crystal who used to sell on the way before, and, and some of the practitioners right? How to when I first when they first started, a lot of people started buying some gimmicky or VA product. So you go “this is interesting.” I was not buying it. Once I started buying, oh, the product came. Okay. Right. So the next time I stopped buying more, yeah, so. So you’re using that to gain initial traction. And then using that traction, you can attract smaller sellers on board. And once sellers are on board and bigger brands, of course, if we see start seeing people are buying more and more from the platform itself, you will get on board. So it’s more of an ecosystem, right or ecosystem. I mean, you have to work in sync.

Jianggan 28:33
That’s it. I think the I think brands in this region are getting more and more sophisticated in commerce. I think at some point in time. We have this, this bonus material about brands we take the shop in in detail playbook report. I think at some point in time, we should have a dedicated session we’ll talk about brands involvement, e commerce industries, and I think there’s lots of interesting things to talk about. Yeah,

San 28:55
I mean, I remember working on on media team a couple years ago 2018 And even then they were so interested in what I mean the brands were doing with new technologies and what they thought ecommerce was going to be then and this was from a luxury perspective that no one could have predicted this and how fast is evolved but But I digress, we will link TikTok Shop playbook sorry in our show notes for you to refer to and hit download and you can read the rest of all of the insights and more than just these answered questions. There’s so much more in this report and like Jianggan just mentioned a bonus section for brands you we will be back this Friday with a another episode with another weekly recap for you have a wonderful rest of the week, everyone. Thank you for being here. Happy Wednesday. Bye. Bye. Right

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].