We all know that TikTok is pushing aggressively into ecommerce in China while also setting ambitions globally, with Southeast Asia as a key focus market. It recently introduced another initiative, Shop Local Saturday, in a number of countries across Southeast Asia. At its core, the initiative is supposed to attract more sellers, but we believe that it also reveals TikTok’s big picture for ecommerce.

What is Shop Local Saturday?

On their website, TikTok describes Shop Local Saturday as a move to “support small and medium businesses (SMBs) in Southeast Asia”. Exclusive to Indonesia, Thailand, and Vietnam, this initiative provides participating merchants with a dedicated in-app page while granting them access to content creators and creative workshops.

In plain business terms, Shop Local Saturday offers two main benefits to sellers: traffic and better marketing.

TikTok Shop Local Saturday - TikTok Seller University

This initiative isn’t TikTok’s first stab at attracting sellers. In this year alone, they rolled out features such as Starter Lab to educate merchants on better connecting with their audience– and they are still toying with the idea of a TikTok Seller University in Indonesia.

On one hand, these initiatives help convince SMBs– micro-influencers especially– that they can monetize their promotions on TikTok. On the other hand, they seek to lower the barriers of entry to live streaming for potential merchants. 

Video production is a science (or even, a process), not an art; orienting sellers to its nuts and bolts make the platform much less intimidating (while increasing the mix of good quality content on the platform). 

TikTok is a social app first

These recent attempts at onboarding sellers also reveal the platform’s unique position. While live streaming has created opportunities for e-commerce, TikTok is still primarily seen as a social app.

Unlike major players such as Shopee and Lazada, which remain marketplaces that are net consumers of consumer traffic (they need constant marketing to bring more people on board), TikTok can generate its own traffic. What it currently lacks is an established network of sellers– which is what they are trying to cultivate by championing the cause of SMBs. 

How TikTok develops will, therefore, pose an interesting question for aspiring ecommerce and social commerce players in Southeast Asia. Is it more effective for them to first focus on generating internal traffic before branching into ecommerce? Or would it be better to draw traffic after building an ecosystem around an existing ecommerce platform?

Still a long road ahead for TikTok

In the long run, TikTok probably harbours ambitions of creating an independent ecommerce ecosystem that can challenge Shopee and Lazada. It has the users–who spend a massive amount of time on the platform– and (live) video, one of the best ways to showcase a product. 

Yet, in spite of its unique advantages, it still has quite a way to go before it can realize this vision.

Ecommerce platform is about the buyers and sellers– but it’s also about logistics, payment, and a whole ecosystem of service providers. Any player who is considering going long in this industry will need to have serious stakes in logistics, payment, and more. Simply put, it’s a lot of resources that TikTok needs to build up around its core short video app.

However, judging from how aggressively Tiktok has wooed sellers with initiatives such as Shop Local Saturday, it’s clearly ready to have more chips in the game.

Ultimately, as TikTok wades into e-commerce in Southeast Asia, we still aren’t sure if it will disappear into the red ocean or make a serious splash. We tend to believe that it can do a better job than Alibaba and JD.com outside China. 

Either way, the industry is about to get interesting. A lot more interesting.

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 hello@mworks.asia.