Southeast Asia eCommerce competition
Shopee’s Defensive Battle in Southeast Asia: TikTok Surges, Lazada Makes Profits, and Temu Squeezes In
Southeast Asia eCommerce competition,As Temu’s battle expands into Southeast Asia, the region has increasingly become the primary battleground for cross-border e-commerce. Southeast Asia, a vibrant hub for e-commerce, is seen as one of the last remaining blue ocean markets due to its potential for rapid market expansion. This has drawn the attention of major global e-commerce platforms.
According to institutional data, e-commerce sales in Southeast Asia in 2023 accounted for only 10% of total consumer goods sales, significantly lower than the global average of 19%. Despite this, the region’s compound annual growth rate remains strong at 18%, comparable to the level of China’s e-commerce market a decade ago. Recalling the fierce competition during China’s e-commerce boom, it is easy to predict the intensity of the upcoming battle in Southeast Asia.
Recently, rumors circulated that Shein, which has operated in the Southeast Asian market for seven years, was exploring a partnership with Shopee. Prior to this, Shein was also said to be in discussions with Lazada about launching a clothing outlet channel. These collaborations with local platforms have become a major strategy for Chinese cross-border e-commerce companies aiming to penetrate the Southeast Asian market.
In early October, Temu was reportedly investing in local e-commerce ventures in Indonesia and Vietnam. In 2022, TikTok Shop strengthened its presence in Indonesia by merging with the local platform Tokopedia, while Alibaba has previously acquired Lazada and continued to invest heavily in it. With major players stepping up investments and refining their strategies, the Southeast Asian e-commerce landscape is undergoing significant changes.
Ten years ago, Li Xiaodong of Sea founded Shopee, inspired by Taobao’s success. Shopee broke through the chaotic e-commerce environment and quickly overtook Lazada. Having held the top spot for years, Shopee now finds itself in a defensive position. Meanwhile, Lazada, which lost its lead to Shopee, risks losing even more ground. By 2023, TikTok and Tokopedia combined had overtaken Lazada’s market share.
With the advent of what some call a “new growth era,” Southeast Asia’s e-commerce battlefield may soon see a new round of reshuffling.
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Temu Steps Up Its Offensive but Faces a Tough Main Battlefield
Temu, a relatively new entrant trying to break into Southeast Asia, recently launched operations in Vietnam and Brunei. Similar to its low-key entry into Thailand in August, Temu has chosen to avoid drawing too much attention. On its official website, Temu’s Vietnam page remains quite basic, only offering English-language services and accepting credit card payments, without supporting local payment methods yet. Currently, Temu has only partnered with two local logistics providers, indicating that its logistics network needs further development.
Despite these challenges, Vietnam’s proximity to China gives Temu a logistical advantage, with delivery times in Vietnam now shortened to 4-7 days, faster than local delivery times within Vietnam. This is a significant improvement compared to the logistics speed for Malaysia and the Philippines.
Vietnam’s e-commerce market has been rapidly growing, with its gross merchandise volume (GMV) increasing by 52.9% in 2022, surpassing the Philippines to become Southeast Asia’s third-largest e-commerce market. The Vietnamese government has been highly supportive of the e-commerce sector, fostering its rapid development over the past few years. On the China-Vietnam border, large warehouses have been established, with some e-commerce platforms building logistics centers in the region.
Since 2023, Temu has expanded into Malaysia, the Philippines, and Thailand. With the recent additions of Vietnam and Brunei, Temu is now active in five Southeast Asian countries, leaving Indonesia and Singapore as the only major markets it has yet to enter. Among these, Indonesia stands out as the largest e-commerce market in Southeast Asia. In 2023, Indonesia’s e-commerce GMV reached $62 billion, accounting for nearly half of the region’s total market value. It remains the most competitive and essential market in Southeast Asia.
However, despite Temu’s progress, the company has faced resistance in entering Indonesia. On October 9, Indonesia’s Minister of Communications and Information announced a ban on access to Temu’s platform within the country. Since September 2022, Temu has applied for trademark registration in Indonesia three times, but each application was rejected.
In early October, rumors surfaced that Temu was attempting to acquire the Indonesian e-commerce platform Bukalapak to gain entry into the Indonesian market via a strategic acquisition. Following these rumors, Bukalapak’s stock price surged, but both companies later denied the reports.
Nevertheless, forming a partnership with a local platform might be a strategic move for Temu. After all, TikTok’s success in Indonesia involved a similar approach. In markets such as Europe, Chinese e-commerce companies have also followed this strategy.
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TikTok Shop Quadruples in One Year, Sets Sights on Second Place
Founded in 2012, Lazada is a well-established e-commerce player, but TikTok Shop’s rapid growth has shaken the status quo. In just over two years in Southeast Asia, TikTok Shop’s GMV reached $16.3 billion in 2023, a fourfold increase from 2022. TikTok’s presence has driven much of the overall growth in Southeast Asia’s e-commerce sector.
Over the past five years, Shopee’s GMV in Indonesia has increased several times over, but its market share has actually declined, dropping from 50% to 40%. Similar trends have been observed in Thailand and Vietnam, primarily due to TikTok’s aggressive entry into these markets. For instance, in Indonesia, TikTok’s market share grew from 0 to 14.2% in less than two years.
Indonesia and Thailand are now TikTok Shop’s largest markets. In April 2023, TikTok Shop recorded an impressive $1.7 billion in sales in just one month, with Indonesia and Thailand contributing the majority of the volume.
Southeast Asia has become TikTok e-commerce’s most successful market. While Temu has established its base in the U.S., TikTok Shop’s base appears to be in Southeast Asia.
TikTok Shop’s success is largely due to its strategy of creating a local ecosystem that integrates users, merchants, influencers, and service providers. By building this community, TikTok Shop has attracted a wide range of merchants and gained a significant foothold in the region.
TikTok also adopts a localized approach, tailoring content to the unique cultural preferences of Southeast Asian markets, particularly through live streaming promotions and holiday campaigns. Its merger with Tokopedia further strengthens its position in Indonesia.
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Shopee Defends Its Territory, New Strategies Required
Southeast Asia’s e-commerce landscape has increasingly mirrored the cutthroat competition seen in China’s e-commerce industry. This dynamic has put local platforms on high alert. TikTok’s entry prompted Shopee’s Li Xiaodong to comment that they are now facing “competitors from a higher dimension.”
While Shopee has maintained its position as the market leader, it cannot ignore the growing threat posed by Temu. Despite Shopee’s longstanding dominance,
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