Having launched just last year, TikTok Shop has rapidly ascended the ranks in Vietnam's e-commerce sector, dethroning Lazada from its position as the second-largest platform by revenue, according to the latest data from market analyst firm, Metric.
The total value of all completed transactions across Vietnam's e-commerce landscape during the first half of 2023 reached an estimated VND93 trillion (approximately $3.875 billion), a robust growth of 46 per cent compared to the same period in the previous year.
The revenue for the first and second quarters of 2023 clocked in at $1.792 billion and $2.083 billion, respectively
TikTok Shop's rise has been meteoric. In the fourth quarter of 2022, a mere four months after its launch, it had already achieved 80 per cent of Lazada's revenue. By the first quarter of 2023, the gap had further narrowed, with TikTok Shop trailing Lazada by just 3.5 per cent in terms of revenue. However, by the second quarter, TikTok Shop had leapfrogged Lazada to become the second-largest e-commerce platform in Vietnam, behind Shopee.
TikTok Shop posted revenues of $679 million, selling 117 million products, while Lazada reported revenues of $654 million, with 117.5 million products sold. Shopee, the market leader, recorded an aggregate value of all successful orders reaching $2.458 billion in the first six months, with a total of 667 million products sold.
During a recent Shoppertainment conference in Ho Chi Minh City, representatives from TikTok underscored the platform's unique selling proposition: its capacity to fuse entertainment content with commerce.
Boasting over 325 million monthly users and hosting more than 15 million businesses in the Southeast Asia region, TikTok's advertising profit margin is reported to be twice the average of other platforms, and its total advertising profit margin ratio stands at 1.7 for paid ads, according to Nielsen's SEA Marketing Mix Modelling 2023.
TikTok's blend of entertainment and commerce appears to be resonating with consumers. The habit of product discovery, encouraged by the platform's social nature, community engagement, and seamlessly integrated shopping experience, appears to be shaping a new pattern in consumer behaviour.
According to a study by Boston Consulting Group (BCG), 81 per cent of TikTok users in the Asia-Pacific region have indicated that the platform's video content has significantly influenced their recent shopping decisions.
The dramatic rise of TikTok Shop within Vietnam’s e-commerce hierarchy is a testament to the power of integrating social media and e-commerce and offers a compelling vision for the industry's future.
The development also raises important questions for established players as they consider how to respond to this new, socially driven approach to online commerce.
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