In this piece, we highlight several startups capitalizing on the social and live commerce trends in Southeast Asia amid the ongoing competition between TikTok and Shopee. For our Founder readers, we hope you can glean valuable insights from this article.

E-commerce competition intensifies: TikTok and Shopee ramp up investments

Shopee has shifted focus towards profitability, achieving positive EBITDA since the fourth quarter of 2022. After a period of efficiency improvements, Shopee announced in their recent earnings call in August that they believe it’s time to increase investments in growth again. Despite anticipating potential losses, Shopee is ready to prioritize growth to counter TikTok’s aggressive expansion in the region.

In the last year, TikTok has emerged as a significant e-commerce player in key Southeast Asian markets, challenging platforms like Bukalapak and Lazada in Indonesia. While TikTok aims to surpass Lazada by the end of 2022, Lazada plans to utilize a recent injection of US$845 million to strengthen its infrastructure and services to maintain its market position.

With Temu entering the Philippines market, competition is heating up, leading to increased investments and funding across the industry. Instead of focusing solely on rapid growth, these giants are now looking towards long-term structural improvements in product, service, and content quality, presenting opportunities for startup founders.

Image source: AppWorks

Opportunities in product quality: Leveraging Southeast Asia’s manufacturing capabilities

In Southeast Asia, major e-commerce platforms have an Average Order Value (AOV) of US$5-10, lower than China’s US$15-50 and Taiwan’s US$50-70. Boosting wallet share and AOV are key goals for these platforms.

One strategy to address this is by enhancing the quality of product offerings. While most products on Shopee and TikTok come from local manufacturers, the quality often falls short compared to Chinese sellers, according to a TikTok Southeast Asia team member. Local makers excel in speed and cost but lag in product quality, presenting an opportunity for higher-quality local manufacturers to thrive.

Similarly, Shopee acknowledges that Chinese manufacturers maintain a competitive edge in product quality and cost structure. This gap opens doors for new local manufacturers and product brands to establish themselves, with potential for tech startups facilitating this transition to seize opportunities.

HCM City-based startup, Inflow, is capitalizing on this trend by connecting global fashion brands with Vietnamese manufacturers, focusing on improving product quality, fulfillment, design, and R&D processes.

Opportunities in service quality: Enhancing merchant profitability

Logistics infrastructure and affiliate programs are areas where e-commerce platforms can enhance services to boost merchant profitability. Startups like Partipost are expanding in Southeast Asia, offering a platform for influencers to participate in marketing campaigns, providing a holistic approach to assist businesses in building enduring brand ambassadors.

Opportunities in content quality: Elevating content standards for Southeast Asian influencers

Improving content quality and tailoring it for local relevance are crucial in social commerce. Startups like Hepmil Media Group have seen success by doubling revenues and focusing on creating engaging content tailored to regional audiences.

Navigating e-commerce competition: Tips for startup Founders

As competition intensifies in the e-commerce sector, startups should focus on providing solutions that significantly outperform existing platforms, addressing key pain points at scale and moving swiftly to stay ahead. Prioritizing sustainable business models, achieving product-market fit, and empowering customers are essential for long-term success.

Maintaining a cohesive strategy and innovating to create unique value propositions will be crucial for startups looking to thrive in the competitive landscape shaped by the rivalry between e-commerce giants like TikTok and Shopee.

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This article was first published on September 19, 2023.

The post TikTok vs Shopee EC battle in SEA: Unveiling strategies for startups appeared first on e27.

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