TikTok’s new gameplan in SEA: F&B, travel

In The Checkout this week, we analyze TikTok’s local services play in SEA and discuss Shopee and Lazada’s financial results. [Read from your browser]( The Checkout 🛒  --------------------------------------------------------------- Welcome to The Checkout! Delivered every fortnight, this free newsletter breaks down the biggest stories and trends in ecommerce. You can find past issues [here]( or [sign up here]( to receive future newsletters. Also, If you’re not a subscriber, get access by [registering here](. IN FOCUS In today's newsletter, we spotlight: - TikTok’s move [to test local services features]( in Southeast Asia - Shopee and Lazada’s positive financial performance in Q2 2024 --------------------------------------------------------------- Hello {NAME} Lately, I’ve been watching lots of short videos and livestreams on TikTok. Most of the content relates to topics I’m interested in such as music, entertainment, and humor. I also often come across food and travel content, which raise my curiosity. Now, the platform wants to capitalize on these user habits by making it easier to purchase items related to the videos they’re watching. TikTok is currently testing a local services feature in Indonesia and Thailand, allowing users to order food, drinks, attraction tickets, and hotel bookings via its app. It is partnering with third parties in both countries to offer the service. In this week’s Big Story, I analyze TikTok's potential to disrupt the Southeast Asian market with local services, similar to what it has done with TikTok Shop in the ecommerce sector. Meanwhile, Shopee and Lazada both recorded positive financial performance in the second quarter of 2024. This may indicate that their strategies are starting to pay off, even amid increasing competition from TikTok Shop. Is Shopee too strong to be challenged in Southeast Asia’s ecommerce space? Read more in The Hot Take below. -- Jofie  --------------------------------------------------------------- THE BIG STORY [TikTok’s local services play ignites 'Everything War' in SEA]( TikTok’s foray into local services in Southeast Asia could upend the market, as it did with ecommerce.  ---------------------------------------------------------------  THE HOT TAKE Shopee, Lazada's efforts starting to pay off? Here’s what happened: - Both Shopee and Lazada showed strong financial results in the second quarter of 2024. - Shopee [recorded]( revenue of US$2.8 billion during that period, up 33.7% from Q2 2023. It expects to achieve positive adjusted EBITDA in the next quarter. - Meanwhile, Lazada [reported]( positive EBITDA in July 2024, marking the first time it has ever reached the milestone. Here’s our take: The positive results achieved by both companies amid intense ecommerce competition in Southeast Asia - where TikTok Shop is threatening their market share - shows that their strategies are starting to pay off. The news of profitability from Lazada came as a surprise, as its market share in Southeast Asia has been continuously shrinking. According to the latest [report]( from Momentum Works, Lazada has been overtaken by TikTok Shop in both Vietnam and Indonesia in terms of market share. Its gross merchandise value in Southeast Asia dropped from US$20.1 billion in 2022 to US$18.8 billion in 2023. However, it seems that Lazada's move to launch the [Choice]( platform is starting to bear fruit. This offers low-cost products that are mostly sourced from China, similar to what Pinduoduo-owned Temu is doing. Although launched a year ago, Lazada has recently become more aggressive in promoting Choice, especially following the success of a similarly named platform at its sister company AliExpress. See also: [Southeast Asia’s ecommerce players go low to get ahead in price war]( Lazada did not specify the key factors behind its profitability in July. Earlier this year, it [conducted]( a major layoff, which likely improved its operating efficiency. Meanwhile, Shopee has committed to reinvesting in the livestreaming and video commerce sectors since mid-last year as a response to the threat from TikTok Shop. This caused its parent company Sea Group to return to losses in Q3 2023 after being profitable for three consecutive quarters. The temporary closure of TikTok Shop in Indonesia for two months provided a significant advantage for Shopee. Many sellers have shifted focus to selling live on the latter platform, including affiliates who were previously popular on TikTok. Shopee has also continued to streamline operations. Recently, the company [relocated]( its customer operations team in Indonesia from Jakarta to Solo and Yogyakarta - cities located around 500 kilometers from the country's capital. This move is expected to save costs as the minimum wage in both cities is lower than in Jakarta. Considering Shopee's seemingly unshakable strength at the moment, it will be difficult for TikTok Shop or Lazada to disrupt its dominance in Southeast Asia in the near future. ---------------------------------------------------------------  EVENTS HAPPENING You can also check out a curated list of trending tech events [over here]( and Tech in Asia’s signature events [here](. [Tech in Asia Conference Jakarta on October 23 - 24]( Want to know what's next for Southeast Asia’s startup scene? Join us at TIA Conference Jakarta to hear from top VCs like Jefrey Joe of Alpha JWC Ventures, the founder-turned-investor Achmad Zaky and Agung Bezharie. 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