2023 has been a pivotal and exciting year in Southeast Asia’s e-commerce sector, marked by significant events such as the record growth of TikTok Shop in Indonesia (and beyond) and Shopee’s historic achievement of profitability. As we transition to a brand-new year, 2024 is expected to build upon what happened in 2023. In this final Cube Pulse report of 2023 we share our thoughts about 5 exciting themes to look out for in Southeast Asia e-commerce in 2024. Read on to learn more.
1. What’s next after the TikTok Shop-Tokopedia merger in Indonesia?
In 2023, TikTok Shop’s swift rise in Indonesia faced regulatory hurdles, ultimately causing it to pause operations in the country for 66 days. As the year concludes, the path forward is becoming clearer as TikTok is forging a powerful alliance by investing up to $1.5bn in GoTo Group, the parent company of Indonesia’s largest local e-commerce, Tokopedia. Thanks to GoTo Group’s government ties, TikTok will finally be able to rebuild trust with officials and refocus on growth. Additionally, the synergies between the strengths of TikTok’s content and Tokopedia’s infrastructure (payment, logistics, etc.) are worth keeping an eye on as they will shape the ecommerce landscape in Indonesia. In 2024, we will finally see where the bridge between TikTok and Tokopedia will be.
2. How will Shopee (Sea Ltd.) balance growth and profitability?
After close to a decade of losses, 2023 marks a potential milestone for Shopee and its parent company, Sea Ltd., which has recorded positive net incomes of $87mn and $331mn in Q1 and Q2, respectively. However, starting from Q3, Shopee chose to sacrifice profitability to prioritize growth and secure its market share against competitors like TikTok Shop, resulting in a Q3 loss of $144mn. While Q4 results have not yet been published, Sea Ltd. is allegedly poised to conclude 2023 as its first profitable year, thanks in part to retained profit from previous quarters. Having proven its ability to be profitable to stakeholders, 2024 promises excitement for Shopee as we observe how it continues to navigate the delicate balance between growth and profitability.
3. How will Lazada and the rest of Alibaba’s “International Digital Commerce Group” fare in 2024?
Alibaba’s recent restructuring plan aimed to divide its business into six units, including the “International Digital Commerce Group” (AIDC), overseeing Lazada, Alibaba, Trendyol, Miravia, and Daraz. Initially intended for potential fundraising or an IPO, the plan has faced setbacks with leadership changes and management retrenchment in recent months. Despite this, Lazada remains a key player in AIDC, with Alibaba injecting a staggering US$1.8bn into Lazada this year. With intense regional competition, especially in markets like Indonesia and Vietnam, Lazada is expected to put up a fight in 2024. We also expect to receive more news about the management and their navigation early next year.
4. Will 2024 be the year Temu takes Southeast Asia?
While cross-border shopping isn’t new in Southeast Asia, Temu, a newcomer, is turning heads with its affordable prices. A brainchild of China’s Pinduodou (PDD Holdings), Temu found massive success in the USA, Australia, and Europe during 2023. After expanding into Malaysia and the Philippines in Q3, it’s set to reach more Southeast Asian countries in 2024. Its success in the region will depend on how well it can differentiate from existing models using its supply chain and infrastructure, and whether consumers will find its deals attractive enough to try a new e-commerce channel. In 2024, it will be interesting to keep an eye on how incumbent platforms and brands will compete with Temu’s value proposition, and monitor regulators’ moves, especially in protectionist markets like Indonesia, to understand whether the platform can also succeed in Southeast Asia.
5. How will the convergence of e-commerce and social media in Southeast Asia evolve in 2024?
In the past, social media and e-commerce platforms in Southeast Asia operated distinctly, each with its own unique applications and user experience. However, more recently, social media (e.g., TikTok, Instagram, and Facebook) have blurred these lines by integrating shopping features, while e-commerce platforms have introduced social functionalities such as livestreams and live chat. Approximately 25% of Southeast Asia’s e-commerce is now attributed to social commerce. Key e-commerce players like Shopee and Lazada are intensifying livestreaming efforts, evident in increased subsidies. The rise of TikTok Shop is prompting global brands to infuse commercial content for direct sales, making social commerce a pivotal aspect of brand-consumer relationships in 2024.
In summary, 2024 looks to be another exciting year for e-commerce in Southeast Asia, where moves by platforms, brands, and other players are set to yield significant outcomes. Stay informed on these developments by subscribing to our newsletter or reaching out to us at info@cube.asia. We look forward to sharing valuable insights as we progress into 2024.
