TikTok Shop continues to grow rapidly across Southeast Asia, including in Indonesia where sales for the first six months of 2023 likely crossed a staggering 2.5bn USD – matching the platform’s full-year tally for 2022.
While most of this trade is scattered among tens of thousands of small long tail sellers, the platform is showing early signs of some sales consolidation among the leading brands – a trend not entirely unexpected as the platform matures over time. Our latest data for the second quarter shows that some top sellers have already reached significant sales volume.
These category winners define a useful ‘high water mark’ for what commercial scale brands can aspire to reach on TikTok Shop in Indonesia in 2023. Read on to learn more!
TikTok Shop’s largest categories, fashion and beauty, are also home to the biggest seller accounts
Fashion and beauty are the two largest categories on TikTok Shop, taking up more than two-thirds of the total channel GMV in Indonesia. Unsurprisingly, these are also the categories where we find the largest individual seller accounts.
This is especially true in the beauty category, where the top seller accounts generated sales of more than 5mn USD during the second quarter and are well on their way to crossing the 20mn USD mark in 2023. Even more impressively, most of these top selling accounts have grown their second quarter sales more than 5x since Q2 2022, with some clocking growth of more than 20x.
There are more than 100 ‘million-dollar sellers’ on TikTok Shop in Indonesia, and almost all are local
Even outside fashion and beauty, in nascent categories like home & office, food & beverage (incl. FMCG), and electronics, we find plenty of examples of fast-growing sellers with sizable volume in the first and second quarter of 2023.
Here are some examples of the product types where we see seller accounts that will likely reach one million USD in NMV in 2023:
- Home & Living: Kitchenware, textiles
- Food & Beverage: Packaged snacks, sambal
- Electronics: Water filters, mobile gadget accessories
Common for the top sellers across categories is that the vast majority of them are official brand accounts and that almost all are local brands, rather than well-known international brands. We ascribe that trend more to local brands’ first-mover advantage, and in many cases their lower prices, than an inherent consumer preference for local brands.
Conclusion: What’s a brand to do?
TikTok Shop is still a young and volatile e-commerce channel, but the emergence of multi-million dollar brands in several categories is an encouraging sign for brands who are investing in the channel or considering entering this year.
From our recent work, TikTok Shop is often the least profitable e-commerce channel at low scale due to the high fixed costs (e.g., live streaming and short-form video production), but can become one of the most profitable at higher sales levels because the variable selling costs (e.g., platform fees and advertising) are commensurately lower.
These nuances must be included in go-to-market and channel planning in order to show the true challenges and opportunities of selling on this exciting new channel.