TikTok is getting serious about e-commerce. It launched its new TikTok Shop feature in Indonesia in mid-April, right at the start of Ramadan. In a country where marketplaces like Tokopedia and Bukalapak already command repeat patronage, TikTok Shop places products before users’ eyes in an entertaining way, blending infomercials with small-screen livestreams. The result is an enticing, up-close connection between seller and customer that is absent in most forms of e-commerce.
To drum up attention for its Shop vertical, TikTok linked up with prominent Indonesian celebrity Nagita Slavina, who has an online store on the app. Slavina and her co-presenter review items on her stream, including skincare products, face masks, and electronics, and interacts with users who leave comments and reactions. Her first livestreaming session racked up more than 1.4 million views.
Intrigued by this new feature, I bought a product through TikTok Shop. Here’s how it works: TikTok Shop is marked by a yellow shopping cart icon at the lower left of TikTok’s homepage. In an app where full-screen entertainment is the draw, TikTok Shop is easy to miss. But from there, it’s straightforward—the product checkout process is the same as any other online store, and its payment options include Ovo, Dana, bank transfers, and cash payments at Indomaret and Alfa convenience stores.
That’s where the user experience runs into hitches. I was paying with Ovo, and I had to leave TikTok’s interface and approve my payment in the Ovo app on my phone within 55 seconds of confirming the order. And the system is buggy—hours after I completed the payment, I received an “order unpaid” notification from TikTok. After firing off a question about this to the seller, it took three days for them to respond. Another day passed, and the package was shipped out.
The last problem was there were no shipping options, and I couldn’t track my package as I would after buying things from other e-commerce marketplaces. My purchase arrived in four days, delivered by J&T Express.
TikTok Shop operates like it’s still being tested. At the time of this writing, the feature still doesn’t have its own dedicated page. Livestreams can be found by typing #tiktokshop in the app’s search box. Yet, despite the drawbacks, TikTok’s in-app shopping and live commerce feature seems promising in that it combines interactive videos—which TikTok creators have mastered—and real-time interactions between sellers and consumers.
Until the end of April, TikTok Shop held a number of livestream sessions promoting products from brands and small and medium businesses (SMEs), hosted by famous content creators and influencers. TikTok also partners with JD.id, which has a flagship store on the app and also organizes livestreams to showcase the items it carries.
It is unclear how many sellers have joined TikTok Shop and whether the platform will have a page specifically for its e-commerce feature. TikTok confirmed to KrASIA that it is testing its e-commerce function in Indonesia, including live commerce. “Brands on TikTok have found a creative outlet to authentically connect with audiences, and we’re excited to experiment with new commerce opportunities that enable our community to discover and engage with what they love,” said a TikTok Indonesia spokesperson.
Converting viewers into buyers
TikTok has been on a hiring spree in Indonesia and Singapore for various e-commerce roles, including business development, content producers, and category operation managers. It also has various programs for SMEs like TikTok for Business and TikTok Shop Seller University, which offers a full suite of tools for sellers and serves as a recruitment and training hub to instill business skills centered around the video platform.
Integrated e-commerce systems in apps that have a hold on our attention are nothing new. Last year, Facebook launched a shopping page where businesses can create online stores on Facebook and Instagram for free. Meanwhile, WhatsApp for Business connects small enterprises with their customers without hassle.
Online purchases still only make up 5% of Indonesia’s total retail transactions. Every popular platform sees this as an opportunity to secure paying users who hopefully become repeat customers.
“For social media apps, the frequency and screen time of users is a benchmark in developing products. These apps have helped online sellers build brand awareness. Now that they are expanding into e-commerce, they should be able to help sellers convert that awareness into sales transactions because this is what matters most to sellers,” said Bima Laga, chairman of the Indonesian e-commerce Association (IdEA).
So far, the field is wide open. Every platform has an equal opportunity to tap into the Indonesian market. With more players streaming in, there will be more options for consumers, and sellers can expand their business presence, Laga added. But one thing makes TikTok Shop’s format (and others like it) stand out.
“Livestreaming is one of the most effective promotions for sellers because sellers can communicate directly with potential consumers,” Laga said. The directness and immediacy shared between a seller and a potential buyer is an experience that cannot be reproduced by marketplaces with infinite aisles for browsing.
Major platforms like Tokopedia, Shopee, and Lazada also have livestreaming features, but TikTok has a unique advantage in a wealth of content that yields a high engagement rate, giving the platform opportunities to turn users into buyers. TikTok users in Indonesia are very receptive to advertising, as 90% follow calls to action after viewing videos that promote products they like, according to TikTok’s own “Ramadan Insights 2021” report.
Let’s be blunt: it is easy to become hooked on TikTok. Unlike social media platforms that provide recommendations based on networks of friends and what accounts a user follows, TikTok serves up a viewing experience that often involves creators you may not have known about before. This process of discovery that intersects with a user’s interests as determined by ByteDance’s algorithms is what makes the platform stimulating enough for some people to spend hours on it each day.
In particular, TikTok’s “For You” feed delivers an endless set of content that is meant to align with an individual user’s preferences, and this is what you see when the app is launched, rather than a feed of videos from accounts that you follow. For creators, TikTok’s arrangement of content gives them exposure beyond their follower base. The reasoning behind this is TikTok’s video features are rooted in meme culture, and the clips are disseminated in often unpredictable ways.
TikTok has grown into one of the most popular apps in the world, with over 2 billion downloads on the App Store and Google Play. In Southeast Asia, the platform has racked up more than 360 million downloads, nearly half of them in Indonesia, with 151% growth year-on-year for 2020, according to data compiled by Sensor Tower.
On average, users spend 52 minutes per day on the app. With that amount of attention already captured by TikTok, it makes sense for the company to open up a new vertical in e-commerce. Anyone with a consistent set of products to sell can capitalize on TikTok’s rich and diverse content to engage a large and active audience, and maybe even build a community around their products.
Gen Z and millennials need to be on board for these developments to take place, and TikTok’s delivery of videos and livestreams match their pace and expectations. The top five online activities in Southeast Asia are social media, messaging, video streaming, gaming, and e-commerce, according to a report published by Facebook and Bain & Company.
“Indonesian consumers have a high tendency to be exposed to promos and make interactions through those activities,” IdEA’s Laga said. “There is currently no data on conversion rates from video exposure to purchase transactions. However, when users watch livestreams on e-commerce platforms, they usually have the intention of buying products.” Rolling out this feature during Ramadan, when Indonesians often engage in online shopping sprees, may have been perfect timing for TikTok Shop.