Is Brazil’s Shopee’s new hope?

In The Checkout this week, we look at Shopee's successful Brazil foray and how TikTok Shop can take over Southeast Asia’s live commerce scene. [Read from your browser]( The Checkout 🛒 --------------------------------------------------------------- Welcome to The Checkout! Delivered every Thursday, 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](. Written by Jofie Yordan Journalist Hello {NAME} I've seen a lot of startups looking to expand beyond their home base. Some have succeeded, but many have failed. Challenges abound: When startups want to enter new regions, they face different market conditions as well as consumer characteristics and behavior. Shopee, for instance, has had to reverse its expansion efforts in Poland, France, India, and Spain as well as four Latin American countries. However, one new market has been an exception: Brazil. Shopee's performance there has been strong, and the Latin American country may become a new growth engine for the Southeast Asian ecommerce firm. In this week's Big Story, my colleague Simon examines how Shopee is thriving in Brazil and what lies ahead for the company there. Continuing the Shopee theme, I discuss the possibility that TikTok Shop could dominate the live commerce market in Southeast Asia in this week’s Hot Take. With rapid growth and a young base of users, could TikTok lead the segment in the region? -- Jofie  --------------------------------------------------------------- THE BIG STORY [Shopee’s success in Brazil justifies global expansion]( The strong performance of the ecommerce firm’s Brazil business could serve as the foundation for its next chapter of growth.  ---------------------------------------------------------------  THE HOT TAKE Can TikTok take over Southeast Asia’s live commerce scene? Here’s what happened: - Shopee is the [most preferred liveselling platform]( among Ninja Van's ecommerce sellers in 2022, followed by Facebook and TikTok. - TikTok is experiencing rapid growth, even though it has just entered the live commerce segment through TikTok Shop. - TikTok Shop's gross merchandise value (GMV) in Southeast Asia [reached US$4.4 billion]( in 2022. Here’s our take: TikTok Shop posted a GMV of US$4.4 billion in 2022, but that’s still far behind Shopee’s [US$19.1 billion GMV]( in just the third quarter of the same year. Yet TikTok Shop is growing quickly, with its GMV up 363% from [US$951 million]( in 2021. Moreover, the service is a relative newcomer in the region - after entering Indonesia that same year, TikTok Shop expanded to Thailand, Vietnam, Malaysia, Philippines, and Singapore in 2022. There are several factors driving TikTok Shop's growth, including the number of its monthly active users (MAUs), which continues to rise. According to third-party estimates, TikTok’s MAUs in Southeast Asia even surpassed Instagram’s in December. TikTok Shop is also riding the wave of live shopping in the region, where sales last year were expected to increase by more than 10x to US$13 billion, according to a research report by [Cube Asia](. The platform offers relatively cheap products and free shipping. This might be the key factor driving its traffic, especially when heavyweights such as Shopee are going in the opposite direction. To pursue profitability, Shopee has been taking cost-cutting measures such as reducing shipping subsidies, which means less free shipping on the platform. TikTok, however, needs to burn lots of cash to keep this strategy afloat. As the world grapples with uncertain macroeconomic conditions, how long can it sustain this approach? In November, the [Financial Times]( reported that TikTok adjusted its 2022 global revenue target to US$10 billion after cutting US$2 billion from the original amount. Social media giant Instagram seems to be pulling back from ecommerce after announcing plans to [remove the shopping tab]( from its home feed. This may create more opportunities for TikTok to consolidate its position in the market. See also: [TikTok Shop has set SEA on fire within months]( Compared to ecommerce-focused players, TikTok Shop has a limited variety of products and its delivery options are not as flexible. For example, instant or same-day delivery are not available on the platform. However, TikTok will benefit from several tailwinds. According to a report from [Meta and Bain & Company]( videos on social media have become one of the top channels for people to discover products. With the app's legions of young users and status as the pioneer of livestreaming videos, TikTok Shop may lead Southeast Asia’s live commerce sector going forward. -- Jofie  ---------------------------------------------------------------  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of the ecommerce scene [here](. 1️⃣ [JD Indonesia to shutter in-house logistics ops amid exit rumors]( JDL Express Indonesia announced that it will discontinue its services by January 22. 2️⃣ [Zilingo board designates EY as provisional liquidator]( The liquidation is set to begin after the startup’s creditors, Varde Partners and Indies Capital Partners, found a new buyer that will take on some of its assets. 3️⃣ [Nykaa names ex-Godrej exec as CFO]( Effective February 3, P Ganesh will be chief financial officer at the India-based online beauty marketplace. 4️⃣ [Ex-Deliveroo execs’ food-ordering firm shutters]( Gobble is shutting its doors after operating in Singapore for about a year and a half. 5️⃣ [Carousell names Ox Street founder as head of luxury]( Gijs Verheijke will help Carousell enhance trust around product authenticity, given that “billions of dollars in luxury goods are transacted” on the platform each year. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you next week! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2023 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894