Many winners in TikTok-Tokopedia tie-up, but Shopee’s not one of them

In The Checkout this week, we take a look at what a TikTok-Tokopedia deal could look like and Shein’s road to a public listing in the US. [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: - What a [TikTok-Tokopedia tie-up]( could mean for Shopee - Shein’s uphill climb to an IPO - Whether AI bots [could replace human livestreamers]( --------------------------------------------------------------- Hello {NAME} TikTok is a gift that keeps on giving. In October, Indonesia prohibited ecommerce transactions on social media platforms. This triggered TikTok Shop’s shutdown in the country, but just two months after the ban, the app appears to be bouncing back. While rumors have swirled about potential tie-ups with local ecommerce firms including BliBli and Bukalapak, TikTok’s deal with Tokopedia - still subject to approval from regulators - is its most definitive pact yet. For Tokopedia, such an agreement eliminates competition from a former rival. As its ByteDance-owned competitor chipped away at its market share, Tokopedia remained [conservative]( instead of going all in with livestreaming like Southeast Asian giant Shopee. That wait-and-see approach paid off when TikTok Shop ceased operations in October, and it could work well for Tokopedia again. With details of the new agreement still up in the air, my colleague Jofie discusses what a partnership between the two companies could look like in this week’s Big Story. Another ecommerce player, Shein, is eyeing a public listing in the US by as early as 2024. The ultra-fast fashion firm may be headquartered in Singapore, but it can’t hide its Chinese roots. Its origins have made it the target of both US lawmakers and the Securities and Exchange Commission, and this scrutiny is just one of the challenges that Shein faces as it heads toward a stock market debut. I examine the company’s IPO journey in this week’s Hot Take. -- Melissa  --------------------------------------------------------------- THE BIG STORY [Is the potential TikTok Shop-Tokopedia deal just a strategic stopgap?]( This could allow TikTok Shop to reenter Indonesia and bolster Tokopedia’s ecommerce strategy. But would it be enough to break Shopee’s dominance?  ---------------------------------------------------------------  THE HOT TAKE Hurdles aplenty on Shein’s road to IPO Here’s what happened: - Last week, Shein [confidentially filed]( for a public offering in the US. - It could get listed by as early as 2024. - While Shein’s valuation at IPO hasn’t been finalized, the company could become one of the highest-valued China-founded companies to go public in the US. Here’s our take: Shein, the ultra-fast fashion juggernaut once valued at US$100 billion, is inching towards its long-rumored IPO. As a prelude to its listing, the firm has made significant efforts to improve its patchy environmental, social, and governance (ESG) record. It has been accused of ripping off the work of independent designers, employing forced labor in Xinjiang, and contributing to landfills with its ultra-cheap, trendy clothing that many toss out after a few wears, among other claims. In the US, Shein is in the middle of an [investigation]( by two congressional committees into its labor practices and alleged use of a loophole that allows its products to enter the US tariff-free. But the firm says it has done some good too via initiatives like [Shein X]( a program offering designers access to its on-demand model, marketing support, and opportunities to grow their reach. According to Shein, it has collaborated with close to 3,000 designers from more than 20 countries via the program since 2021. In September, the company [donated S$8.6 million]( (US$6.4 million) to “advancing opportunities for education” in Singapore, where it is headquartered. This year alone, it has pledged US$155 million for ESG under its evoluShein project. Shein also made new [prominent hires]( to head up its logistics operations in the US and changed its shipping strategy. While it typically ships its products from China directly to US customers, it has started [doing so in bulk]( to US warehouses - a process that incurs tariffs. The goods are then dispatched to US customers. But tides and public perceptions can be hard to change. Some of Shein’s efforts, including a media trip organized for a group of social media influencers to Guangzhou, drew flak for glossing over the working conditions at one of its factories. See also: [Why SEA should watch out for Shein’s top rival Temu]( Despite those headwinds, Shein is going full steam ahead. This year, the company opened its marketplace to third-party sellers in Brazil and the US, and built out its warehousing and manufacturing capabilities in Europe, the US, and Latin America. In August, Shein acquired a third of Forever 21’s parent company in a deal that could boost its offline footprint in US malls. As of November, over 300 Forever 21 pieces are available on Shein’s website, with a second drop planned for January 2024. Two months after the Forever 21 deal, Shein snapped up UK-based brand Missguided. The companies are planning to sell Missguided products on Shein’s sites. Collectively, these efforts are expected to rake in close to US$5 billion in additional revenue by 2025, taking Shein’s total revenue to US$58.5 billion, according to a [report]( by The Information. The scale that Shein has achieved in its largest markets may - ironically - limit its ability to grow further. That, combined with an industry-wide slowdown in ecommerce, has led to revenue growth slowing to 37% between 2021 and 2022 compared to 140% in the preceding period, the same [report]( showed. To add to that, not all of Shein’s recent initiatives have fully panned out. A goal to ship 20% and higher of its sales in Europe from its new facilities in Turkey by the end of 2024, for instance, has so far fallen short of its target. With PDD Holdings’ Temu also on the ascent in the US - one of Shein’s key markets - the going will only get tougher for Shein.  ---------------------------------------------------------------  NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the ecommerce scene [here](. 1️⃣ [Amazon targets Shein with big fee cuts for cheap apparel sellers]( The US ecommerce giant has sharply reduced fees for merchants selling clothes priced below US$20, as it competes with Shein in the low-value apparel category. 2️⃣ [Blibli’s gross profit climbs 59% in Q3, EBITDA loss narrows 28%]( The Indonesian ecommerce firm attributes the increase in gross profit to a better product mix in its B2C sales segment. 3️⃣ [Alibaba stock downgraded, loses top ecommerce spot to PDD]( Morgan Stanley downgraded Alibaba’s American depositary receipts from overweight to equal-weight and lowered its price target from US$110 to US$90, citing uncertainty stemming from a reversal of the Chinese company’s plan to spin off its cloud business. 4️⃣ [TikTok did not file for ecommerce permit, Indonesian trade minister says]( Zulkifli Hasan’s statement comes after his deputy, Jerry Sambuaga, said the short-video platform is in the process of obtaining an ecommerce permit from the government. 5️⃣ [Meituan confirms not buying Foodpanda, Grab’s shares may stabilize]( At an investor conference, the China-based food delivery firm said said it was not interested in buying Foodpanda.  ---------------------------------------------------------------  FYI 1️⃣ [Can AI bots shake up SEA’s thriving livestreaming industry?]( The region’s e-retailers are expected to adopt AI-controlled deepfake bots for live commerce in 2024. 2️⃣ [Mapping Indonesia’s key logistics players and ecommerce enablers amid slowdown]( Funding for both sectors continues to decline from its peak in 2021 amid sluggish ecommerce growth after the pandemic. --------------------------------------------------------------- That’s it for this edition - we hope you liked it! 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