The booming of new consumer brands going global to Southeast Asia is still in its infancy. What role does content e-commerce, represented by TikTok Shop, play in the current development of consumer brands? What impact has the merger of TikTok Shop with Tokopedia, renamed ShopTokopedia, had on sellers and traffic? Is the concept of D2C brands (also known as DTC brands, which are direct-to-consumer brands) still a pseudonym in the still immature Southeast Asian market? What is the deep-seated consumer psychology behind this? Through an in-depth interview with Melina Anlin, Vice President of Investment at AC Ventures, a venture capital firm investing in Southeast Asian consumer brands, we will gain a better understanding of the current situation of consumer brands going global to Southeast Asia.
The disruption of content e-commerce: It's like being in a huge online Disneyland
"The most interesting thing is that when TikTok entered Indonesia and other Southeast Asian countries, its essence was like an online Disneyland," said Melina Anlin. Every day on the way to work, you would see Indonesians naturally opening TikTok and immersing themselves in the online amusement park world. "When people in Indonesia feel bored, the first thing they do is to open TikTok, which really is a form of entertainment." These people spend a lot of time on TikTok, and even taxi drivers waiting for orders on the side of the road are constantly scrolling through TikTok videos.
People are passing the time with short videos, and at the same time, they are unconsciously discovering and coming into contact with countless new brands every day. For these brands, whether they are local or foreign, the factories, supply chains, and investors behind them are of little significance to the wide audience of viewers - consumers care more about what the brand represents (whether it is respectable or trendy), whether its sales tactics are eye-catching, and the most important factor of all, the price. "When you shop through live streaming, there are usually special prices. Some live streamers always encourage people to sign up, and there are also a lot of electronic discount shopping coupons," Melina said.
Locals are becoming increasingly accustomed to this new form of shopping. Although they really open TikTok just for entertainment, when they discover a special price in a live video, they may make an impulse purchase that can only last for two hours.
On March 27, 2024, Indonesia's TikTok e-commerce has completed the migration of its e-commerce system and fully merged with Tokopedia, renamed as ShopTokopedia. As a result, Tokopedia has full control over the payment, user data, and merchant operation functions of the original TikTok Shop. This is the latest news about TikTok e-commerce after Indonesia's regulations on social media platforms banning direct product transactions were issued last year.
Last October, after TikTok e-commerce was restricted in Indonesia, many people thought that traffic would flow to traditional shelf e-commerce platforms such as Shopee and Lazada to some extent. But in fact, after our research and observation, "the growth of other e-commerce platforms was actually not as much as people expected." Another big seller in Southeast Asia who operates consumer brands also said that after TikTok e-commerce went through this ordeal in Indonesia, it seems to be no different from before for both sellers and buyers in terms of usage and operation.
However, there are also some sellers who have made substantial investments in the early stage who have felt that the traffic is not as good as before. But looking at the current situation, for many new consumer brands that want to enter the Southeast Asian market, investing in content e-commerce on TikTok has become an important option. "Not only in Indonesia, but globally, social media platforms such as Instagram and TikTok are fundamentally changing the way brands appear and develop. The initial cost of brand testing is very low, but the benefits may be very high," said Melina.
Lack of trust: Southeast Asian new consumption is still in its early stages of development
"Although TikTok is cutting into the social media space, traditional shelf-based e-commerce is still doing okay," a Southeast Asian e-commerce seller told Xiaguang. Melina Anlin believes that one can observe the development process of Southeast Asian consumer brands by comparing them with the US fast-moving consumer goods (FMCG) industry.
Melina Anlin used to work for Bain & Company, and the company releases a list of emerging brands (Insurgent Brands) in the US FMCG industry every year. In the current Southeast Asian market, one can observe many new consumer brands with similar characteristics to the independent emerging brands in the US.
However, the difference is that "the emerging brands in Southeast Asia are not truly D2C brands like those in the
