TikTok Shop: A New Way of Shopping

What is Social Commerce?

Online shopping has become more and more popular in recent years, caused by the shift in lifestyle due to Covid-19 and the ever-growing infrastructure. One online shopping trend that is also growing in tandem with e-commerce is social commerce. What differentiates them is that while customers can shop through an application specifically made for shopping in e-commerce, with social commerce people are able to shop through social media. To put it simply, social commerce is the process of buying and selling products and/or services which is done directly on social media platforms. One of the platforms that allow this is TikTok.

In the past couple of years, the short-video social media platform has been gaining even more popularity in Indonesia, proven with the fact that the platform has been downloaded over 500 million times in 2019 alone. This number has been increasing over time. One of the reasons for this is the type of entertainment that TikTok provides in the form of short videos uploaded by its users and how its algorithm is easy to learn. This makes TikTok convenient as a place for one to share their content. You don't need to have many followers to upload; as long as the content is liked by many users and is considered interesting by TikTok, that content will be able to reach a high engagement rate.

How Big is TikTok’s Growth?

The app’s ever-rising popularity is also one of the reasons for TikTok to keep developing its features, one of them being TikTok Shop. Based on a survey by Populix in 2022, TikTok Shop is the number one social commerce in Indonesia with the number of users reaching 45% of the total of all social commerce users in Indonesia. Besides TikTok Shop, 21% of the respondents also admitted to have shopped using WhatsApp, and 10% have used Instagram and Facebook to shop. Based on this data, it's proven that TikTok Shop is dominating social commerce in Indonesia, which is quite evident from how its GMV has multiplied by 18 times from August to December 2021, according to Populix’s report titled “The Social Commerce Landscape in Indonesia”.

TikTok and Shopping Habits

The fact that TikTok has changed the shopping habits of consumers can’t be ignored. Many people like to shop using the live streaming feature, also known as live shopping. TikTok Shop's live-streaming feature is noted to have defeated even Shopee and Tokopedia in Indonesia, based on a survey by Ninja Van. According to a different survey on live shopping in Indonesia conducted by Statista in October 2022, 69 percent of Indonesian respondents used TikTok to watch live shopping, followed by Instagram (20%), and Facebook (10%). Video is considered to have a critical role for users in finding and choosing a product before buying, as it provides potential consumers a clearer idea of the quality of the product.

Advantages of TikTok Shop

There are many advantages that cause consumers to switch to shop in TikTok Shop. Users are able to effortlessly shop in TikTok without having to exit the application when finding a product that they are interested in, unlike the case with many other social media. Besides that, customers can receive many promos such as free shipping and discounts. This is why TikTok Shop's engagement rate is higher than other apps, which is 17.96% per upload. From the sellers' perspective, TikTok Shop provides other benefits as well, such as an active user base that totals around 800 million users who open the app 8 times a day on average, meaning that the products are shown to tons of users and therefore the chances of a sale are increased; easy-to-learn algorithm; and the ease to expand the business's market.

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