Only 16% of Singaporeans shop on social media: Can TikTok Shop break through?

In a short span of time, TikTok has completely won the globe over with its highly specific algorithm, entertaining and educational content and addictive trends. However, as of late, TikTok has been working to compete with its social media counterparts with the introduction of TikTok Shop.

TikTok Shop is the social media giant's answer to the fact that social media has begun driving shopping trends and is also a direct competitor of Instagram Shop. However, while the app has been strongly promoting products such as portable chargers, beauty blenders and more, the uptake continues to remain low. 

In a study done by market research and data analytics company Milieu Insight, it was found that while 61% of Gen Zs are aware of TikTok shop, only 20% have shopped on it and only 11% have made an actual purchase. 

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However, it is key to note that generally, very few consumers in Singapore turn to social media for shopping across TikTok Shop, Facebook Marketplace and Instagram Shop and that only 16% have shopped on either one of these platforms in the past six months, according to Milieu Insight.

Saying that, there is immense potential on TikTok Shop considering its user base and highly personalised algorithm. Across the border, TikTok Shop has been gaining traction since it launched in March last year in Malaysia. 

In a recent regional survey, The TikTok Effect: Accelerating Southeast Asia's Businesses, Education and Community Report, SMBs reported increased revenues of nearly 50% by using TikTok to sell their products and services. It was also found that close to four in five businesses (79%) transitioned from offline to online marketing channels using the platform. In addition to that, more than 80% of TikTok creators polled boosted their incomes through avenues such as TikTok LIVE and brand sponsorships.

While this is a good start for TikTok shop, the numbers have yet to confirm if it will actually succeed in the region or if it will be an equal flop like its Instagram counterpart which recently revamped its navigation bar once again and made a strategic, and possibly significant decision by removing its shopping tab from the main bar at the bottom of its screen. The Reels tab replaced the shop tab at that point. 

While this may seem new, Instagram actually began testing out a main feed without the shopping button from September last year when it attempted to simplify the user experience. The test was part of a larger pivot away from its shopping features, according to an internal memo seen by The Information. Saying that, shopping is still part of the app. It simply will no longer have a prominent spot on the home feed.

“You will still be able to set up and run your shop on Instagram as we continue to invest in shopping experiences that provide the most value for people and businesses across feed, stories, reels, ads and more,” Instagram said on its support page.

So, will TikTok be an equal flop or could TikTok's stellar business and marketing strategy prevail? MARKETING-INTERACTIVE spoke to industry players to find out more.

Shoppertainment done right

For a start, it is important to note that people do not deliberately turn to social media for shopping and so it's success largely lies in how little TikTok makes it feel like a shopping experience, according to Timothy Chan, the executive creative director at GOVT.

He said:

The content does not feel like an intrusive ad, and although the term 'shoppertainment' is slightly cringy, when done right, it's a great draw for impulsive buys. 

He added that while he is sure that TikTok shop's success boils down to a lot of factors, a big factor is that it has managed to own live streaming to some success. 

"It's pretty ironic if you think about it – a seller standing on a soap box hawking his or her wares is the oldest form of selling. And now anyone can do it. It goes back to shoppertainment, and live streaming does sell," said Chan. 

He added that he believes that TikTok shop has been popular mainly because TikTok has continued to be popular and that it "shows no signs of being just a flash in a pan".

"Plus, because TikTok is predominantly used by a younger demographic, it is safe to say that they are more open to shopping directly from a social platform, compared to the older generation. And you can't discount the obvious – TikTok has pumped a whole lot of money into making it a success too," he said. 

True enough, TikTok has pumped a lot of effort and money into pushing TikTok shop in SEA. In June this year, Bloomberg reported that TikTok has plans to significantly increase the size of its global eCommerce business to about U$20 billion in merchandise sales in 2023. It reportedly was banking on rapid growth in the Southeast Asia region.

The allure of influencers

Additionally, on the vein of shoppertainment, TikTok has been able to attract influencers onto its platform very well which helps it with increasing sales, according to Ranganathan Somanathan, the co-founder of RSquared Global Ventures. This means that there is a higher chance for interaction and purchases. 

"Multiple reports suggest that the engagement rate for micro influencers on TikTok is four to five times more than though stories or reels on Instagram or Facebook. TikTok's ability to garner users, get them to spend more time on its platform has given TikTok a strong position to capitalise on the commerce opportunity," he said. 

True enough, Milieu Insight found that TikTok content creators play a key role in the discovery of new products with nearly six in 10 (58%) of TikTok shoppers saying that they have discovered new products through content creators, influencers and celebrities followed by 52% for livestreaming events. 

Adding on, Oddie Randa, the managing director, Asia Pacific and China of Gushcloud International explained that people want to buy from someone they trust, and that they believe in. They want to purchase a particular product from an influencer that has tried and tested the product and is willing to give it a positive review, he said, adding:

This exchange then becomes much more immediate, transparent, and shareable. 

He explained that because of this, TikTok and TikTok Shop seem more "fun, current, instant, and comprehensive." He added that TikTok Shop's products also are typically more affordable and have mass market appeal. "Their products do not intimidate the younger consumers who dominate the online population, and who have a limited amount of money to spend," he said. 

"Additionally, their short form video reviews also provide a feel of product usage that isn’t always present in other social media shops," he said, referencing the way influencers on the app sell by filming reviews and testing out the product on camera. 

He said:

Wherever people go to for entertainment is always going to be a good place to sell. In today’s generation, that place is TikTok, and that shopping market is TikTok Shop.

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