TikTok E-commerce Is Facing A Reshuffle. How Can Foreign Traders Going To Southeast Asia Save Themselves?

In the past year, TikTok e-commerce has achieved great success in the Southeast Asian market. However, the introduction of Indonesia's new e-commerce regulations "Regulations" has caused problems for TikTok e-commerce. Despite this, B2B trade between Southeast Asia and China is still booming, and Alibaba International Station has become the first choice for more and more overseas merchants.

With TikTok Shop being banned in Indonesia, merchants began to look for new markets and channels, and Alibaba International Station provided them with the stable and long-term business opportunities they needed. Alibaba International Station has released a support measure called "Plan S" to provide support to merchants and become a safe haven for them.

For merchants, choosing Alibaba International Station as a sales channel means obtaining a stable market and long-term business opportunities. In this unstable period, merchants need to find new ways to survive, and the B2B market and Alibaba International Station provide them with viable options. This will not only help merchants tide over difficulties, but also allow them to expand into a broader international market.

In general, TikTok e-commerce is facing a reshuffle, but Alibaba International Station, as a safe haven for overseas merchants, provides merchants with a stable market and opportunities. Merchants need to actively explore new sales channels, and the B2B market and Alibaba International Station are good choices for their development.

TiKTok fails in Indonesia

“On a plane we went to Indonesia in April, half of them were Chinese. Among the half of the Chinese, half wanted to do TikTok and went to inspect it.” You Yu, CEO of Qianxing Intelligence, told Yilan Business.

According to Zhou Shouzi’s disclosure at the forum, as of June this year, TikTok’s monthly active users in Southeast Asia have exceeded 325 million, covering almost half of the population in the region, of which 125 million are from Indonesia, accounting for 45% of Indonesia’s population. A previous internal letter from Kang Zeyu, head of TikTok e-commerce, revealed that TikTok Shop Indonesia has served 80 million Indonesian users in the past two years.

Such a huge e-commerce market has been banned, and merchants who have bet on TikTok for Indonesia's overseas business have suffered a blow. From the announcement of the policy on September 26 to the official shutdown on October 4, Indonesia gave merchants less than 10 days.

Yilan Business believes that the ban of TikTok shop in Indonesia is not so much a local targeted measure as an inevitable result.

On the one hand, the social media + e-commerce model works well in China, but it has always been controversial abroad.

Take Tik Tok as an example. In February this year, the U.S. and Canadian governments successively announced a ban on the use of Tik Tok on government equipment. At the subsequent U.S. Congressional hearing in March, TikTok CEO Zhou Suizi made the decision within five hours. Respond to questions about security issues that U.S. lawmakers are concerned about. Data privacy, content moderation and other related topics have always been a difficult hurdle for TikTok.

On the other hand, Tik Tok’s huge traffic has had an impact on its local e-commerce.

According to previous reports by China Business News, Indonesian officials have repeatedly stated that e-commerce sellers using predatory pricing on social media platforms are threatening Indonesia’s offline market. Indonesian Deputy Minister of Trade Jerry Sambuaga spoke in parliament. In his speech, the phenomenon of using the live broadcast function to sell goods on TikTok was used as an example to illustrate this.

It is worth noting that among the regulations promulgated by Indonesia this time, there is an article that "Indonesian e-commerce platforms set a minimum price of US$100 for goods purchased directly from abroad, and imported goods sold in Indonesia need to comply with local whitelist standards. .” This law explains what Indonesian officials call “predatory pricing.” Generally speaking, the existence of a large number of low-price merchants on TiKTok has affected Indonesia’s local e-commerce business. From the government’s perspective, it is natural to ban them.

In fact, Indonesia's ban is only the beginning of the obstacles for TikTok e-commerce in the Southeast Asian market. Following Indonesia, Vietnam, the Philippines, and Malaysia have successively launched comprehensive investigations into TikTok’s local business. Mandatory pricing, user privacy security, and the impact of the advertising business on local media have all become topics criticized by Southeast Asian governments.

According to Hugo Cross-Border Report, in this crisis, TikTok single-channel sellers were most affected by the closure of Indonesian TikTok Shop stores. Low price reduction promotions on the site, contacting offline channels or service providers to clear inventory have become their few options. s Choice. Some companies that only operate TikTok SaaS and overseas warehouses have also been deeply affected. Some merchants with heavy warehouses have a large amount of inventory accumulation that cannot be solved in a short time, resulting in huge losses.

At this point, some senior foreign trade people put forward the suggestion that "B2C should not engage in price wars, but B2B should also start doing so at the same time." It is easy to understand that B2C does not engage in price wars. The bottom line of US$100 also makes price wars impossible. So, is it feasible at the operational level for B2C merchants to simultaneously deploy or return to B2B?

Is it possible to switch to B2B?

In the eyes of some foreign traders, B2B business has a lower threshold than B2C.

"The core of doing B2B business is to convince the purchaser with our products. If we can handle this aspect, it will actually be more than half successful. But for C-side business, you have to make the product competitive enough and be good at playing. When changing the platform policy, grasp the characteristics of the platform, and also consider branding. For some businesses that have been around for decades, branding may be a relatively new thing." Wang Bowen, CEO of Zhejiang Maibo Industrial Co., Ltd., told Yilan Business.

Industry insiders believe that B2C merchants face users directly and are better at providing services, while B2B merchants generally focus on subdivided vertical fields. But this is not a conflict. On the contrary, the advantage of B2C merchants with many categories provides them with more choices, and they have also done business through B2B export channels such as Alibaba International Station.

In Cheng Zhen's view, if there are no problems with the B2C sellers' own products, then as long as they are familiar with and master the customer acquisition rules of the B2B platform, returning to B2B business can be regarded as a "dimensionality reduction blow."

It depends on the operability of B2C merchants in returning to B2B. What needs to be considered are policies and specific implementation issues.

First of all, B2B is the most basic economic and trade exchange between countries, and it is also the largest form of trade. In particular, Southeast Asian countries and China and other regional countries have signed a number of international multilateral free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP), which have become the cornerstone and guarantee for the continued deepening and development of B2B trade exchanges.

This is because the B2B format often promotes the local real economy, which is equivalent to "making the cake bigger." The B2C model relying on social media e-commerce has seized a large amount of local e-commerce traffic, which is equivalent to "stealing someone else's cake."

Secondly, the reason why TikTok Shop was banned this time is that social media e-commerce is not recognized by the Indonesian government. Some B-side merchants told Yilan Business that before TikTok e-commerce became popular, most social media e-commerce companies would choose Google and Meta, which were also sued this time.

Due to the social nature of the social media platform itself, users tend to be more consumer-oriented. Brand retailing may be effective, but the cost of accurately identifying wholesale purchasing users is very high. Therefore, B-side companies will not give priority to social media when doing business, and changes in the Southeast Asian e-commerce market will not affect them.

Finally, as Cheng Zhen said, B2C merchants often have the advantage of having many categories, providing them with more choices. The B2B market still has huge potential in Southeast Asia, especially in cross-border trade and supply chain cooperation. Therefore, it is reasonable for some merchants to consider returning to B2B to seek more stable and sustainable business development opportunities.

Even if they want to consider doing B-side business, for merchants affected by TikTok's closure, the top priority is to find suitable channels to receive traffic. It is worth noting that just yesterday, Alibaba International Station released “Plan S” to provide new solutions for Southeast Asian sellers.

A safe haven for Chinese sellers

As early as September 14, Alibaba International Station announced the launch of "nationalized" operations. Help Chinese sellers to operate their own market more accurately and find more precise customers.

Among them, investment promotion for the B2B market in Southeast Asia has begun recently. Qin Fen, head of the industry and merchant business department of Alibaba International Station, revealed: "In just the past two weeks, more than 5,000 industrial and trade domestic trade merchants have appeared on the platform. Enter and seize the Southeast Asian market.”

Cheng Zhen told Yilan Business that in fact, since the end of last year, the company has discovered through the data consultant on the Alibaba International website that consumption in the Southeast Asian market is on the rise, and has increased advertising in this market. Over the past year, business opportunities have increased by 220% year-on-year, and customers have increased by 50%.

As the first platform for B2B exports, at this node, Alibaba International Station has captured the needs of a large number of Southeast Asian sellers to handle traffic. This round of emergency support measures is called "S Plan". The relevant person in charge of Alibaba International Station said that S stands for "Shield" and "Sure" hope to provide a safe haven and more certainty for cross-border sellers.

Specifically, relevant measures include: one-click moving of goods, comprehensively simplifying the store opening process for merchants so that they can resume operations as soon as possible and avoid losses; providing traffic support ranging from 3 to 6 months to merchants that meet different requirements; taking into account the Southeast Asian market conditions , helping merchants customize export plans through dedicated support plans; providing "worry-free accompanying" services for newly opened stores with full guidance from dedicated personnel.

It is reported that Alibaba International Station has conducted directional traceability for 12 million local retailers, manufacturers, factories, and engineering companies in Southeast Asia, attracting more professional buyers in Southeast Asia to enter the platform, and achieving more accurate order matching between buyers and sellers.

Obviously, Alibaba International Station is fully prepared for this possible B2B return wave. So, can Alibaba International Station serve as a suitable "safe haven" for merchants?

At least for now, yes.

After experiencing the turmoil in Southeast Asia, for merchants, channel stability and compliance are the top priorities. At this level, Alibaba International Station, which has a history of more than 20 years, has its own risk-resisting advantages. According to Alibaba Group's 2023 fiscal year report, Alibaba International Station has served more than 47 million small and medium-sized enterprises in more than 190 countries and regions around the world.

At the same time, no matter which channel you choose, it is unrealistic to place any hope on short-term profits, and you need to consider longer-term business. Therefore, choosing channels with forward-looking attributes means more profit possibilities for merchants. In recent years, the iteration of Alibaba International Station for digital traders is obvious to all. Digital consultants bring intuitive data reference to merchants, and the live broadcast of Qidian's work stations provides real scenarios. Only by establishing digital channels can merchants efficiently match supply and demand.

In any case, the most taboo thing in business is "putting eggs in one basket". Sellers who rely on a single channel often lose the possibility of a “Plan B”. Building an independent website requires building brand strength, social media platform risks are difficult to control, and the long-term feasibility of a Temu-like full hosting model will take time to prove. For B2C merchants, whether to find a new survival path based on their own product attributes is an issue that needs to be considered at the moment.