Since the beginning of this year, the popularity of Southeast Asia has not diminished. According to Baidu Index, the Southeast Asia Information Index reached 8,371,516 on August 23 this year, the highest peak in the past year.

Source: Baidu Index

Among them, in the field of cross-border e-commerce, relevant institutions predict that the size of the Southeast Asian e-commerce market may reach US$234 billion in 2025. A Bloomberg report in June this year pointed out that TikTok plans to reach US$20 billion in global e-commerce business GMV this year. Southeast Asia will become TikTokShop’s largest market outside the United States.

Source: Orient Securities

The geographical location close to China, similar cultural formulations, and the replicability of domestic short video and live broadcast delivery models have also led many MCN institutions and individual sellers to consider TikTok Southeast Asia cross-border e-commerce as the first stop for overseas expansion.

There is a serious shortage of talents in small-language languages ​​in China, and it is difficult to operate localized operations abroad.

"When operating TikTok in the domestic market, it HE Tuber is too difficult to recruit talents with small languages ​​in Southeast Asia. Even if you are given a monthly salary of more than 25,000, you still cannot recruit suitable anchors." Li Lu, the head of a domestic MCN organization, told DoNews.

As Li Lu said, the "One Belt, One Road" Big Data Report (2017) pointed out that there is still a situation where English is "dominated by one family" in foreign language education in my country. A survey of 423 language service agencies across the country found that companies providing Chinese-English translation services and English-Chinese translation services accounted for the highest proportions, 96.93% and 94.80% respectively. Followed by Japanese and French. Only 2.60% of companies provide "Chinese-to-foreign" and "foreign-to-Chinese" services, which is a small proportion, and there is a serious lack of service capabilities in small languages.

More importantly, unlike China, where Mandarin is the official language, Southeast Asia is actually an extremely fragmented market. There are currently at least 13 official languages ​​in six Southeast Asian countries, not including dialects and minority regional languages. This leads to the contradiction that even if some practitioners want to learn these small languages, they don’t know where to start.

In the context of the shortage of talents in minority languages, the multi-faceted talents required to operate TikTok make this situation even worse. Live streaming requires practitioners to have strong oral skills in small languages ​​​​and the ability to interact in the live broadcast room.

Language barriers force TikTok sellers operating in the domestic market to passively adjust their operating strategies.

TikTok seller Zhang Qi said that during TikTok’s live broadcast in Southeast Asia, the company had previously found talents in small languages ​​to record and broadcast the content in the live broadcast room in advance. However, after being warned by the official, the entire store's weight was directly restricted, and the number of visitors and conversion rate plummeted.

The same situation also occurs in video creation. Recreating short videos that have exploded on domestic short video platforms is a video strategy currently adopted by many TikTok sellers. In addition to being easily restricted by the official website, this kind of video also has a high risk of account suspension.

Moreover, in the current Southeast Asian market, the actual contradiction between the number of fans of anchors and their ability to bring goods is not proportional, which also determines that even if TikTok players can increase the number of fans on a single account, it is still unknown how much revenue they can bring from selling goods.

Take the Indonesian market as an example. Although Indonesian Internet celebrity @louissescarlettFamily has more than 6 million fans, according to industry insiders, her ceiling is only around US$200,000 in monthly orders.

Data.ai data also shows that during the "Eid al-Fitr" promotion period in Indonesia, TikTok not only increased its orders by 493%, but its GMV increased by 92%. In 2022, TikTok's average monthly GMV in Indonesia reached US$200 million, but this figure is still lower than the single-game sales data of domestic leading anchors represented by Li Jiaqi and Xiao Yang.

The reason for this situation is that Southeast Asia currently lacks the soil for experts to bring goods and cultivate e-commerce development. The reason why the penetration rate of live streaming e-commerce in my country has developed rapidly in recent years is that before the outbreak of live streaming e-commerce, various e-commerce models such as traditional shelf e-commerce, 020, and community group buying e-commerce have completed educating consumers. Live streaming e-commerce essentially just innovates the gameplay of traditional shelf e-commerce, but it does not change much in the supply chain, transaction, and after-sales aspects of the entire e-commerce.

Based on this, head anchors can use their price advantage or video content advantage to complete the aggregation of a large number of fans while constantly building fans' trust in them, which will eventually feed back into the live broadcast sales data. However, e-commerce in Southeast Asia will only really start after 2020. With low e-commerce penetration, people will naturally be unable to accept various emerging e-commerce models.

Source: CMB International

In order to cope with the shortage of talents in small languages ​​​​in China, many TikTok sellers have chosen to go to Southeast Asia for localized operations. But even so, these sellers still have many problems to solve.

First, authorities in Southeast Asian countries are constantly adjusting their policies. Still taking the Indonesian market as an example, on July 28 this year, Indonesian Trade Minister Zulkifli Hassan said that Indonesia will restrict the online sales of imported goods priced below US$100, and imported goods will also need to obtain a supplementary license. That is Indonesian National Standard (SNI). This means that it has become impossible for sellers to rely on China's supply chain and production capacity to produce low-priced goods for sale on Indonesian e-commerce platforms.

Second, during the project start-up stage, entrepreneurs must have a clear enough insight into the market conditions, talent systems, laws and regulations, and business environment of the country in which they operate.

Since the development of domestic live streaming e-commerce, "rolling" has become the norm in the entire industry. On the Douyin platform, the 24/7 live broadcast room can be viewed almost at any time.

Because in the past few years, leading anchors including Li Ziqi and Lang Weixian have had constant conflicts with the MCN organization behind them. In order to prevent this situation from happening again, many domestic MCN organizations have imposed restrictions on anchors through sky-high compensation. However, since live streaming in Southeast Asia is still in its infancy, there are also many challenges in the management of influencers. Contracts are not very binding for local experts: it is extremely common in Southeast Asian goods delivery circles to not be able to find the person after receiving the order, to cheat on samples, and to have delivery periods as long as 2 months.

Looking at it more deeply, except for the founders of SHEIN, Jitu and other companies who are Chinese entrepreneurs, it is almost difficult to see domestic entrepreneurs among the unicorn companies in Southeast Asia. This also shows that domestic entrepreneurs want to truly do a good job in Southeast Asia. Localized operations are not easy either.

The unit price acceptable to Southeast Asian e-commerce users is very low. The unit price of RMB 25 has almost reached the ceiling that local e-commerce users can accept. TikTok seller Li Wei said to us helplessly.

As Li Wei said, CITIC Securities data shows that the unit price of TikTok in Indonesia, Malaysia, Thailand, and Vietnam is US$2-5, US$4-7, US$2-3, and US$2-4 respectively. TiChoo data shows that the average price per customer of TikTok stores in Indonesia is US$2-4, that of stores in Thailand, Malaysia, and Vietnam is US$4-6, while that of stores in the Philippines is only US$1-2.

Source: CITIC Securities

Although lower unit price per customer has a boosting effect on increasing the penetration rate of e-commerce, domestic Pinduoduo also uses low unit price to promote the increase in e-commerce penetration rate for users in lower-tier markets.

But in essence, the reason why Pinduoduo sellers can accept the platform's low-price gameplay is because they are attracted by Pinduoduo's large user base, which in turn brings the possibility of huge orders. But Pinduoduo’s gameplay cannot be directly reused on TikTok.

According to the "2022 TikTok Ecological Development White Paper", among the TOP20 live broadcasts in Southeast Asia in 2022, 85% of the main categories will be beauty and personal care products, and shoes and boots, mobile phones & digital, and home daily necessities will each account for 5%.

However, based on the unit price of US$3 (approximately RMB 21), if the TikTok seller chooses to ship from China, deduct the current price of international postal parcels of about 10 yuan, and the commission rate of overseas anchors who live broadcast the goods must not be less than 15%. , related raw material costs, after-sales costs, anchor costs, investment costs, etc., even if Yiwu merchants already have supply chain advantages in home daily necessities, their actual profits are extremely meager. If peers in a certain category launch a price war again, the possibility of negative net profits cannot be ruled out.

More importantly, on the one hand, both TikTok and Douyin currently use the byte algorithm mechanism. Whether sellers can use short videos and live broadcast rooms to generate sales is highly random, and this randomness cannot cover up daily TikTok Actual costs incurred in operations. On the other hand, Li Wei found in many live broadcasts that although the click-through rate of products in the live broadcast room can sometimes reach more than 50%, the final paid order is less than 2%.

The reasons for the above situation are not only related to the fact that consumers in Southeast Asia are currently not interested in the live streaming delivery model as mentioned above, but are also related to the habits of consumers in Southeast Asia and the traffic mechanism of TikTok.

First of all, online payment serves as the foundation for the development of e-commerce. However, because most consumers in Southeast Asia lack trust in online payments, they prefer cash payments. Bain Consulting data shows that nearly 60% of consumers in Southeast Asia still prefer cash payments in 2021.

Secondly, among the six Southeast Asian countries, except for Singapore, which has a relatively high level of economic development, the remaining five countries have limited per capita disposable income. Vietnam's per capita disposable income of urban residents in 2020 was US$487 (approximately RMB 3,556). Relatively low incomes have also led to Southeast Asian consumers currently being keen to compare prices on different e-commerce platforms when shopping.

However, Southeast Asia’s local e-commerce platform Shopee and Alibaba-invested Lazada account for almost 75% of the entire Southeast Asia e-commerce market share. Moreover, the cost for domestic cross-border e-commerce sellers to operate traditional shelf e-commerce in Southeast Asia is lower than the cost to operate TikTok. This results in the price advantage of the two platforms compared to TikTok.

Finally, because TikTok is a global APP, IP instability often occurs due to the need for scientific Internet access. Passed to the live broadcast room, the target country may be Vietnam, but the end user may be from Indonesia. When language cannot be communicated smoothly, the problem of empty traffic and no conversion will naturally arise.