SEA E-Commerce War: XHS, Shopee & TikTok Shop Reshape Business
What is the future of e-commerce in Southeast Asia?
Table of Contents
The gloves are off in Southeast Asia’s e-commerce arena. What began as Shopee’s comfortable dominance has evolved into a three-way battle reshaping how nearly 680 million consumers discover, engage with, and buy products. Shopee, TikTok Shop, and Xiaohongshu (XHS) aren’t just fighting for market share—they’re redefining commerce itself. This battle is not only about transactions but also about who controls consumer attention, culture, and influence in a region that is rapidly digitizing.
The Numbers That Matter
Southeast Asia’s e-commerce market surpassed US$128 billion in 2024, according to regional estimates (Google/Temasek/Bain e-Conomy SEA 2023). Projections suggest it could reach US$191–250 billion by 2030 (Statista 2024; Momentum Works 2023). While some global forecasts cite trillion-dollar figures, those numbers reflect worldwide growth—not Southeast Asia specifically. For SEA, the trajectory is steep, but context matters: growth is driven by mobile-first adoption, social media integration, and rapid fintech innovation.
Indonesia remains the heavyweight, accounting for 40–50% of the region’s GMV (Momentum Works 2023). Its market is on track to approach US$150 billion by 2030. Malaysia and Singapore are also key, serving as testing grounds for consumer adoption and platform experimentation. Thailand, Vietnam, and the Philippines, while not detailed here, also represent growing battlegrounds with their own platform dynamics and cultural nuances.
Mobile penetration is central to this surge. Smartphone usage averages 80–90% across SEA (GSMA 2023), with social media usage among the highest globally (We Are Social 2024). With over 450 million internet users in the region, e-commerce is no longer a luxury or urban trend—it’s a mainstream behavior across income levels.
Platform Wars: Who’s Winning Where
Shopee: Fighting to Keep the Crown
Shopee continues to lead with an estimated 40–50% regional market share (Momentum Works 2023). In Malaysia and Singapore, once secure territories, Shopee faces mounting pressure as consumers test alternatives. Its strengths—logistics, local payments, and a vast seller network—remain powerful assets, built over years of investment in infrastructure and trust.
However, Shopee faces two challenges. First, consumers are increasingly seeking more engaging shopping experiences rather than transactional efficiency. Second, as platform fees creep upward, sellers are testing multi-platform approaches. Shopee’s ability to evolve beyond its marketplace model into one that integrates content, loyalty programs, and creator partnerships will determine whether it maintains dominance.
TikTok Shop: The Disruptor That Actually Disrupted
TikTok Shop’s GMV surged from US$4.4 billion in 2022 to over US$16 billion in 2023 (Momentum Works 2023), making it the most talked-about disruptor in SEA retail.
- Malaysia: TikTok Shop commands 10–20% share (SCMP 2023), particularly strong in fashion, beauty, and lifestyle. Sellers who leaned into live-streaming early are seeing outsized gains, and SMEs have adopted it as a primary sales channel.
- Indonesia: With 10–15% market share, TikTok Shop’s merger with Tokopedia in late 2023 cemented its credibility (Nikkei Asia 2023). Live shopping streams are now ingrained in urban consumer behavior, blending entertainment and retail seamlessly.
- Singapore: Adoption is modest but growing (Statista 2024). Consumers are experimenting with social commerce, and SMEs are testing TikTok Shop as a channel for regional outreach.
TikTok Shop’s key innovation is that it redefined shopping as entertainment. This shift is pressuring competitors to rethink how they engage consumers beyond discounts and logistics.
XHS: The Premium Discovery Play
Xiaohongshu (XHS) is smaller but influential. Unlike Shopee or TikTok Shop, XHS is positioned as a premium lifestyle discovery platform, bridging content and commerce.
- Malaysia: 2–3 million active users (Nikkei Asia 2024). Its strongest traction comes from beauty, fashion, and lifestyle, with affluent and Chinese-speaking demographics leading adoption.
- Singapore: Functions as a trend-discovery hub (TechNode 2023). It influences brand perception more than direct sales, shaping what products become aspirational.
- Indonesia: Faces cultural and localization hurdles (Momentum Works 2024). Its premium positioning resonates with aspirational segments, but scaling requires broader cultural integration.
For businesses, XHS is less about immediate sales and more about building long-term brand equity.
The Live Commerce Revolution
Live commerce is transforming shopping habits. Surveys indicate 70%+ of consumers are more likely to buy after a live shopping event, and nearly half make impulse purchases (PwC APAC 2023). The Asia-Pacific live commerce market surpassed US$370 billion in 2024, with SEA emerging as a fast-growth engine (McKinsey 2023).
Unlike static e-commerce, live commerce introduces urgency and intimacy. Sellers engage directly, demonstrate products, answer questions, and close sales in real time. This changes product design and inventory planning, as brands increasingly develop items that can be showcased live.
Businesses that allocate 20–30% of marketing budgets to live commerce and train staff as livestream sellers are outperforming peers. Forward-looking companies treat live commerce as part entertainment studio, part sales channel. Those who adapt early are building brand loyalty and higher engagement that transactional marketplaces cannot match.
Market Reality Check: Malaysia, Singapore, Indonesia
Malaysia: The Testing Ground
With smartphone penetration above 88% (MCMC 2023), Malaysia is a fertile testbed. Shopee leads in electronics and general merchandise, TikTok Shop thrives in fashion and beauty, and XHS attracts premium shoppers. Malaysian SMEs often run parallel strategies across all three, leveraging Shopee for scale, TikTok Shop for virality, and XHS for brand positioning. Government-backed SME programs further accelerate experimentation.
Singapore: The Premium Battleground
Over 50% of online purchases are cross-border (IMDA 2023). Singaporean consumers are affluent, digitally savvy, and demanding in terms of speed and trust. TikTok Shop is gaining ground with interactive cross-border shopping, while XHS sets trends for luxury and premium products. Shopee maintains reliability for everyday needs. Many businesses use Singapore as a regional hub for logistics, cross-border sales, and influencer-driven marketing campaigns.
Indonesia: Scale Above All Else
Digital payments exceeded US$266 billion in 2023 and are projected to reach US$417 billion by 2028 (Bank Indonesia 2023). With over 270 million people, Indonesia is the ultimate scale play. The TikTok–Tokopedia merger positions the platform as a real rival to Shopee. Live commerce resonates deeply with Indonesian culture, where community and entertainment are central to shopping. Localization—adapting content to regional dialects and cultural nuances—will be crucial for sustained success.
What This Means for Your Business
- Think ecosystems, not platforms. Multi-platform strategies are the future (McKinsey 2023).
- Invest in live commerce capabilities. Early adopters report 3–5x higher engagement (PwC 2023).
- Localize by platform. Shopee, TikTok, and XHS require different tactics, even within the same market.
- Prepare for rising platform fees. As competition intensifies, monetization will increase (Momentum Works 2023).
- Prioritize creator partnerships. The creator economy is central to driving trust and discovery (We Are Social 2024).
The Road Ahead
Cross-border e-commerce in SEA is projected to reach US$75–80 billion by 2030 (Statista 2024). Global live commerce could hit US$2.47 trillion by 2033 (IMARC 2023). These numbers underscore that the real winners won’t just be those with the best products or prices, but those who master the blend of content, community, and conversion.
Shopee, TikTok Shop, and XHS each represent different futures: Shopee with transactional efficiency, TikTok Shop with entertainment-driven shopping, and XHS with premium discovery. Businesses that integrate elements of all three will define the next decade of growth.
The e-commerce war in Southeast Asia is more than a competition—it is a blueprint for how global commerce will evolve. Those who move quickly, experiment boldly, and adapt strategies to local contexts will thrive. Those who hesitate risk being left behind.
References
- Google, Temasek, Bain. e-Conomy SEA Report 2023
- Momentum Works. E-commerce in SEA 2023
- Statista. E-commerce Projections SEA 2024
- South China Morning Post (SCMP), 2023
- Nikkei Asia, 2023–2024
- TechNode, 2023
- PwC. APAC Live Commerce Survey 2023
- McKinsey. The Future of Live Commerce 2023
- IMDA Singapore, 2023
- Bank Indonesia, 2023
- IMARC. Global Live Commerce Forecast 2023
- MCMC (Malaysian Communications and Multimedia Commission), 2023
- We Are Social/DataReportal, 2024
- GSMA Intelligence, 2023