Analyzing Tiktok Shop A Strategic Analysis And Recommendations For Future Growth.pdf

According to statistics of e-commerce data platform Metric, in November 2022 alone, sales on TikTok Shop reached VND 1,698 billion, with 13 million products sold and 32,000 sellers gener

VIETNAM NATIONAL UNIVERSITY - HO CHI MINH CITY

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

SCHOOL OF INDUSTRIAL MANAGEMENT

TP.HCM

REPORT ANALYZING TIKTOK SHOP: A STRATEGIC ANALYSIS AND

RECOMMENDATIONS FOR FUTURE GROWTH

STRATEGIC MANAGEMENT TERM 222 - CC01 - GROUP 02 Instructor: Lai Van Tai

TABLE OF CONTENTS

1.1 Tiktok Shop Company Backgound — Tiktok Company Flatform 4 1.2 Tiktok Shop Mission, Vision, and Core Value 2c 1c 122222121 re 4 1.2.1 Tiktok Shop MiSlon 2 1 121 2122121122122 012 21111251111111021 510112 k ray 4 1.2.2 Tiktok Shop VISIOH Q02 2012212011211 21 1212511211112 01 2510112112112 0k ray 4 1.23 Tiktok Shop Core ValÌUe 0 2 20121122121 122122111 111121111 21111112 12H key 5 1.3 Tiktok Shop objectives for the next 5 ÿ€ATS c2 n2 HH xe 5 1.4 Evaluate how well Tiktok Shop's objectives align with its mission, vision, and COTE VALUC a 6 1.5 Tiktok Shop service đesCTIPfIOH 0 2022212112 21221211 111 221111121121 2112011028 ray 7

2.1 Theory In analyzing Tiktok Shop 0 22221222121 121 1121211 551121111 281221551282 are 8 2.1.1 PESTEL Theory ccc cecceccsecnecsceeeneesseseesaesscseesaessstaeeaeeseeaeeaeeseeneesseneees 8 2.1.2 Five Forces Model ec cceccececeeceeeeseceeceeeeneeseseseneescessssneenseseeeneenseeneenesneeaes 9 2.1.3 SWOT Analysis ccccccccccccesseeecneceseeeecnecseeecenecsecieeneesesieeeeseeesisenieesseena 10

22 How the theory can be applied to Tiktok Shop's situafIon - 22c c2: 11

3.1 External evironment anaÌySIS 2 2 212211212 121212111212112221212111 1112111 1x gxkt 12 3.1.1 Macro-environment analysis — PESTEL analySIs 2 22c s22 12 3.1.2 Opporturnifies and Threats from PESTEL - 2 2222212212112 erxer 20 3.1.3 The mplications oFPESTEL factors for Tiktok Shop's fifure 24 3.1.4 _ Industry Analysis — FIve Forces Model 2c c1 22221222 xe re 25 3.1.5 _ Opporturnities and Threats from Five Forces Model scc s22 c2 27

3.2 Internal environment araÏWS1§ - 5 c3 2221211221 22121 1251121255211 111221101 1x rrg 30 3.2.1 Resources and CapabilIfies - - c2 211121211151 221 1221122112212 12181111 k re re 30 3.2.2, Culture and SfTUCfUFe LH Hà HH Hà Hà rệt 30 3.2.3 Corporate Social ResponsIbiÏLfV c2 112x212 222222212 1 HH re Hr re 32 E5 5 ẽ a 34 3.2.5 Distinctive CompefencI€s - - c c n2 ng TH 21111201111 111 201212112111 1 xee 36 3.2.6 Internal environment’s Streneths and Weaknesses co 37 3.3 SWOT Analysis

LIST OF FIGURE Figure 1 Market share of the most popular e-commerce platforms in Vietnam today

LIST OF TABLE Table 1 Opporturmties and Threats from PESTEL 12 22 1121221122321 xxx 21

According to statistics of e-commerce data platform Metric, in November 2022 alone, sales

on TikTok Shop reached VND 1,698 billion, with 13 million products sold and 32,000 sellers generating orders This level of sales is enough to help TikTok Shop surpass Tiki (396 billion VND), just behind Lazada (2,603 billion VND) and Shopee (8,761 billion VND) on the ranking of e-commerce platforms with the largest sales of the month in Vietnam

On average, TikTok Shop earns 56.6 billion VND in revenue every day and 434,000 products are sold, the average value of each product is 130,000 VND The product segment with prices in the range of VND 100,000 - 200,000 brought the highest revenue for sellers

on the TikTok Shop floor, accounting for 39% with VND 647 billion in a month

In addition, according to the latest ranking of Reputa listening and monitoring system, TikTok Shop has surpassed Sendo and Tiki to become the third most popular e-commerce platform on social networks in November 2022, just behind Lazada and Shopee

We can see the rapid rise of Tiktok Shop However, when it first entered the fierce competition with big competitors like Lazada and Shopee, there were still many limitations

In particular, the age group accessing Tiktok is only 18-24 years old, so Tiktok Shop needs more strategies to reach all ages, and maintain sustainable and competitive development with Shopee, Lazada, Tiki

L1 = Tiktok Shop Company Backgound — Tiktok Company Flatform

TikTok is a Chinese social media and music video platform launched in 2017, for markets outside of China by Truong Nhat Minh, founder of ByteDance It is used to create short music, lip-syncing, dance, comedy, and talent videos from 3 seconds to 10 minutes, and short repeat videos from 3 to 60 seconds ByteDance first launched Douyin for the Chinese market in September 2016 TikTok was subsequently launched in 2017 for iOS and Android in most markets outside of mainland China; however, it is only available worldwide, including the US, after merging with Musical.ly on August 2, 2018

TikTok has officially launched the e-commerce solution (e-commerce) TikTok Shop in Vietnam market TikTok Shop is an innovative solution for buyers, sellers and content creators, providing a seamless, comprehensive e-commerce ecosystem might on TikTok Through this new e-commerce platform, TikTok hopes to open up many business opportunities for businesses, especially small and medium-sized businesses that are gradually recovering from the impact of the Covid-19 pandemic provides a fresh shopping experience for users and growth opportunities for content creators

1.2 Tiktok Shop Mission, Vision, and Core Value

1.2.1 Tiktok Shop Mision

Tiktok Shop is a platform that connects creators, brands and consumers in a dynamic and engaging way Tiktok Shop aims to empower creators to showcase their talents and passions, while providing them with opportunities to monetize their content and grow their fanbase Tiktok Shop also enables brands to reach new audiences and drive sales through innovative and interactive marketing campaigns Consumers can discover and shop for products that match their interests and preferences, while enjoying entertaining and informative content from their favorite creators Tiktok Shop's mission is to create a vibrant and diverse community that celebrates creativity, authenticity and individuality

1.2.2 Tiktok Shop Vision

Tiktok Shop Vission is a new feature that allows users to shop for products directly from

the Tiktok app Users can browse through a curated selection of items from various brands and influencers, and purchase them with a few taps Tiktok Shop Vission aims to create a seamless and engaging shopping experience that leverages the power of video content and social interaction Users can also create their own videos to showcase their purchases and share them with their followers Tiktok Shop Vission is part of Tiktok's broader vision to become a leading destination for e-commerce and entertainment

1.2.3 Tiktok Shop Core Value

Tiktok Shop Core Value is a concept that reflects the goal of Tiktok to provide a seamless and engaging shopping experience for its users Tiktok Shop Core Value is based on four pillars: creativity, community, convenience and conversion

- Creativity: Tiktok Shop allows users to showcase their products and services in a creative and authentic way, using video formats that capture attention and inspire action Users can also discover new products and brands through personalized recommendations and live shopping events

- Community: Tiktok Shop fosters a sense of community among users, who can interact with each other and with sellers through comments, likes, messages and duets Users can also share their shopping experiences and opinions with their followers and friends

- Convenience: Tiktok Shop makes shopping easy and fun, with features such as in- app checkout, fast delivery, secure payment and customer service Users can also access Tiktok Shop from anywhere, anytime, using their mobile devices

- Conversion: Tiktok Shop helps sellers increase their sales and grow their businesses,

by reaching a large and active audience of potential customers Sellers can also optimize their campaigns using value-based optimization, which aims to find high- quality shopping audiences who are likely to generate higher value per purchase 1.3 Tiktok Shop objectives for the next 5 years

TikTok predicts its e-commerce sales to reach 470 billion in 5 years According to a

LatePost article, TikTok Shop, the e-commerce part of the popular short video app TikTok, generated over $1 billion in gross merchandise volume (GMV) in the first half of 2022 The amount is equivalent to its GMV for all of 2021 The TikTok Shop was warmly received throughout Southeast Asia The average monthly GMV in Indonesia is $200 million, whereas that in the UK is $24 million, according to LatePost TikTok e-commerce was introduced in Thailand, Vietnam, Malaysia, the Philippines, and Singapore in the first half

of 2022 For new sellers in the mentioned nations, TikTok eliminated the first month's platform commission charge and 1% of payment channel costs According to LatePost, the five nations account for at least 50% of TikTok's GMV in Southeast Asia

Ramadan, which is similar to the winter holidays in the west in that it is the time of year when Indonesians purchase the most, has allowed TikTok Shop to capitalize on this trend TikTok initiated the series of deals to draw users, and throughout the promotions, its orders surged by 493% and GMV grew by 92% The TikTok team has set an ambitious aim of reaching a GMV of $470 billion in five years, given that it took the world's largest e- commerce company, Amazon, about 30 years to reach $600 billion in net sales in 2021 By the end of 2023, the team wants to grow in more than ten nations, according to a TikTok report For that, We can see that TikTok Shop has set a high aim in the e-commerce market and has been ready to compete with such a large e-commerce company like Amazon

1.4 Evaluate how well Tiktok Shop's objectives align with its mission, vision, and core value

TikTok Shopping is a collection of services, functions, and marketing tools that allow companies to fully use TikTok's purchasing impact With TikTok Shopping, businesses have the option of utilizing a full-service e-commerce solution, in which TikTok handles all aspects of product upload, point of sale, shipping, and fulfillment on its own platform Also, through TikTok's relationships, businesses that deal with third parties may link their product inventory PrestaShop, Shopify, Square, and Ecwid are now accessible on the platform In the near future, Wix, SHOPLINE, OpenCart, and BASE should be accessible They will also introduce a TikTok Shopping API later this year, enabling companies to link their product catalogs into TikTok and eventually incorporate those goods into their organic

content In order to align with its mission and vision, they offer users interesting features such as Product Links, LIVE Shopping, Collection Ads, Dynamic Showcase Ads, and Lead Generation With all of the features, they will easily bring a good purchasing experience for customers In addition, TikTok has an influence on each step of the purchasing process TikTok is revolutionizing marketing by promoting awareness, attention, and sales in fresh ways TikTok is outperforming competing platforms at each step of the retail buying process discovery, contemplation, and purchase After the purchase, TikTok's impact endures And still, TikTok’s joy remains even after consumers have made purchases because of their unrestricted creativity and eagerness to engage with the TikTok community Users join our platform to post videos like unboxing, how-to, and tutorial videos to evaluate the things they're passionate about, which generates a novel type of viral word-of-mouth advertising This results in communities of brand enthusiasts within the app that is grounded in loyalty and encourage interaction Outside of the app, TikTok's effect is felt everywhere The customer journeys on TikTok are driven by enjoyment Every day, millions of individuals use TikTok for a variety of purposes, including learning something new, having fun, becoming inspired, or joining a community So what is the one emotion that links them all? It is Joy TikTok uplifts consumers by taking advantage of good emotions, which have an indisputable influence on their interactions with companies and purchases They want marketers to develop engaging experiences and campaigns on the platform so that people feel satisfaction and joy even after they've bought the goods TikTok is the only platform that has this ongoing wave of positivity

15 Tiktok Shop service description

TikTok Shop is an innovative new shopping feature that enables merchants, brands and creators to showcase and sell products directly on TikTok With TikTok Shop, you can reach millions of potential customers who are looking for products that match their interests and preferences You can also collaborate with other creators and partners to promote your products and earn commissions

TikTok Shop allows you to create a fully native shopping experience on the TikTok platform, where you can manage your products, orders, promotions, customer service and

TikTok Shop is currently available in select countries and regions, including the UK, Chinese mainland, Hong Kong, Indonesia, Malaysia, Thailand, Vietnam, Philippines and Singapore You can apply for TikTok Shop access through the Business Center or the TikTok Shop Creator Application If you are a partner or an agency, you can also support the growth of your clients by using TikTok Shop

TikTok Shop is a great opportunity for sellers, brands and creators who want to reach a large and active audience on TikTok By using TikTok Shop, you can turn discovery into purchase and make shopping community-driven, relevant and fun

IL.1 Theory in analyzing Tiktok Shop

IL.1.1 PESTEL Theory

PESTEL analysis is a management framework and diagnostic tool used to assess major external factors that influence an organization’s operation PESTEL model (or PESTLE model) involves the collection and portrayal of information about external factors which have, or may have, an impact on business PEST analysis is an analysis of the political, economic, social and technological factors in the external environment of an organization The outcome of the analysis will help you to understand factors external to your organization which can impact upon strategy and influence business decisions

- Political factors: This factor includes the influence of government policies, regulations, and laws that can impact the operations of a business Changes in government policies, taxes, and regulations can have a significant impact on a

business, including its profitability and sustainability

- Economic factors: Economic factors include inflation, exchange rates, interest rates, and consumer spending, among others Changes in these factors can impact a business's sales, profitability, and overall success

- Sociocultural factors: This factor includes the influence of societal attitudes, values, and lifestyle preferences on a business This can include changing trends, demographics, and cultural norms that can impact a business's operations and sales

- Technological factors: The technological factor includes the impact of new technologies, innovations, and disruptions on a business This includes emerging technologies such as artificial intelligence, blockchain, and the internet of things (IoT), among others

- Environmental factors: The environmental factor includes the impact of environmental issues, such as climate change, sustainability, and carbon footprint,

on a business This can include regulations related to environmental protection and the growing demand for sustainable products and services

- Legal factors: The legal factor includes the impact of legal issues and regulations on

a business This includes laws related to labor, data privacy, and intellectual property, among others

II.1.2 Five Forces Model

Porter’s Five Forces is a model that identifies and analyzes five competitive forces that shape every industry, and helps determine an industry’s weaknesses and strengths The Five Forces is a framework for understanding the competitive forces at work in an industry, and which drive the way economic value is divided among industry actors Porter’s Five Forces Model is an important tool for understanding the main competitive forces at work in an industry This can help you to assess the attractiveness of an industry, and pinpoint areas where you can adjust your strategy to improve profitability

- Competitive rivalry: This force looks at the intensity of competition within the

industry The more competitive the market, the lower the profitability for individual companies Factors that influence competitive rivalry include the number of competitors, their size, and market share, as well as the level of product differentiation and customer loyalty

- Threat of new entrants: This force looks at the barriers to entry that exist in the market The easier it is for new companies to enter the market, the higher the level of competition and the lower the profitability for existing players Barriers to entry can include high capital requirements, regulatory restrictions, economies of scale, and proprietary technology

- Bargaining power of suppliers: This force examines the power that suppliers have over the industry The more power suppliers have, the more they can influence prices and reduce profitability for companies Factors that affect supplier power include the number and size of suppliers, the level of differentiation of their products

or services, and their ability to integrate forward into the industry

- Bargaining power of buyers: This force examines the power that buyers have over the industry The more power buyers have, the more they can influence prices and reduce profitability for companies Factors that affect buyer power include the number and size of buyers, their bargaining leverage, and their ability to integrate backward into the industry

- Threat of substitute products or services: This force looks at the availability of substitute products or services that can compete with the industry The more substitutes that are available, the more pressure there is on companies to differentiate their products or services and lower their prices to remain competitive

I1.1.3 SWOT Analysis

SWOT analysis is a process that identifies an organization’s strengths, weaknesses, opportunities and threats Specifically, SWOT is a basic, analytical framework that assesses what an entity A SWOT analysis is a technique used to identify strengths, weaknesses,

opportunities, and threats for your business or even a specific project SWOT is used to help assess the internal and external factors that contribute to a company’s relative advantages and disadvantages

- Strengths: These are the internal factors that give a business an advantage over its competitors Strengths could include things like a strong brand reputation, unique product offerings, or a highly skilled workforce

- Weaknesses: These are the internal factors that put a business at a disadvantage compared to its competitors Weaknesses could include things like poor cash flow management, outdated technology, or a lack of experienced personnel

- Opportunities: These are external factors that a business can capitalize on to improve its position in the market Opportunities could include things like new market trends, changes in regulations, or the introduction of new technology

- Threats: These are external factors that could negatively impact a business Threats could include things like increased competition, changing consumer preferences, or economic downturns

II.2 How the theory can be applied to Tiktok Shop's situation

PESTEL, Five Forces, and SWOT analysis are important strategic planning tools that businesses use to identify internal and external factors that impact their performance in the market

In the case of Tiktok Shop, a PESTEL analysis can help to identify the macro- environmental factors that influence the company, such as political and legal regulations, economic conditions, and technological advancements Understanding these factors can help the company to anticipate potential challenges and opportunities and adjust its strategies accordingly

Five Forces analysis is useful for understanding the competitive dynamics of the industry and the company’s relative position within it This analysis can help Tiktok Shop to identify potential threats and opportunities for growth and develop strategies to increase its

Overall, using these strategic planning tools together can provide a comprehensive picture

of the business environment in which Tiktok Shop operates, helping the company to make informed decisions and develop effective strategies for growth and success

TiL1 External evironment analysis

III.1.1 Macro-environment analysis — PESTEL analysis

a Political

In the current Vietnamese legal system, we have built a series of legal documents regulating e-commerce activities In 2005, the National Assembly passed three laws that lay the legal foundation for e-commerce, which are:

- Commercial law

- Social legal

- Law on electronic transactions

In addition to the above documents, e-commerce activities, activities related to e-commerce

in general and the settlement of disputes in the field of e-commerce are also governed by a number of laws such as:

- Law on Information Technology 2006

- Telecommunications Law 2009- Criminal Code 1999 No 37/2009/QH12

- Consumer Protection Law 2010

- Law on Advertising 2012

Currently, there are about 50 million hours of video watching on TikTok every day in Vietnam, not to mention watching live streams (live streaming) Besides, TikTok has become the user's favorite discovery tool Content on the platform stimulates them to discover new brands and products naturally, even making unplanned purchasing decisions Half of TikTok users admit they discovered a new product or brand while using the platform, and 89% made a purchase on the TikTok Shop after watching a video on TikTok This is also the highest number of all existing social networking platforms

So hidden deep inside is still the risk of security issues In order to prevent violations of data leakage and loss, Vietnam has clear laws on cybersecurity, making it one of the few countries with policies to protect personal data of consumers

Policy for TikTok and Tiktok Shop users before disclosing their data to law enforcement, unless providing such notice:

- Prohibited by applicable law;

- Would jeopardize the investigation;

- Would put individuals at risk of harm

It is the responsibility of the requesting law enforcement agency to specify in their request whether any of these criteria are met TikTok will make such requests when appropriate supporting information is provided (for example, if a request involves a non-disclosure obligation under applicable law)

In addition, the legal system and tax administration in Vietnam are always updated and revised in a timely manner, thereby quickly improving to help businesses stabilize their business The stable political situation creates favorable conditions for Shopee to develop

Both low interest rates on deposits and loans have caused people to reduce their tendency to increase savings by depositing money in banks, on the other hand, it will increase the need

to borrow money from banks for consumption or investment private The exchange rate affects the competitiveness of products in the international market When the price of domestic products is cheap relative to similar products in the international market, the competitiveness of the products increases, so exports tend to increase Although the exchange rate is still increasing, the rate of increase has slowed down During this period, Vietnam's economy is relatively more stable and has more positive developments as the

- The development of e-commerce

Despite the impacts of the pandemic in 2020 and 2021, e-commerce is still thriving in Vietnam According to Mr Anh, Vietnam's e-commerce market is forecasted to grow by double digits this year to rank third in Southeast Asia In fact, the pandemic has fueled a significant increase in e-commerce, recording 16% growth last year In 2021, retail sales of Vietnamese e-commerce will reach $13.7 billion and are forecast to grow 20% this year to

$16.4 billion, compared with $5 billion in 2015

2023 is predicted to be an optimistic year with many new and interesting changes for the global e-commerce market in general and the e-commerce market in Vietnam in particular After 2 years of relying too much on online shopping due to the Covid-19 pandemic, by

2023, consumers are ready and starting to return to traditional shopping Therefore, the revenue of the online retail industry will certainly have a decrease, however, it will still be much higher than before the pandemic and there will still be many opportunities to continue

to grow

c Social

- Demographic group

The age group from 16-24 years old has 96% internet usage

The age group 25-34 has 91% internet usage

The age group 45-54 has 85% internet use

Over 55 years old only 52% for people

This means that when deciding on a product line for your online store, you have a much better chance of succeeding with items that cater to the younger generation

- Style of life

As of September 2022, Vietnam has 72.1 million Internet users (accounting for 73.2% of the population) in daily life With this number, Vietnam is the country with the 12th highest number of Internet users worldwide

Currently 91% of people have used smartphones; in which, the number of people in rural areas is nearly 80% Vietnamese people are on the internet for an average of 25 hours/week The representative of Nielsen also said that the income of Vietnamese people is continuously increasing

According to a survey by Neilsen, young Vietnamese connected consumers currently account for more than 34% (1/3) of the age group from 21 to 34 years old 76% of them have a high income and most live in urban areas, are optimists, always tend to shop to upgrade their lives Their spending is focused on travel, shopping for clothes, technology products, entertainment services

d Technological

The globe has been swept up by the social media app TikTok, especially among the

younger population As a result, TikTok has a sizable user base and provides online

retailers with access to its social network TikTok's popularity has been largely attributed to

a number of technological developments, including:

- One of TikTok's most significant technological benefits is its algorithmic feeds

Each user's tailored content is selected using machine learning algorithms based on their viewing habits, engagement levels, and other variables It follows that

consumers are frequently exposed to fresh and intriguing material, keeping them

interested and returning for more

- Tools for video editing: With just a few clicks, users of TikTok's video editing

features may produce videos that appear professional Users can easily add a unique touch to their films using the app's filters, effects, and music collection

- TikTok focuses on short-form (15-60 second) video content, commonly referred to

as the FOMO effect, which enables viewers to swiftly consume and share material The younger generation, who has shorter attention spans and prefers quick, snappy material, finds this particularly intriguing

- Integration with more social media sites: The TikTok platform will make it simple for vendors to post their livestream material on additional social media sites like

Instagram and Twitter The app's viral growth and popularity have been accelerated

as a result, which has aided the environment's efforts to make its items more well-

known

- User-generated material should be updated: TikTok mainly relies on user-generated content, which has aided in creating a strong feeling of community among users The regular creation of "trending" videos and the sharing of fresh information about

newly released items by vendors keeps the material diversified and current

- Customers have access to a variety of different payment methods through TikTok, including the usage of e-wallets and card payments as well as software that allows users to link service points using cash The exchange of goods is made simpler as a result of this for both the vendor and the buyer

e Legal

As stated in our Merchant Terms of Service, TikTok Shop may take enforcement measures against sellers or creators who violate these rules Sellers are also in charge of making sure that all applicable laws and rules are always followed in relation to the listing, offering, and sale of items on TikTok Shop

This advice is meant to make it easier for sellers to follow the rules They are not meant to

provide comprehensive legal advice and are not complete If a seller has any concerns regarding the rules and laws pertaining to their items, we advise them to consult with a lawyer Together with these Limited Product Rules, TikTok company has also issued our TikTok Shop Banned Product Guidelines, which list categories of goods that are never permitted to be offered on TikTok Shop Before putting any things up for sale, sellers must abide by these rules as well

Rules for the TikTok Store are often revised Sellers are in charge of periodically reviewing this page to make sure they are adhering to the most recent rules

TikTok shops should stay away from the following three products:

- Banned Items are those that are not permitted for sale on TikTok Shop and are prohibited by local law or regulation

- Restricted Items are certain categories of goods that must first have TikTok Shop's permission before being sold Before offering limited items for sale, vendors may need to go through a category approval procedure Sellers may be required to produce records as part of this procedure, including but not limited to certificates, test results, product or packaging photographs, and other legal records

- Unsupported Items are certain product categories that are presently not allowed to be offered on TikTok Shop Even if vendors could be authorized to offer these items or have the proper credentials, TikTok stores do not presently support their sale on the site

- Some product categories that may only be offered if the seller has been accepted via

a constrained, "invite-only" process are referred to as "invite-only" items

f Environmental

The TikTok company is now following the shopertainment model (fusing shopping and entertainment) Shortly after its official introduction, TikTok Shop soon became the preferred discovery tool of consumers, "surpassing" several e-commerce platforms and altering perceptions of the retail sector

Metric's statistics on e-commerce show that sales on TikTok Shop alone hit VND 1,698 billion in November 2022, with 13 million goods sold and orders from 32,000 vendors This volume of sales is sufficient for TikTok Shop to overtake Tiki (396 billion VND), which was third on the list of Vietnamese e-commerce platforms with the greatest monthly sales behind Lazada (2,603 billion VND) and Shopee (8,761 billion VND)

mw Sendo

6 HOA: THANH HUYEN

Figure 1 Market share of the most popular e-commerce

platforms in Vietnam today

The TikTok platform specifically offers three different sorts of services The first goal is to provide consumers with video entertainment The second is educational entertainment, which includes learning how to cook, study English, etc Lastly, TikTok offers entertainment services for shoppers TikTok viewers who see other users make purchases will also make purchases

As can be observed, TikTok's strategy is to open up options for customers, sellers, and producers so that everyone pays the lowest price possible Manufacturers and sellers may concentrate only on their areas of competence without consideration to marketing Customers, however, will purchase items at the lowest cost

Experts claim that TikTok's entry into the internet sales market has been made possible by the current e-commerce development in Southeast Asia In an effort to outperform the competition, TikTok is taking advantage of the market by charging the lowest commission (at 1%, compared to 10% costs on other platforms)

In actuality, TikTok is up against fierce competition from well-known tech behemoths like Shopee and Lazada Several businesses also have live streaming capabilities, although their traffic has decreased Due to the absence of online purchase facilities, Facebook Live, which many firms use to advertise their products, is also inferior to TikTok

Social commerce will become more popular as e-commerce in Southeast Asia continues to

flourish, and TikTok is well-positioned to embrace this as a source of revenue backed by the resources and support of the parent platform ByteDance TikTok has the resources to explore and test the idea of growing its interest in this field

TH.1.2 Opporturnifies and Threats from PESTEL

Table 1 Opporturnities and Threats from PESTEL

Political

- The high usage and popularity of TikTok in

Vietnam presents an opportunity for TikTok Shop to

reach a large customer base and potentially increase

sales

- The clear laws on cybersecurity and personal

data protection in Vietnam can provide reassurance

to consumers and potentially enhance trust in the

platform

- The strict regulations on network safety < cybersecurity in Vietnam can pose a threat to operation of TikTok and TikTok Shop, particularly there are any data breaches or violations of these laws

- The requirement for TikTok and TikTok Shop comply with a range of legal documents and regulatic may increase operational complexity and costs, wh could potentially impact profitability

Economic

- Despite the global economic downturn,

Vietnam's economy has maintained positive growth,

which creates a favorable business environment for

Tiktok Shop

- Low inflation and interest rates may increase

consumer spending and borrowing, which could

benefit Tiktok Shop

- Despite supply chain disruptions and

increasing prices, the impact on Tiktok Shop is still

under control

- The development of e-commerce in Vietnam

is forecasted to grow by double digits, which

presents opportunities for Tiktok Shop to expand its

- The transport and logistics industry has not fu recovered after the pandemic, leading to supply ch disruptions, which could affect Tiktok Shop's operation

- Exchange rate fluctuations may affect competitiveness of Tiktok Shop's products in international market

- The expected return to traditional shopping in 2( may lead to a decrease in revenue for the online re industry, including Tiktok Shop

Sociocultural The high internet usage among the younger

generation presents a potential market for products

that cater to their needs and preferences

- The increasing number of internet users and

smartphone users in Vietnam, along with the average

25 hours/week spent online, provides a favorable

environment for e-commerce businesses like TikTok

Shop

- The growing income of Vietnamese people,

especially the connected young consumers with high

income, provides opportunities for TikTok Shop to

offer high-quality and premium products/services

that meet their needs and preferences

- The low internet usage among the elde population in Vietnam may limit the potential market products that target this demographic group

- The increasing number of e-commerce busines

in Vietnam may increase competition and affect market share of TikTok Shop

- The shifting trend towards traditional shopp after 2 years of relying too much on online shopping ‹

to the Covid-19 pandemic may affect the revenue of online retail industry, including TikTok Shop

Technologica hnological Large user base and access to younger | - Privacy concerns and data security issues os

- Algorithmic feeds and tools for video editing

- Regulatory challenges and government scrutiny

integration with other social media sites Sk of negative publicity and reputation damage

- User-generated content creates a sense of Dependence on user-generated content, which «

model has proved to be successful, and the TikTok

Shop has quickly become a popular discovery tool

for consumers

- TikTok's strategy of offering video

entertainment, educational entertainment, and

entertainment services for shoppers creates multiple

options for customers, sellers, and producers,

potentially leading to increased sales for all parties

involved

- The growth of e-commerce in Southeast Asia

presents an opportunity for social commerce to

become more popular, and TikTok is well-positioned

to embrace this as a source of revenue

giants like Shopee and Lazada, which also hi livestreaming capabilities

- While Facebook Live is inferior to TikTok due the lack of online purchasing options, it still prese competition for TikTok

- TIKTok's success in the e-commerce market co attract more competition, potentially leading to increa: competition and reduced market share

Legal

- By providing clear guidelines and rules for

sellers, TikTok Shop can attract more sellers to use

its platform, which can increase the variety and

availability of products for customers to purchase

- The periodic revision of rules can also allow

TikTok Shop to adapt to changes in local laws and

regulations and stay compliant, which can help it

maintain its reputation as a reliable and trustworthy

sellers from using TikTok Shop and opt for other commerce platforms with fewer restrictions

- The need for sellers to consult with lawyers ensure compliance with rules and laws can be tin consuming and costly, which can discourage some sell from using TikTok Shop

- Economic factors:

The e-commerce market is growing strongly and is expanding globally, specifically Vietnam The growth of this market can provide a large number of potential customers for TikTok Shop With the development of the digital economy, online shopping has become more popular than ever This has helped the TikTok shop reach new customers

- Sociocultural Factors:

In the future, cultures and societies from other countries are gradually approaching Vietnamese people, which means that the use of foreign products may increase because of tiktok’s assimilation In addition, as users become more and more accustomed to using social networks to discover new products and services (following domestic and international trends), it may increase the demand for TikTok Shop to provide a wider range

of products and services

- Technological Factors:

The rapid pace of technological change can be an opportunity or a threat for Tiktok Shop New technologies such as augmented reality and virtual reality can enhance the shopping experience on the platform, while emerging technologies such as blockchain and artificial intelligence (AI) can enhance security and increase quality

Therefore, TikTok Shop should invest in measures to ensure the safety and security of its users in a timely manner, such as implementing stricter privacy policies or improving its

customer support services

Until now, the Tiktok shop has allowed a lot of rampant advertising and a lack of careful information selection, resulting in many products that do not meet quality standards but are still aggressively marketed As a result, advertising and marketing laws are critical to TikTok Shop's future The platform must follow all advertising and marketing regulations

in the countries where it operates Violations of these laws may result in legal action, fines, and reputational harm to the platform

- Environment factors:

Waste of resources because of packaging: The more consumption (for packaging) of cardboard boxes also means that more raw materials must be exploited to make cardboard: trees According to Fast Company, about 165 billion packages are shipped in the US each year using the amount of cardboard equivalent to more than 1 billion trees Therefore, Tiktok shop should think about solving this problem For example, can coordinate with retailers to have their goods shipped to online buyers using the original packaging, instead

of having to add an extra layer online retailer packaging

The more you buy, the more harmful it is to the environment: It is forecasted that if the number of purchases at tiktok is increasing, it means that transportation will replace manufacturing factories to become the largest source of CO2 emissions Ex: In the US, nearly a quarter of the transportation industry's "carbon footprint” is due to medium and heavy-duty trucks - which are the main players in last-mile delivery (from the vendor's warehouse to the user's hand

TIL.1.4 Industry Analysis — Five Forces Model

Five Forces analysis for Tiktok Shop in Vietnam