TikTok Sets Sights on US$17.5 Billion Shopping Business, Challenging Amazon's Dominance
TikTok, the popular video app owned by ByteDance, is planning to expand its e-commerce business in the United States and aims to reach a merchandise volume of up to US$17.5 billion this year.
This ambitious goal poses a significant threat not only to Amazon but also to other Chinese-owned companies like Temu and Shein, who have been gaining traction among younger American shoppers.
Unlike its competitors, TikTok is leveraging its massive social media reach and the appeal of viral videos to attract buyers. The company's TikTok Shop feature, which combines online entertainment with impulse buying, has been growing rapidly and is now seeking to tap into the US and Latin American markets.
While TikTok was initially focused on Southeast Asia, where it generated the bulk of its sales, it is now shifting its attention to the US and Latin America. The company plans to launch its e-commerce operation in these regions in the coming months, according to insiders familiar with the matter.
TikTok Shop allows users to purchase items while scrolling through a feed of short videos and live streams within the app. The company hopes that consumers will see it as a viable alternative to Amazon or other e-commerce platforms. This format, which combines the convenience of shopping on Amazon with the product discovery aspect of apps like Instagram, has already proven successful in China, where TikTok's sister app Douyin has captured a significant portion of consumer spending.
ByteDance, the parent company of TikTok, is determined to export its e-commerce model globally. In the US, TikTok is offering free shipping and subsidies to influencers who promote products in their videos and live streams. The company reported that during the Black Friday and Cyber Monday sales events, over 5 million new US customers made purchases on TikTok. With approximately 150 million users in the country, TikTok has a substantial user base to leverage for its e-commerce ambitions.
To generate revenue from its e-commerce platform, TikTok recently announced that it will increase fees imposed on merchants. Beginning in April, merchants will be charged 6% of each sale, which will increase to 8% in July for most product categories. While these commissions are still significantly lower than Amazon's seller fees, it indicates TikTok's commitment to monetising its e-commerce platform.
As American consumers become more comfortable shopping on Chinese e-commerce apps, TikTok's expansion into the US market could pose a significant challenge to established players like Amazon. With its unique blend of social media and e-commerce, TikTok has the potential to disrupt the online shopping landscape and capture a substantial share of the market.
TikTok aims to grow its US e-commerce business to US$17.5 billion this year, posing a threat to Amazon.
The company plans to expand sales in the US and Latin America, launching its e-commerce operation in the coming months.
TikTok Shop combines online entertainment with impulse buying, leveraging its social media reach and viral videos to attract buyers.
Source: Bloomberg