TikTok eyes $17.5 billion shopping business in Amazon territory




January 4, 2024

​TikTok aims to increase the size of its U.S. e-commerce business tenfold to $17.5 billion this year, according to people familiar with the matter, posing a bigger threat to Amazon.com Inc.

The 2024 merchandise volume target for the U.S. version of TikTok Shop, which combines online entertainment with impulse shopping, was discussed in internal meetings in recent weeks and may still change depending on how business goes, the people said, They asked not to be identified. discuss private information.

TikTok’s ambitious goal creates a clash not only with Amazon but also with other Chinese-owned companies, Temu and Shein, which have made big inroads among younger American shoppers. Unlike its two rival discounters, TikTok is counting on its social media reach and the appeal of viral videos to hook shoppers.

Last year, TikTok was on track to rack up around $20 billion in global gross merchandise value, with Southeast Asia contributing the bulk of sales through its platform, Bloomberg News reported. The company is now looking to expand sales in the U.S. and Latin America, where it plans to launch the e-commerce operation in the coming months, two people familiar with the matter said.

ByteDance, founded more than a decade ago by Zhang Yiming and Liang Rubo, became an Internet leader worth more than $200 billion thanks to the virality of short video platforms TikTok and Douyin. TikTok Shop is one of the fastest-growing features for the Beijing-based company, which is seeking a new growth engine beyond social media advertising. ByteDance’s revenue rose about 30% in 2023 to more than $110 billion, outpacing the projected growth of much more established social media rivals Meta Platforms Inc. and Tencent Holdings Ltd.

TikTok Shop allows users to purchase items while scrolling through a perpetual feed of short videos and live streams within its main social media app, hoping consumers will use it as an alternative to Amazon or Sea Ltd’s Shopee .. That format, an effort to combine the ease of shopping on Amazon with product discovery offered by apps like Meta’s Instagram, has already helped Douyin take a significant share of Chinese consumer spending from Alibaba Group Holding Ltd. and JD.com Inc., in particular. after lockdown rules during the pandemic forced people to spend more time online.

ByteDance intends to export its e-commerce model globally. In the United States, TikTok offers free shipping and subsidies to influencers who sell gadgets, clothing and makeup in videos and live streams. In November, driven by Black Friday and Cyber ​​Monday deals, more than 5 million new U.S. customers bought something on TikTok, the company said. It has approximately 150 million users in the country.

TikTok announced Wednesday that it will increase fees imposed on merchants to 6% of each sale starting in April and 8% in July in most product categories, ending promotions used to attract sellers. Those commissions are still significantly lower than Amazon seller fees, which typically hover around 15%, but the increase indicates that TikTok is moving quickly to generate revenue from its e-commerce platform.

Americans are increasingly comfortable shopping on Chinese e-commerce apps, including the popular fashion site Shein and PDD Holdings Inc.’s Temu, whose popularity has skyrocketed since a Super Bowl ad aired in February.

It’s unclear what sales targets TikTok Shop has set globally or for other markets. In Indonesia, TikTok took control of GoTo Group’s e-commerce unit Tokopedia in a $1.5 billion deal, allowing the company to restart its online retail service after months of scrutiny by the local government.

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