TikTok aims to emulate the achievements of other well-known Chinese e-commerce websites Shein and Temu.
TikTok is escalating its competition with well-known online retailers Shein and Temu by establishing an e-commerce operation in the United States to sell consumers products created in China.
According to those familiar with the plan, the video-sharing site would launch the program in its largest market in early August in an effort to match the American success of its two rivals, both of whom were started in China.
Similar to Amazon.com's "Sold by Amazon" service, TikTok will store and ship goods for Chinese manufacturers and retailers, including clothing, electronics, and kitchenware. Additionally, it will manage logistics, after-sale services, transactions, and marketing.
The decision broadens TikTok's e-commerce strategy, which had trouble with its early aspirations to create a platform for third-party vendors in the United States. Due to political unpredictability regarding the app's future, American merchants were hesitant to participate, delaying the rollout of that service on a larger scale. Washington authorities and lawmakers have labeled TikTok a national security danger, and there is growing scrutiny there.
The TikTok Shop Shopping Center, which unites many channels where users may see and buy goods onto a single website, is a marketplace similar to Amazon that TikTok is currently developing. Both products sold directly by outside retailers and those sold through TikTok's program are eligible for user reviews.
TikTok's entry into the new e-commerce model is intended to broaden its seller ecosystem and diversify beyond advertising sales in order to increase revenue from its well-known video app. The action follows the ascent of fast-fashion retailer Shein and PDD Holdings' Temu, which generated a $800 million profit in 2022. It could present another challenge for Amazon.com.
According to the people, TikTok intends to quadruple the gross merchandise value, or the total quantity of items transacted on the network, to $20 billion this year from less than $5 billion last year.
According to a representative for the firm, TikTok Shop, the app's e-commerce division, will continue to give local companies the tools they need to grow their presence on the platform.
Requests for feedback from Temu and Shein were not answered.
Since last year, a number of e-commerce vendors, including Temu, AliExpress from Alibaba Group Holding, and Shopee, which is owned by Sea with headquarters in Singapore, have launched comparable initiatives globally, taking advantage of China's status as the world's manufacturing floor to provide lower-priced items.
"The e-commerce landscape this year is simply that all platforms are adopting this new model," a TikTok merchant manager told the hundreds in attendance at an online roadshow last week.
In comparison to Temu and Shein, "TikTok's advantage over peer platforms T and S is that we have one billion monthly active users globally," he stated. According to market research company Sensor Tower, the combined user base of the two purchasing platforms makes up one-fifth of TikTok's overall user base.
According to people familiar with the situation, TikTok executives gave their e-commerce team the duty of researching the business models of the company's quickly-expanding competitors back in March. TikTok is owned by Beijing-based ByteDance. It debuted its own version in Saudi Arabia and the UK two months later.
The action was taken because, according to the sources, many Chinese retailers using its platform for third-party sellers found it difficult to satisfy their customers and increase their profits. As a result of concerns about fakes and frauds, TikTok also moved to tighten control over the products and services offered on its site, they claimed.
source: https://www.wsj.com/articles/tiktoks-next-plan-for-u-s-dominance-selling-made-in-china-goods-44943693