The Scoop
TikTok is planning to launch an online retail store in the U.S. version of the app as soon as next month, putting the company in direct competition with e-commerce platforms like Amazon, Shein, and Temu, according to people familiar with the matter.
The new store will be distinct from TikTok’s existing TikTok Shop feature, in which brands pay a small commission to sell their products on the platform. TikTok is purchasing its own inventory as part of the initiative, and will handle things like logistics and customer service. Most of the items, ranging from kitchen gadgets to toys, will come from manufacturers in China, some of the people said.
Users will be able to browse goods from both the new store and TikTok Shop through a dedicated e-commerce tab within the app. TikTok hinted at the feature in a Los Angeles job listing, calling it a “central hub” where customers can discover sales promotions and manage their orders.
TikTok is shifting its e-commerce strategy after learning that Chinese manufacturers were struggling to provide adequate customer service to Western consumers on TikTok Shop, as well as to reduce long shipping times from China to the U.S. and U.K.
Some of the sellers also used gimmicky tactics, like asking customers to pay to spin a wheel with different prizes during livestream broadcasts. TikTok later banned merchants from engaging in these forms of “gambling,” one of the people said.
A spokesperson for TikTok acknowledged the company was testing a retail feature in the U.K. called “Trendy Beat,” which was first reported by the Financial Times last week. “But we don’t have anything to share for the U.S.,” the spokesperson said.
Louise’s view
TikTok is wading into the messy world of directly selling physical goods, a move largely unprecedented among Western social media companies — for good reason.
To scale its retail shop into a multi-billion dollar business, TikTok will need to invest heavily in warehousing and supply chain management, areas that competitors like Amazon have already mastered. It will also need sophisticated buyers who can choose the right products for TikTok’s young and fickle audience.
But entering the retail industry itself might be one of the only ways for TikTok to convince more brands to join TikTok Shop, which has yet to gain significant traction in the U.S. Once companies see that consumers are willing to make purchases through the platform, they may be more willing to invest in it, said Juozas Kaziukėnas, founder of the e-commerce intelligence firm Marketplace Pulse.
“Amazon was first a retailer, then a marketplace. Shein was first a retailer, then a marketplace,” said Kaziukenas. “TikTok too will first be a retailer, then a marketplace?”
Room for Disagreement
Selling goods from China may make things even more difficult for TikTok in Washington, where lawmakers have already spent years debating the national security concerns posed by its Chinese ownership. More recently, they have begun scrutinizing e-commerce companies from the People’s Republic.
In a scathing report released last week, the House Select Committee on the Chinese Communist Party accused Shein and Temu of sending almost 600,000 packages into the U.S. each day with little oversight.
The View From China
TikTok may be feeling ambitious about its online shopping prospects because of how well its parent company, ByteDance, is performing in the Chinese e-commerce market. Sales of clothing, bags, and accessories on Douyin, the Chinese version of TikTok, surpassed Alibaba’s Tmall earlier this year, according to the market research firm BigOne Lab.
Notable
- TikTok has signed contracts with logistics firms in the U.S. that “lease and operate warehouses to store inventory,” The Information reported Friday.
- TikTok is aiming to more than quadruple the size of its global e-commerce business to as much as $20 billion in sales this year, betting especially on rapid growth in Southeast Asia, according to Bloomberg.