By Zheping Huang, Alex Barinka, Dong Cao and Olivia Poh
ByteDance Ltd.’s 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 greater threat to Amazon. com Inc.
The 2024 merchandise volume target for the U.S. version of TikTok Shop — which combines online entertainment with impulse purchases — has been discussed in internal meetings in recent weeks and could further change depending on how business goes, people said. the sources, who asked not to be named. discuss private information.
TikTok’s ambitious goal creates conflict not only with Amazon, but also with Chinese companies Temu and Shein, which have made big inroads with young American shoppers. Unlike its two rival discounters, TikTok relies on its presence on social networks and the appeal of viral videos to attract buyers.
Last year, TikTok was on track to amass about $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 increase sales in the United States and Latin America, where it plans to launch its e-commerce operations in the coming months, two people familiar with the matter said.
“Speculative U.S. merchandise sales figures presented by Bloomberg are inaccurate,” TikTok said in a statement.
ByteDance, founded more than a decade ago by Zhang Yiming and Liang Rubo, has become 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 closely held company, which is seeking a new growth engine beyond social media advertising. ByteDance’s revenue jumped about 30% in 2023 to more than $110 billion, outpacing the forecast growth of its much more established social media rivals Meta Platforms Inc. and Tencent Holdings Ltd.
TikTok Shop lets users purchase items while scrolling through a perpetual stream of short videos and live streams within its main social media app, hoping consumers will use it as an alternative to Amazon’s Shopee or Sea Ltd. That format — an effort to combine the ease of shopping on Amazon with the product discovery offered by apps like Meta’s Instagram — has already helped Douyin wrest a significant share of Chinese consumer spending from Alibaba Group Holding Ltd. and JD.com Inc., especially after lockdown rules during the pandemic pushed 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, thanks to Black Friday and Cyber Monday deals, more than 5 million new U.S. customers purchased something on TikTok, the company said. It has around 150 million users in the country.
TikTok announced Wednesday that it would increase fees on merchants to 6 percent of each sale starting in April and 8 percent in July across most product categories, marking the end of promotions used to attract customers. sellers. These commissions are still significantly lower than Amazon’s selling fees, which are typically around 15%, but the increase indicates that TikTok is quickly moving to generate revenue from its e-commerce platform.
Americans are increasingly comfortable shopping on Chinese e-commerce apps, including popular fashion site Shein and PDD Holdings Inc.’s Temu, which has exploded in popularity since an ad aired for the Super Bowl in February.
It is unclear what sales targets TikTok Shop has set globally or for other markets. In Indonesia, TikTok took control of Tokopedia, the e-commerce unit of GoTo Group, in a $1.5 billion deal, which allowed the company to restart its online sales service. detail online after months of scrutiny from local government.
First publication: January 4, 2024 | 8:22 a.m. STI
