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The backstory: TikTok, the social media sensation, is not just a place for viral dances and funny videos. It's also been making moves into the e-commerce scene, especially in China with its mainland Chinese counterpart Douyin. In fact, China's live-streaming e-commerce market is booming, with predictions of reaching 4.9 trillion yuan (about US$676 billion) by year-end. This has caught the attention of hosts and sellers, not just in Asia but in Western markets like the US and Europe. But things haven't been all smooth sailing for TikTok, as it's faced some heat from US officials.
There are data security concerns swirling around the app, and the US government has even considered a bill that could ban apps it sees as security risks. TikTok's CEO, Shou Zi Chew, even had to testify in front of Congress in March to defend the platform.
More recently: Last November, TikTok decided to take on the US e-commerce market by launching TikTok Shop. It's like an online marketplace that lets local vendors sell their stuff to TikTok users in specific regions. TikTok Shop is also making strides in Southeast Asia, taking on established players in the e-commerce market like Shopee and Lazada. In fact, TikTok has said it'll invest billions into the region in the coming years. But while it’s gaining momentum in Asia, its growth in the US has been a bit slower.
The development: TikTok reportedly plans to launch a new program in August to help Chinese merchants sell their stuff globally. It'll kick off in the US first, according to a person in the know who spoke to The Wall Street Journal. The idea is to follow the success of shopping platforms like Shein and Temu in the US. Being a Chinese-owned company, it's giving these merchants a leg-up by providing services like storage and shipping, making it easier for them to sell products in the US.
The program, nicknamed "full service," has been undergoing testing in markets like Britain. While an exact launch date isn’t confirmed, TikTok is actively working towards its US debut. In the future, TikTok plans to extend the program to merchants beyond China. The company's decision to prioritize Chinese businesses first is rooted in China's established export rules and manufacturing prowess as a global factory powerhouse.
"TikTok Shop is an innovative new shopping feature which enables merchants, brands and creators to showcase and sell products directly on TikTok through in-feed videos, LIVEs, and the product showcase tab," said a message on the TikTok Shop Seller Center website.
"Across Southeast Asia, more than 325 million people come to TikTok every month and 15 million businesses use the platform. The role we've played in expanding economic opportunities, education and community-building in this region and around the world is immense. We are excited to see the positive impact TikTok has had and are committed to continuing the work of helping individuals, communities, and businesses grow and thrive," said TikTok CEO Shou Chew in June.
“The rapid growth of TikTok Shop poses a direct threat to Southeast Asia’s incumbent e-commerce leaders,” said Simon Torring, co-founder of e-commerce research firm Cube Asia. “It is however still too early to declare TikTok Shop’s victory. It has not yet demonstrated the ability to gain significant growth momentum outside the beauty and fashion categories, and a lot of the current growth is heavily subsidized by TikTok through vouchers and aggressive marketing spending.”