TikTok has big plans to compete with Shein, Temu in the US
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TikTok has big plans to compete with Shein, Temu in the US

Nov 10, 2023

TikTok is gearing up to join Chinese titans Shein and Temu in competing for a share of the global e-commerce market. The short-form video-sharing platform is preparing to launch a program that will help Chinese merchants sell goods to the US and beyond, the The Wall Street Journal reported yesterday (July 25).

Cast in the same mould as Amazon’s “Sold By Amazon” program, TikTok will provide a range of services to sellers, including storage, marketing, transactions, and logistics, according to Semafor, which had first reported on the opening of the US shop last month.

A full-fledged launch of the program is expected in August in the US, WSJ reported, adding that it was already being tested in Britain. Earlier in June, TikTok confirmed a new in-app “Trendy Beat” shopping section, where it is offered products for sale that are shipped and sold by a subsidiary of ByteDance, was available in the UK. On May 30, it filed a trademark application for “Trendy Beat” in the US.

As a social media company, TikTok has not had to deal with warehousing, supply-chain management and after-sales service so far. To get the ball rolling, the company has been poaching Temu and Shein talent, according to the WSJ.

The “Shop” feature TikTok already runs in the US, the UK, and Asia is distinctly different from the new program, as the former aims to replicate China’s $400 billion livestream shopping industry outside the mainland. Brands pay a small commission to sell their products on the platform via streams, giving exposure to local businesses. TikTok has been onboarding brands like PacSun and Revolve for TikTok Shop in the US.

However, TikTok Shop transactions don’t bring in dollars for TikTok. Sellers host shopping broadcasts on the platform, but consumers ultimately need to check out through the brands’ websites and third-party shipping partners fulfil the orders. For the new e-commerce project, TikTok is purchasing its own inventory and running its own logistics network.

TikTok got its start in China but touts itself as a global company today. Its parent company ByteDance moved its headquarters to Singapore as part of a strategy to distance itself from its country of origin as US-Sino tensions rise.

TikTok CEO Shou Chew is a third-generation Singaporean, and more than 60% of the company is owned by global institutional investors such as Carlyle Group, General Atlantic, and Susquehanna International Group.

In the same vein, the new program isn’t meant to serve just Chinese business, but merchants across the globe. Chinese businesses are likely to be a starting point for the program, given the glut of merchants and solid export rules, and the ability to exploit loopholes in US import laws and avoid high tariffs. The controversy surrounding TikTok in the US, which has led to the threat of a ban, might make American merchants weary of participating in the program, at least in the beginning.

“TikTok’s advantage over peer platforms T (Temu) and S (Shein) is that we have one billion monthly active users globally.”—A TikTok merchant manager quoted in the WSJ taking to an online roadshow audience last week.

TikTok’s move into the US social e-commerce space comes months after a deep-pocketed American giant bowed out of it. In January, Meta-owned Instagram scrapped the shop tab from its homepage layout. Two months later, it killed live shopping, which allowed creators to directly tag products and promote links in their live broadcasts, and directed resources to traditional ads instead.

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Feature of interest: TikTok ShopQuotable: TikTok has a billion reasons to launch e-commerceCompany of interest: Instagram