![Small shopping cart and shopping bag and boxes on top of a laptop, which shows the TikTok logo](jpg/tiktok-shopping.jpg)
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TikTok is reportedly preparing to capitalize on its social commerce success with a marketplace that could launch as soon as early August, people familiar with the matter told The Wall Street Journal. The store would focus on selling made-in-China goods to U.S. consumers, putting TikTok in direct competition with Shein and Temu.
The marketplace, called the TikTok Shopping Center, would integrate multiple channels to create a single page where users can view and buy goods. The selection would include items stored and shipped by TikTok on behalf of Chinese manufacturers and merchants as well as products sold directly to shoppers by other retailers.
TikTok also plans to include marketing, transactions, logistics, and post-sale experience among the services it will offer Chinese companies. The overall marketplace will feature a wide range of items, including clothes, electronics, and kitchen gadgets.
The social media giant is no stranger to retail. TikTok Shop lets browsers purchase items from retailers without needing to leave TikTok’s ecosystem, and e-commerce solution provider WooCommerce recently integrated support for this feature into its own platform. Capabilities for retailers using WooCommerce include in-feed videos, livestreams, and product showcase tabs on profile pages.
Additionally, TikTok is testing the “Trendy Beat” shopping section in the U.K., according to TechCrunch. This aspect of the platform showcases popular items from trending videos and could serve as a beta test for a larger e-commerce marketplace launch in the U.S.
Americans on average purchased four items on TikTok totaling $150 in the 52-week period that ended Nov. 1, 2022, according CouponFollow’s survey of 1,000 social media followers. The hashtag #TikTokMadeMeBuyIt had more than 30 billion views at that time, and since then it’s doubled to 63.8 billion views.
Even with numbers like this in mind, TikTok’s plans are ambitious: The platform is aiming to quadruple its gross merchandise value to $20 billion in 2023 from $5 billion in 2022, sources told The Wall Street Journal. With an average of over 150 million monthly active TikTok users in the U.S., according to TikTok internal data from March 2023, the platform has the audience to make its goal a reality.
However, the leap from a social commerce enabler to an Amazon-style marketplace is a major undertaking. TikTok understands this challenge — sources told The Wall Street Journal that an e-commerce team began studying the business models of TikTok’s “fast-growing rivals” in March — but it remains to be seen if TikTok and parent company ByteDance can bridge the gap between understanding and execution.
People familiar with the matter also said that merchants using TikTok’s existing third-party seller platform in other regions have struggled to maintain adequate customer service and grow profit. Additionally, complaints about fakes and scams are a challenge that plagues marketplaces around the world, to the point that Amazon has invested $1.2 billion into fighting the problem, and TikTok is no exception.
TikTok faces additional pressure in the U.S. from lawmakers who have branded the Chinese-owned social media sensation a national security risk. The Biden administration is supporting the bipartisan RESTRICT Act, which would empower the Department of Commerce to “review, prevent, and mitigate” information communications and technology transactions to prevent threats posed by “technology from foreign adversaries,” potentially hampering TikTok’s ability to operate in the U.S.
Despite the challenges, TikTok seems ready to launch the next step in its evolution. Job recruiters told The Wall Street Journal that the social media giant is recruiting professional buyers as well as warehouse and order managers — including experts employed at Temu and Shein. TikTok reportedly also plans to expand the program to companies outside China as it builds up its international logistics system, which could set the stage for international retailers to sell through the TikTok Shopping Center.
BrainTrust
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Neil Saunders
Managing Director, GlobalData
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DeAnn Campbell
Head of Retail Insights, AAG Consulting Group
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