TikTok, the social media giant owned by ByteDance, is making plans to shake up the US eCommerce scene by aiming to grow its business tenfold to a whopping $17.5 billion in 2024.
The plan, discussed in recent internal meetings, puts TikTok Shop in direct competition with Amazon, Shein, and Temu in the American market. However, unlike its discount-focused rivals, TikTok is banking on its vast social media reach and the popularity of viral videos to entice buyers.
TikTok's eCommerce Skyrocketed In 2023
In the past year, TikTok was already on a trajectory to achieve around $20 billion in global gross merchandise value, with the majority of sales coming from Southeast Asia.
Now, the company is setting its sights on expanding its eCommerce operations in the US and Latin America, with a planned launch in the coming months.
TikTok Shop, a rapidly growing feature within the platform, allows users to seamlessly purchase items while scrolling through short videos and live streams. The company hopes this format will position it as an alternative to giants like Amazon and Shopee. ByteDance, valued at over $200 billion, is seeking new avenues for growth beyond social media advertising.
With a revenue that experienced an impressive 30% surge in 2023, exceeding $110 billion, the media giant outpaced established social media rivals Meta Platforms Inc. and Tencent Holdings Ltd.
TikTok, with approximately 150 million users in the US, refuted the speculated merchandise sales figures reported by Bloomberg, stating, "The speculated US merchandise sales figures represented by Bloomberg are inaccurate."
TikTok's 2024 Strategy
To achieve its e-commerce goals this year, the video streaming platform is adopting a strategy of free shipping and subsidies to influencers promoting gadgets, clothing, and makeup through videos and live streams.
In line with this, TikTok announced an increase in fees imposed on merchants, starting at 6% of each sale in April and escalating to 8% in July for most product categories. Though still considerably lower than Amazon's seller fees, which typically sits at 15%, the move signals TikTok's transition towards generating revenue from its eCommerce endeavors.
The media giant's initiative comes at a time when American consumers are increasingly comfortable shopping on Chinese eCommerce platforms, evident in the popularity of Shein and Temu.