TikTok sees $17.5 billion shopping activity on Amazon's turf: reports
By Zheping Huang, Alex Barinka, Dong Cao and Olivia Poh
TikTok by ByteDance Ltd. wants to grow the size of its U.S. e-commerce business tenfold this year to as much as $17.5 billion, according to people familiar with the matter, posing a bigger threat to Amazon.com Inc.
The 2024 merchandise volume target for the U.S. version of TikTok Shop — which combines online entertainment with impulse buying — was discussed in internal meetings in recent weeks and could still change depending on how business fares, the people said, asking not to speak to be mentioned by name. discuss private information.
TikTok's ambitious goal sets it up not only for a clash with Amazon, but also for Temu and Shein, other Chinese companies that have made big strides among younger American shoppers. Unlike its two rival discounters, TikTok is banking on its social media reach and the appeal of viral videos to captivate buyers.
TikTok was on track to amass about $20 billion in gross merchandise value globally last year, with Southeast Asia accounting for the bulk of sales through its platform, Bloomberg News reported. Now the company is looking to expand sales in the U.S. and Latin America, where it plans to launch its e-commerce business in the coming months, two people familiar with the matter said.
“The speculative U.S. merchandise sales figures shown by Bloomberg are inaccurate,” TikTok said in a statement.
Founded more than a decade ago by Zhang Yiming and Liang Rubo, ByteDance grew into an internet leader valued at more than $200 billion thanks to the virality of short-video platforms TikTok and Douyin. TikTok Shop is one of the fastest-growing positions for the Beijing-based, closely held company, which is looking to build a new growth engine beyond social media advertising. ByteDance's revenue will rise about 30 percent to more than $110 billion in 2023, outpacing projected growth from much more established social media rivals Meta Platforms Inc. and Tencent Holdings Ltd. was surpassed.
TikTok Shop allows users to purchase items while scrolling through a continuous feed of short videos and livestreams within the main social media app, in the hope that consumers will use it as an alternative to Amazon or Sea Ltd's Shopee. That format — an attempt to combine the convenience of shopping on Amazon with the product discovery offered by apps like Meta's Instagram — has already helped Douyin take a significant share of Chinese consumer spending from Alibaba Group Holding Ltd. and JD.com Inc. after lockdown rules during the pandemic led to people spending more time online.
ByteDance plans to export its e-commerce model globally. In the US, TikTok offers free shipping and subsidies to influencers who sell gadgets, clothing and makeup in videos and livestreams. In November, more than 5 million new U.S. customers, boosted by Black Friday and Cyber Monday deals, bought something on TikTok, the company said. It has around 150 million users in the country.
TikTok announced Wednesday that it will increase the fees imposed on sellers to 6 percent of each sale starting in April and to 8 percent in July for most product categories, ending the promotions used to entice sellers. Those commissions are still significantly lower than Amazon's seller fees, which are typically around 15 percent, but the boost signals that TikTok is moving quickly 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 a Super Bowl ad aired in February.
It is unclear what sales goals TikTok Shop has set globally or for other markets. In Indonesia, TikTok has taken control of GoTo Group's e-commerce unit Tokopedia in a $1.5 billion deal, allowing the company to restart its online retail service after months of local government scrutiny.
First print: January 4, 2024 | 8:22 am IST