TikTok, under the umbrella of ByteDance, is gearing up to expand its e-commerce presence in the United States dramatically, aiming to amplify its business to a potential $17.5 billion in the current year. Sources familiar with the matter revealed that discussions within the company have set this aggressive merchandise volume target for TikTok Shop in the US, a platform blending online entertainment with quick-purchase features. However, these projections remain tentative, subject to alterations based on the business’s performance, as discussed in internal meetings in recent weeks by undisclosed sources due to the sensitivity of the information.
This ambitious objective by TikTok sets the stage for a direct confrontation not only with Amazon but also with other Chinese-owned entities like Temu and Shein, both of which have gained substantial traction among young American consumers. TikTok, unlike its discount-oriented rivals, relies heavily on its expansive social media reach and the allure of viral content to entice and engage potential buyers.
Reports from Bloomberg News suggested that in the previous year, TikTok was on a trajectory to accumulate approximately $20 billion in global gross merchandise value, with a significant portion of sales coming from Southeast Asia. Presently, the company is eyeing further market expansion in the US and Latin America, with plans to launch its e-commerce operations in the coming months, as per sources close to the matter.
Representatives for TikTok have refrained from offering any comments on these developments.
ByteDance, founded by Zhang Yiming and Liang Rubo over a decade ago, has ascended to become a significant Internet powerhouse valued at over $200 billion, largely propelled by the success of its short-video platforms, TikTok and Douyin. The TikTok Shop represents one of the fastest-growing segments for the Beijing-based company, which seeks to diversify its revenue streams beyond reliance on social media advertising. In 2023, ByteDance witnessed a staggering revenue surge of about 30%, surpassing the expected growth rates of more established social media giants like Meta Platforms and Tencent Holdings.
TikTok Shop’s distinctive feature allows users to seamlessly shop while scrolling through a continuous stream of short videos and live broadcasts within the main social media app. This unique format, a fusion of Amazon’s convenience and the product discovery essence akin to Meta’s Instagram, has notably enabled Douyin to capture a significant market share in China, especially following increased online activity during the pandemic.
ByteDance is steadfast in its goal to export this e-commerce model globally. In the US, TikTok is incentivizing influencers with free shipping and subsidies as they promote various products, ranging from gadgets to apparel and cosmetics, through videos and live streams. The company reported a surge in new US customers during the November period, attributed to the momentum of Black Friday and Cyber Monday deals, indicating TikTok’s resonance with approximately 150 million users in the country.
The increasing acceptance of shopping through Chinese e-commerce platforms among Americans, including Shein and Temu, has spurred TikTok’s drive to claim its share in this evolving market landscape. However, the specific sales targets for TikTok Shop on a global scale or within other markets remain undisclosed.
In a strategic move, TikTok made headlines by securing control of GoTo Group’s e-commerce arm Tokopedia in Indonesia through a $1.5 billion deal. This acquisition facilitated the revival of TikTok’s online retail service in the region after encountering scrutiny from the local government for months.