The TikTok video application, which is part of the ByteDance ownership structure, has begun positioning itself as a free trading platform within the framework of seminars and meetings with Chinese manufacturers and exporters.
The application, which is starting to form a new dimension of its activity, which is the marketplace, provides opportunities for free placement of ads, and free delivery, and guarantees zero commissions and warehousing for everyone. If this tactic is implemented with the proposals indicated by the company, TikTok is likely to radically change the balance of power in the market, where currently the dominant positions belong to Chinese competitors Temu and Shein. Also, the online trading platform of the video application has the potential to limit the scale of the presence of Amazon.
Experts say that this decision by TikTok, which clearly indicates the company’s intention to focus on efforts to carry out activities in the field of e-commerce, is an attempt to change the status of the brand amid increasing pressure on the social video platform in the United States on the eve of the presidential election. The appearance of the firm in the market of cheap goods of Chinese manufacturers will make adjustments to the situation in this trading space.
TikTok will allow Chinese merchants to gain access to an audience of more than a billion users and will take over the work of promoting and delivering products, ranging from marketing to invoicing. This was reported by ByteDance sales managers during live broadcasts. In the case of interaction with TikTok, sellers, according to them, should only provide information about the goods and send them to a warehouse in Guangzhou. The rest of the process is the company’s activity space.
TikTok is a promising platform for commercial interaction since the corresponding application has already been installed on 150 million devices in the United States and at the same time the user base continues to grow.
The company has already launched full-fledged trading platforms inside its main application in the UK and Saudi Arabia. In the coming months, this service will be launched in North America. Representatives of the company have not yet provided any comments on the appearance of the marketplace in the new geographical area.
TikTok’s e-commerce business is currently under active development and is showing four-fold annual growth. Forecasts state that by the end of this year, the gross value of goods will be $ 20 billion. From the point of view of the distribution of sources of income from e-commerce on a regional basis, the greatest financial performance is recorded in Southeast Asia. In this region, TikTok has achieved the greatest success in combining online entertainment and in-app purchases.
TikTok Shop is a kind of commercial space consisting of a collection of small shops that are associated with the profiles of famous people and creators. Users learn about these stores through their content channels.
On the main page of TikTok, there is a Shop tab, which in terms of functionality and design is in a certain sense a traditional shopping site. The company hopes to fill this platform with goods from Chinese sellers and major global brands.
The distribution of TikTok Shop among American users of the video application has long been an important task for the company, but recently the firm has been making maximum efforts to achieve this goal. This is reported by the media with reference to anonymous sources familiar with the plans of the brand. In the context of promoting a centralized marketplace, TikTok follows the experience of Temu, which was launched in the United States in 2022 and quickly topped the charts. The business strategy of this company is to use the full payment model and attract the maximum number of Chinese sellers of goods of various categories.
TikTok, trying to lure sellers to its online platform, promises zero fees. Also, representatives of ByteDance said that they would not create conditions under which sellers would be forced to work at a loss.
The practice of waiving fees is standard for the initial stage of the existence of e-commerce platforms. This strategy was applied by Alibaba Group Holding and brought good results. Shein is also involved in similar practices, albeit on a selective basis.
As we have reported earlier, TikTok to Invest Billions of Dollars in Southeast Asia.