ByteDance Ltd-owned TikTok is reportedly planning a massive expansion of its U.S. e-commerce business. The Chinese social media powerhouse aims to reach revenues of $17.5 billion, posing a unique threat to the e-commerce behemoth Amazon.com Inc AMZN.
What Happened: Insiders revealed that the U.S. version of TikTok Shop is set for a drastic increase in merchandise volume by 2024. TikTok’s unique model, which blends online entertainment with impulse buying, could challenge not only Amazon but also Chinese e-commerce platforms like PDD Holdings Inc PDD owned Temu and Shein, as per Bloomberg report.
By leveraging its extensive social media reach and viral videos, TikTok plans to attract potential buyers. With the majority of its $20 billion in global gross merchandise value generated in Southeast Asia last year, TikTok is now focusing on boosting sales in the U.S. and Latin America.
ByteDance’s revenue saw an approximately 30% surge in 2023, surpassing $110 billion and outpacing the growth of social media competitors like Meta Platforms Inc and Tencent Holdings Ltd.
TikTok Shop, one of ByteDance’s fastest-growing features, offers users the opportunity to purchase items while browsing through a feed of short videos and live streams. The company hopes this unique format will provide an alternative to Amazon or Sea Ltd‘s SE Shopee.
Why It Matters: This ambitious expansion plan comes after TikTok’s decision to increase its seller fees from 2% to 8% plus a $.30 commission fee. This move was aimed at boosting sales to its platform after the company reportedly lost more than $500 million in its growing e-commerce vertical last year.
Earlier, ByteDance had made a strategic decision to exit the gaming industry and shut down its main brand, Nuverse. This move allowed the company to focus more on its e-commerce and social media platforms.
The company’s e-commerce ambitions have been evident, as they have been attempting to rival Amazon by transforming into a hub for e-commerce. TikTok’s strategy included covering shipping and discounts while still paying full price to sellers for each sale in exchange for creating product videos for the platform. With around 150 million U.S. users, TikTok’s e-commerce expansion could significantly reshape the industry.
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