In a move that signals its aspirations beyond social media, TikTok, the Chinese-owned company, is set to launch an online retail store within the U.S. version of its app, as reported by Semafor. This bold endeavor will involve TikTok procuring inventory, managing warehousing and logistics, and overseeing customer service operations. Unlike the current TikTok shop, which allows brands to sell products on the platform at a fee, this upcoming e-commerce platform will be a distinct venture. TikTok is betting that operating its own e-commerce store will yield success, drawing inspiration from Douyin, its Chinese counterpart, also owned by ByteDance, which has already surpassed sales on Alibaba’s Tmall.
To realize this ambitious undertaking, TikTok is actively recruiting individuals through its career website to oversee the new feature. Among the positions listed is one based in Los Angeles, responsible for managing the “TikTok Shop Shopping Center.” This center will offer customers the opportunity to explore promotions, make purchases from TikTok merchants, and manage their orders.
TikTok’s foray into e-commerce represents a significant ambition. Over the years, numerous companies have endeavored to merge social media with shopping, giving rise to the concept of “social commerce.” The aim is to create seamless shopping experiences for consumers as they engage with social media content. However, previous attempts have had limited success. Instagram introduced features that enable users to shop directly from brand photos or videos, while Snap has a similar feature in development.
What sets TikTok’s forthcoming shop apart is the level of control it will possess over inventory, pricing, and the overall shopping experience. Leveraging its vast data, TikTok can identify trending products among its user base and analyze user behavior to optimize conversion rates. Given that TikTok users already spend close to 56 minutes per day on the platform, the company has ample opportunities to showcase and sell products. These advantages could potentially position TikTok ahead of even e-commerce giant Amazon.
Should TikTok’s e-commerce venture prove successful and achieve scalability, it could have broader implications. Chinese fast-fashion label Shein, which rapidly penetrated the U.S. market, has faced allegations of human rights violations and the production of environmentally harmful, disposable products. (Shein denies these allegations.) If TikTok follows a supply chain model similar to Shein’s, it could pose concerns for both workers and the environment.
However, it is crucial to acknowledge that TikTok’s foray into e-commerce is far from guaranteed success. Establishing a thriving e-commerce business is notoriously challenging, especially considering TikTok’s limited experience in the American market. The cost of setting up a comprehensive supply chain, including shipping and operational logistics, is substantial. Furthermore, the risk of holding inventory lies with TikTok, as it may incur losses if items fail to sell.
Undoubtedly, this venture represents a daring experiment. Yet, if TikTok manages to achieve favorable outcomes, it has the potential to disrupt the landscape of online retail as we currently understand it.