No rest for the wicked, it seems! TikTok, the Chinese video app owned by ByteDance, is planning to expand its global e-commerce business and, through merchandise sales, aiming to reach $20 billion in gross merchandise value (GMV) this year.
- TikTok’s E-commerce Growth Plan
- Survey Findings: Marketers’ Views on TikTok
- Importance of the US Market
- Challenges Faced in the US Market
- The Potential Impact of TikTok Shop
- What Does the Future Hold for TikTok?
TikTok’s E-commerce Growth Plan
While TikTok focuses on working out the kinks in the US market, the company is also eyeing opportunities closer to home. By betting on strong growth in Southeast Asia, TikTok aims to bring in most of the cheese and double down on e-commerce after experiencing a slowdown in ad sales and are working to reclaim (and even surpass) its previous position as a social e-commerce powerhouse.
According to Bloomberg, the short video app generated $4.4 billion in GMV through its TikTok Shop in the previous year. However, the platform has set its sights on a much higher target, aiming to quadruple its GMV to $20 billion in 2023. Talk about ambition! This ambitious target showcases TikTok’s determination, and they have something cooking to bring it to fruition.
The idea that TikTok is leaning into is to apply what they learn from other successful frameworks. Specifically, it’s aiming to replicate the success of its sister app Douyin’s live shopping model, which is more or less the TikTok of China, as it is not available outside of the mainland country. (Additionally, there is Lemon8, a shopping platform available in the US through ByteDance, which could serve as an alternative.)
Successfully implementing this would allow TikTok to position itself as a formidable competitor to industry giants such as Amazon and Shopee worldwide.
But can they convince advertisers in the US that working together is worth it?
Survey Findings: Marketers’ Views on TikTok
Are marketers still putting their trust in TikTok? A recent Capterra Marketer Sentiment Survey sheds light on their opinions:
- Despite lingering security concerns, a staggering 87% of marketers firmly believe that TikTok remains a viable platform for long-term marketing strategies. It seems the potential outweighs the worries.
- What if TikTok were to vanish? A whopping 82% of marketers fear that their advertising goals would become increasingly challenging to achieve without TikTok’s reach and engagement.
- In the event of a TikTok ban, 70% of marketers have contingency plans in motion, intending to expand into other digital channels beyond social media. Facebook and YouTube emerge as the top alternatives, capturing the attention of 80% and 79% of marketers, respectively.
- When it comes to TikTok’s safety and privacy, 60% of marketers express valid concerns. However, only 31% perceive brand safety as a significant challenge when utilizing the platform, highlighting a distinction between data privacy and brand reputation.
- Unraveling TikTok’s algorithms remains a puzzle for 47% of marketers, adding an air of mystery to the platform’s inner workings.
- Allegations of TikTok spying on U.S. users find believers in 45% of marketers. The debate surrounding data privacy continues to loom large.
- The banishment of TikTok could pave the way for other industry players to seize the opportunity. Companies like Meta, YouTube, and Snap could stand to benefit, likely generating more revenue in the absence of TikTok.
As marketers navigate the evolving landscape, these insights provide a glimpse into the perceptions and considerations that shape their strategies in an uncertain TikTok world.
And yet, TikTok seems to be on its way to perhaps, by chance or hard work, actually thrive once more–and more so than other competitors who also do business in promoting as can be seen in recent ad spend trends. If these trends continue, the social app will sigh in relief. Yet this would pose nearly impossible if American involvement waned disappearing into the night like a runaway.
Importance of the US Market
While TikTok has set its sights on global growth, capturing the US market is crucial for its e-commerce ambitions. As the world’s second-largest social commerce market after China, the US becomes a primary target for TikTok’s expansion strategies.
With the hurdles TikTok faces in the US, including concerns surrounding the handling of American user data, developing positive relationships with US brands isn’t the only objective. But it is still vital as it’s entirely possible that it could help the platform garner support, gain allies and counter critics in Washington and the courts.
However, convincing US merchants to embrace TikTok’s offerings has proven challenging thus far, despite the statistics supplied in the previous section. Given that the US is a major social commerce market, TikTok needs to convince American merchants of the platform’s value proposition.
To be fair, TikTok Shop only began enlisting merchants on an invite-only basis in November 2022. Just as recently as April, TikTok announced that it had transitioned TikTok Shop from alpha to beta testing to attract more merchants. Reportedly nipped in the bud, this launch was paused in the US mere weeks after being set in motion. However, there have been articles claiming that these claims were denied by TikTok. Unable to suss out what the actual current status is on this initiative, we’re left with a lot of intrigue!
Either way, TikTok Shop faces a combination of other obstacles as well. These include shifting consumer shopping behaviors, a slowdown in overall social commerce growth, low adoption of live commerce, and the potential (and partially realized) risk of a ban.
As TikTok continues to navigate these complexities, overcoming the obstacles and ensuring the success of its Shop will be pivotal for TikTok to fully tap into the immense potential of the US market if it wants to solidify its position as a dominant force in the social commerce industry.
Challenges Faced in the US Market
The road to success in the US market has not been smooth for social platforms, particularly in the realm of shopping and live stream commerce. Meta (formerly Facebook) discontinued multiple shopping features, and TikTok had already delayed the release of its TikTok Shop more than once.
Overcoming consumer skepticism regarding data security, credit card information, and trust in the shipping and returns process is a significant challenge for any social platform attempting to establish itself as an e-commerce destination.
To gain trust and overcome these hurdles, TikTok may need to collaborate with major retailers like Walmart, Amazon, and Target. This would likely require concessions related to data ownership and user interface, potentially integrating with existing retailer checkout systems.
The Potential Impact of TikTok Shop
TikTok’s success in the US greatly depends on the acceptance of its e-commerce feature. If the platform successfully integrates a major retailer, it could transform the mindset of US consumers regarding livestream and in-app commerce. While the rollout of TikTok Shop has been complicated (to say the least), securing a partnership with a prominent retailer could drive substantial changes in consumer behavior and expectations.
Despite these challenges, TikTok remains a formidable social commerce platform in the US and continues to experiment with new features, like testing visual search in its Shop to stay on the cutting edge. Its influence is undeniable, making it a must-have platform for sellers targeting Gen Z, even without the full functionality of TikTok Shop.
What Does the Future Hold for TikTok?
As TikTok forges forth with ambitious e-commerce expansion plans, challenges abound even despite focusing on Southeast Asia as a key growth market. The company’s aspirations of reaching $20 billion in gross merchandise value this year showcases its determination to reclaim its position as a social e-commerce powerhouse, even in the US.
While uncertainties and obstacles persist, TikTok remains a force to be reckoned with in the ever-evolving world of social commerce. The platform’s influence on Gen Z and its ability to captivate users cannot be underestimated, making it an essential platform for sellers targeting this coveted demographic.
With its unwavering perseverance, innovative features, and ongoing experimentation, TikTok continues to push boundaries and shape the future of e-commerce. As TikTok’s future remains uncertain, we marketers must remain adaptable and adjust our strategies based on evolving digital trends.
In the meantime, I guess we’ll all just have to keep shaking our Magic 8 Ball and hope to someday get a response besides, “Reply hazy, try again.”
