Looking to compete in a lucrative market that’s already rewarded Chinese e-commerce companies, TikTok is all in on a new digital retail blockbuster of its own coming this August.
By then, the China-based digital entertainment platform will have rolled out its new e-commerce business in the U.S., taking on competitors like Shein and Temu who already operate in America.
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TikTok Shop, the company’s e-commerce operation, intends to sell China-made products in the U.S. and expects to hit the ground running in early August, The Wall Street Journal reported on July 25.
While TikTok has certainly made inroads in the U.S. with its streaming video platform, with about 117 million American users, it’s struggled to gain e-commerce altitude in the U.S. over the past few years.
In May, TikTok’s parent company called off a planned launch of a third-party e-commerce operation, as Western merchants balked at partnering with a company that was threatened with a ban by the Biden administration last March, which deemed TikTok as a national security risk.
Now that the smoke has cleared somewhat after TikTok sought to accommodate U.S. security concerns, TikTok Shop is set to open for business in the U.S., the second-largest consumer social market in the world behind China, with over $68 billion in e-commerce sales already in 2023, according to Insider Intelligence.
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TikTok is expected to center its U.S. e-commerce strategy using a “Sold by Amazon”-like program where the company will handle all the shipping and storage services needed for platform merchants, and will charge those merchants a cut of their sales proceeds for every completed sale.
If that sounds familiar, it’s because Amazon operates the same way, as do Temu and Shein, the latter of which earned $800 million in profits in 2022 with U.S. e-commerce sales on its platform.
Yet TikTok acknowledges it has a built-in market that can take business away from global e-commerce competitors.
“The e-commerce landscape this year is simply that all platforms are adopting this new model,” a TikTok spokesperson said at a marketing event in mid-July. “TikTok’s advantage over peer platforms T (Temu)and S (Shein) is that we have one billion monthly active users globally."
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