ByteDance Ltd.’s social media company, TikTok, is embarking on an audacious mission to establish itself as a dominant player in the e-commerce industry with the lofty goal of quadrupling its global sales.
TikTok aims to achieve a staggering $20 billion in merchandise sales this year, according to people familiar with the matter.
“That would be a speedy increase from last year’s $4.4 billion in gross merchandise value, which represents the total worth of goods sold through its TikTok Shop offering,” said the anonymous sources.
TikTok is betting on rapid growth in Southeast Asia, particularly in markets like Indonesia, where influencers showcase products through live-streamed videos, ranging from denim jeans to lipstick.
TikTok is also working to expand its sales in the United States and Europe, albeit on a smaller scale compared to its overall target. The company aims to grab a bigger share of the $17 trillion online commerce market as its main revenue driver, especially after its advertising business slows down due to the ongoing economic downturn.
Despite threats of a potential ban by American politicians over national security concerns, TikTok sees potential in forming profitable ties with US merchants and brands.
“The Chinese-owned company is intent on exporting its commerce model to the US and its 150 million users there,” the sources added. TikTok has proposed measures to address national security concerns, such as data isolation for American users and technology reviews by partners like Oracle Corp.
However, challenges persist, with the state of Montana imposing a prohibition on the app’s download starting in 2024, and lawmakers proposing similar bills for a nationwide ban.
When approached for comment on the company’s financials, a TikTok spokesperson declined to provide any statements.
ByteDance, founded over a decade ago by Zhang Yiming and Liang Rubo, has become a prominent internet leader valued at over $200 billion. Its success can be attributed to the virality of TikTok and Douyin, its Chinese counterpart. While live shopping has yet to gain significant traction in the US and Europe, TikTok draws inspiration from Douyin’s success in China.
TikTok Shop allows users to buy items while scrolling through an endless feed of short videos and livestreams. By blending entertainment with impulse buying, TikTok aims to position itself as a viable alternative to giants like Amazon.com Inc. and Sea Ltd.’s Shopee.
Douyin’s success in capturing a significant portion of Chinese consumer spending from Alibaba Group Holding Ltd. and JD.com Inc. serves as a testament to the potential of TikTok’s commerce model.
“The rapid growth of TikTok Shop poses a direct threat to Southeast Asia’s incumbent e-commerce leaders,” said Simon Torring, co-founder of e-commerce research firm Cube Asia. “It is, however, still too early to declare TikTok Shop’s victory. It has not yet demonstrated the ability to gain significant growth momentum outside the beauty and fashion categories, and a lot of the current growth is heavily subsidized by TikTok through vouchers and aggressive marketing spending.”
