TikTok prepares to ride the social media shopping wave
• Plan is to replicate the success of its cousin Douyin, which racked up $26bn of e-commerce transactions in a year
ByteDance’s TikTok is working with brands including streetwear label Hype to test inapp sales in Europe, a move that will intensify its competition with Facebook and further blur the line between social media and online shopping.
The popular video app is hoping to replicate abroad the success of its Chinese-only cousin Douyin, which racked up $26bn of e-commerce transactions in just its first year of operation. TikTok has begun working with merchants in markets including the UK on ways they can sell products directly to millions of users within the app, people familiar with the matter say.
While TikTok has run promotional shopping campaigns in the past, the trials are a precursor to a broader launch of a global e-commerce service. The prototype so far is visible only to select participants. It is not known when the company will kick off the formal launch.
A Hype representative confirmed the test without commenting further. The label’s storefront under its TikTok account displays a range of merchandise with product images and prices, according to a screen grab provided to Bloomberg News.
ByteDance is moving aggressively into a $1.7-trillion Chinese e-commerce arena in hopes of adding another mega-growth story to its stable ahead of a much-anticipated initial public offering. It aims to handle more than $185bn of e-commerce annually by 2022, building on the reach of social media wunderkinds TikTok and Douyin. Unlike Chinese rivals Alibaba Group or Tencent, ByteDance’s apps also enjoy a broad global fan base, and cofounder Zhang Yiming wants to use that as a springboard into the game of online commerce.
“TikTok has been testing and learning with e-commerce offerings and partnerships and we are constantly exploring new ways” to add value, the company said in an e-mailed statement. “We will provide updates as we explore these important avenues for our community of users, creators and brands.”
The internet giant remains a late entrant to China’s social commerce scene, where influencers tout products to fans like a Gen-Z version of the Home Shopping Network. It is counting on its artificial intelligencedriven, interest-based recommendations to help its e-commerce business catch up.
STOREFRONTS
The move comes as social media titans around the world scramble to grab their share of online retail, a segment that will generate $5-trillion in sales in 2021, according to eMarketer’s projections.
In May 2020, Facebook introduced new tools to improve the shopping experience on its platform as well as photo sharing app Instagram. Pinterest has also stepped into e-commerce by channelling buyers to merchants’ websites.
TikTok, for its part, had already begun testing the waters in online shopping through promotional tie-ups with Walmart and Canadian e-commerce firm Shopify. Businesses typically tag their products in TikTok’s social content, with links directing buyers to their own sites, but users still technically stay in the TikTok app. Facebook and Instagram let merchants either set up their in-app storefronts or channel users to third-party services.
Now TikTok aims to lock users inside its ecosystem to a greater degree. Brands like Hype will run dedicated stores on the video platform, taking orders from and interacting directly with shoppers. While the Chinese company won’t handle sales or merchandise itself, it hopes to sell more ads to merchants, boost traffic and take a cut of business.
Back in December, Zhang told global employees that ecommerce, when combined with live-streaming and short videos, offers an even bigger opportunity outside China, according to attendees who asked not to be identified.
The company has also been quietly building a team of engineers in Singapore to grow TikTok’s nascent e-commerce operations.
It’s unclear how TikTok intends to proceed, but its Chinese twin offers clues. In a splashy coming-out party for Douyin’s one-year-old business in April, executives explained that the company intends to replicate its success with AIrecommended videos in online shopping.
By scrolling an endless stream of content linked with physical goods, the start-up aims to hook shoppers the same way lip-syncing videos enthralled a generation of American and European teens.