HONG KONG – ByteDance’s TikTok aims to grow the size of its US e-commerce business tenfold to as much as US$17.5 billion (S$23.3 billion) in 2024, according to people familiar with the matter, posing a bigger threat to Amazon.com.
The 2024 merchandise volume goal for the US version of TikTok Shop – which melds online entertainment with impulse buying – was discussed in internal meetings in recent weeks and may still change depending on how the business goes, said the people.
TikTok’s ambitious target sets up a clash not just with Amazon, but also fellow Chinese-owned outfits Temu and Shein, which have been making big strides among younger American shoppers. Unlike its two rival discounters, TikTok is counting on its social media reach and the appeal of viral videos to hook buyers.
TikTok was on track in 2023 to amass around US$20 billion in global gross merchandise value, with South-east Asia contributing the bulk of sales through its platform, Bloomberg News reported. Now, the company is seeking to expand sales in the United States and Latin America, where it is planning to launch the e-commerce operation in the coming months, two people familiar with the matter said.
“The speculated US merchandise sales figures represented by Bloomberg are inaccurate,” TikTok said in a statement.
ByteDance, founded more than a decade ago by Mr Zhang Yiming and Mr Liang Rubo, grew into an Internet leader worth more than US$200 billion, thanks to the virality of short-video platforms TikTok and Douyin. TikTok Shop is one of the fastest-growing features for the company, which is seeking a new growth driver beyond social media advertising. ByteDance’s revenue surged roughly 30 per cent in 2023 to more than US$110 billion, outpacing the projected growth of far more established social media rivals Meta Platforms and Tencent Holdings.
TikTok Shop lets users buy items while scrolling through a perpetual feed of short videos and live streams within its main social media app, hoping consumers use it as an alternative to Amazon or Sea Limited’s Shopee. That format – an effort to combine the ease of shopping on Amazon with the product discovery afforded by apps like Meta’s Instagram – has already helped Douyin snatch a significant portion of Chinese consumer spending from Alibaba Group Holding and JD.com, particularly after lockdown rules during the Covid-19 pandemic drove people to spend more time online.
ByteDance is intent on exporting its e-commerce model globally. In the US, TikTok is offering free shipping and subsidies to influencers who peddle gadgets, clothes and make-up in videos and live streams. In November, boosted by Black Friday and Cyber Monday deals, more than five million new US customers bought something on TikTok, the company said. It has roughly 150 million users in the country.
Americans are increasingly comfortable shopping on Chinese e-commerce apps, including the popular fashion site Shein and PDD Holdings’ Temu, which has exploded in popularity since airing a Super Bowl ad in February.
It is unclear what sales targets TikTok Shop has set globally or for other markets. In Indonesia, TikTok has taken control of GoTo Group’s e-commerce unit Tokopedia in a US$1.5 billion deal, which allowed the company to restart its online retail service after months of scrutiny by the local government. BLOOMBERG
https://www.straitstimes.com/business/tiktok-targets-23-billion-shopping-business-on-amazon-s-turf
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