TikTok is aiming to significantly increase its global e-commerce business, with the goal of generating up to $20 billion in merchandise sales this year. The company is banking on the rapid growth of Southeast Asian markets, such as Indonesia, where influencers use live-streamed videos to sell a range of products.

Expanding TikTok Sales in the US and Europe Amidst Regulatory Pushback

According to a Bloomberg report, while TikTok also seeks to expand its e-commerce operations in the US and Europe, these regions make up a smaller portion of its overall target. With its primary revenue driver, advertising, slowing down, TikTok is focusing on capturing a larger share of the $17 trillion online commerce industry.

Despite facing potential bans in the US over national security concerns, TikTok believes that forging profitable partnerships with American merchants and brands could help it gain support and allies while addressing criticism from Washington and the courts.

The company has proposed measures, including data segregation and technology review by external entities, to address security concerns. However, the app is still facing bans at the state level, with Montana planning to prohibit downloads in 2024 and similar bills proposed nationwide.

Regarding financials, TikTok declined to comment. ByteDance, the parent company, has seen significant success thanks to the popularity of its short-video platforms, TikTok and Douyin. While live shopping has not gained traction in the US and Europe, TikTok draws inspiration from the success of Douyin in China.

TikTok Shop, where users can buy products while scrolling through short videos and live streams, aims to provide an alternative to established e-commerce platforms like Amazon and Shopee. The company launched a similar service in select markets in 2021, scaling back in the UK but continuing to thrive in Southeast Asia where it competes with Lazada, Shopee, and Tokopedia.

Simon Torring from Cube Asia, an e-commerce research firm, acknowledges TikTok Shop’s potential to disrupt Southeast Asia’s e-commerce leaders. However, he highlights the need for further growth outside the beauty and fashion categories stating:

“A lot of the current growth is heavily subsidized by TikTok through vouchers and aggressive marketing spending.”

While TikTok Shop currently represents a small portion of ByteDance’s revenue, achieving its ambitious $20 billion target could demonstrate the viability of live-stream commerce beyond its niche audience and challenge traditional online shopping globally.

Nonetheless, TikTok faces scrutiny from governments and regulators due to concerns about data privacy and China’s influence. As part of its expansion plans, TikTok is reportedly considering outsourcing the operations of its live shopping platform in North America through a partnership with TalkShopLive, a Los Angeles-based company.

TikTok’s Exponential Growth

In 2022, the global user base of TikTok reached around 1.7 billion, showing a remarkable increase of over 66 percent compared to 2020. TikTok, which was introduced in 2017 as an international adaptation of the Chinese social media app Douyin, gained widespread popularity in 2020, with a peak of about 313.5 million downloads in the first quarter of that year. It is projected that TikTok will have around 2.25 billion users by 2027.

Source: Statista

In September 2022, Khabane Lame, a popular TikTok creator and comedian, achieved the status of being the most followed content creator on the platform, surpassing dancer Charli D’Amelio. Hailing from Italy, Lame’s follower count reached 155 million by March 2023. Charli D’Amelio closely trailed behind in second place with 150 million followers, while singer Bella Poarch secured the third position with a substantial following of 93 million users.

Source: Statista

To achieve its revenue goal, the popular short video-sharing platform will likely need to continue innovating its e-commerce offerings, addressing concerns regarding data privacy and security, and building trust with users and partners.

While the $20 billion target represents an ambitious aim, TikTok’s strong user base, global reach, and successful adoption of its social media platform position the company well to capture a significant share of the growing online commerce market.

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