Source: Financial Times

Over the past few months, TikTok has proven to be more than just a short-video app by diving more into e-commerce. The platform has taken this ambition further to create a new shopping feature that sells products for its parent company.

TikTok Takes on E-commerce Giants

TikTok has quickly risen up the ranks to become the fastest-growing application on the globe. What started as a platform to create and share videos has elevated and is now among the first places shoppers visit when looking to buy items.

In fact, statistics show that online shoppers consult TikTok more than apps such as Instagram which have long been known to advertise and sell products. The app holds 35% of the global online market as a source of product information.

Source: Civicscience

To further support businesses on the platform, TikTok launched TikTok Shop which enables users to buy and sell products. The idea behind this feature is to aid users to buy products they see in videos without having to leave the app.

The platform would then be paid a commission from these sales which added to its source of revenue. Courtesy of the sales made on the platform, TikTok was able to make over $85 million in revenue in 2022 alone.

More importantly, TikTok has gathered data that enabled it to create a new shopping feature to sell its own products. This is a similar move made by Amazon, which has leveraged enormous amounts of private data on consumer behavior to identify the best products to sell to its users.

The feature which is named “Trendy Beat” was rolled out for testing in the UK a few weeks ago. So far, this section sells goods that have been featured in popular videos, like clothing items, a five-piece fan-shaped wet and dry makeup puff set, and a vegetable chopper.

According to a report by Financial Times, all the products advertised on Trendy Beat are shipped from China. The items are then sold via a business incorporated in Singapore that is owned by TikTok’s parent company ByteDance.

TikTok’s Project S Aims to Take on E-Commerce Giants

This new business direction, also known as “Project S” within ByteDance is meant to help the company sell cheap items while receiving marketing from TikTok. This will make ByteDance a rival to e-commerce giants such as Amazon and Shein who hold the greater market share for such products.

TikTok has been marketing its products more than those of competing platforms in order to drive more sales to its products. Using trends such as #TikTokMadeMeBuyIt, the app is reportedly pushing the idea to more users.

The project is under the leadership of Bob Kang, the e-commerce head of ByteDance. According to sources, Kang has traveled to London to oversee the initiatives in the UK, where the project is currently being tested.

Trendy Beat is not currently conducting tests in the US since it is “focused on continuing to invite new merchants to join our test of TikTok Shop and learning from our community,” a spokesperson said

Instead, the company has shown signs of building its own product fulfillment centers in the US. Based on recent job postings on LinkedIn, TikTok is looking to build an “international e-commerce fulfillment system” that will include international warehousing, customs clearings and supply chain systems.

To better compete with rivals, ByteDance reportedly hired personnel from Shein, who already have experience in this business niche, to help grow its e-commerce operations. Additionally, the company is also working on manufacturing most of its products itself.

With control over the production process, ByteDance is looking to further lower the cost of products and possibly to levels lower than those of companies like Shein which are already known for cheap products.

“Bob Kang is obsessed with Temu and replicating its success, and he thinks they can do this by inserting themselves into the supply and sale process,” a source from the UK said.

Project S has also been termed as ByteDance’s way of generating more income that can support its $300 billion valuation, which makes it the world’s most highly valued private start-up. This is ahead of the company’s highly anticipated initial public offering expected in the next two years.

TikTok Is the BluePrint

Similar to how TikTok is looking to beat e-commerce giants, Amazon is looking to compete with TikTok. The short videos on TikTok have created a new type of e-commerce known as “shoppertainment” which has been referred to as the future of shopping.

Most shopping platforms are now looking for ways to integrate photos and videos of people using products in order to drive more sales. This is the secret behind Instagram’s and TikTok’s massive sales revenue.

As such, Amazon launched a new feature in the Amazon Shopping app to show photos and videos of influencers and other customers using products. The feature named Inspire will be similar to TikTok’s infinite scroll of content. However, Inspire will be optional whereas TikTok has it as the main feature.

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