Is TikTok going to be the new Amazon?

By aiming to compete with American giants Amazon, Shein, and Temu, the company that owns TikTok, ByteDance Ltd., is reportedly striving to achieve a revenue of $17.5 billion by the end of the year, thanks to the expansion of its shopping platform. According to anonymous sources cited by BoF, the relaunch of TikTok Shop in America has been a hot topic in recent weeks during the company's internal meetings. Will TikTok succeed where Meta failed, bringing to the forefront the toxic combination of social media addiction and online shopping? For years, the app has proven to be a crucial tool for retailers and brands, as seen with trends like the Stanley Cup, popular among Gen Z users, or the niche BookTok, which recommends worthwhile new releases. Despite the short-lived existence of Instagram's marketplace, the ever-growing engagement on TikTok could fuel the purchasing power of the app's users, leveraging the virality of the items.

The Launch of TikTok Shop in America

Until 2023, southeast Asia was the region contributing the most to TikTok sales, accumulating approximately $20 billion in the last twelve months alone. However, ByteDance now aims to expand its market in America, where it is set to inaugurate a new e-commerce space. ByteDance's global growth already surpasses that of Meta, the American competitor, having observed a 30% increase in revenue in 2023 alone. So far, outside of southeast Asia, the revenue of the company behind TikTok relied on advertising. Now, perhaps influenced by studies like The State of Fashion demonstrating user annoyance with ads, the global launch of TikTok Shop could increase ByteDance's earnings, propelling the company to new record heights.

How TikTok Shop Works

The TikTok Shop feed follows the original app's format, showcasing a series of short videos and live stream feeds. Using the algorithm that has long contributed to the app's rise, TikTok Shop aims to combine the ease of online shopping from Amazon with the engagement provided by social media. ByteDance's e-commerce will be officially launched in the United States and Latin America in the coming months, offering free shipping and subsidies to influencers participating in live selling. In November, during Black Friday and Cyber Monday, over 5 million US users purchased items through the app. Taking a cue from fast fashion competitors like Shein and Temu, who focus on low prices and cheap shipping, TikTok Shop boasts lower fees than Amazon - currently around 15% for merchants, though they recently announced an increase from 6% to 8% by July 2024. Despite the TikTok ban in America by the US government, American users are increasingly willing to purchase products on Chinese apps and e-commerce platforms. Shein's popularity skyrocketed after sponsoring an ad during the 2023 Super Bowl.