TikTok records strong growth in e-commerce volume in domestic and international markets

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In China, social commerce has emerged as a leading sales channel for the e-commerce sector. ByteDance, which owns the Chinese social media platform TikTok, has made major inroads in both the domestic as well as international markets. In Southeast Asia, for instance, consumers have quadrupled their spending, with gross merchandise volume on the social commerce platform reaching over US$4 billion. Along with its e-commerce business, TikTok has also generated incremental revenue through its advertising vertical.

• The growth in e-commerce volume and advertising revenue has been largely driven by the continuous growth in its monthly active users. Furthermore, the availability of enhanced monetization tools has helped the firm improve the advertiser's experience and ad performance.

However, unlike its growth in the Chinese and Southeast Asian markets, TikTok has struggled to gain growth momentum in Europe and the United Kingdom. Consequently, to drive the growth of its e-commerce business vertical in international markets such as the United Kingdom and the United States, TikTok outsourced some of its operations to third parties. For instance,

• In October 2022, TikTok entered into a strategic partnership with TalkShopLive to launch the live shopping feature in North America. The decision to source the operations came after the social commerce platform struggled to take off in the United Kingdom. As part of the collaboration, TalkShopLive will provide TikTok with the underlying technology, while also offering support for live streams hosted by brands and influencers.
• In November 2022, TikTok also forged a strategic alliance with ChannelEngine. As part of the collaboration, ChannelEngine merchants in the United Kingdom will be able to sync their catalog and build their presence on the social media platform in a seamless manner. In 2023, ChannelEngine is expected to launch the integration with TikTok Shop in Southeast Asian markets.

Zendbox, the United Kingdom-based fulfillment firm, also launched a service for TikTok. The service will help TikTok sellers to fulfill orders from the Zendbox warehouse. While the fulfillment firm is not an official partner, the collaboration is an important one for TikTok. Notably, the rollout of TikTok in international markets such as the United Kingdom has been faced with several problems, including customer complaints about delayed shipping and brands abandoning the platform due to a lack of sales.

The strategic collaboration with TalkShopLive, ChannelEngine, and Zendbox is part of the firm’s strategy to address some of these challenges, thereby supporting its social commerce ambitions in the United Kingdom and the United States market.

• In the United States, TikTok is reportedly planning to launch fulfillment centers to reduce delivery times. While the firm has not revealed the full plans for its e-commerce fulfillment centers in the North American region, the move will put TikTok in direct competition with players such as Amazon and Walmart, both of whom have been expanding their presence in the social commerce space.

In the United States, TikTok is facing another issue that can severely impact its e-commerce growth in the region. A new bill, if passed, will lead to a ban on the social commerce platform in the United States. The firm has raised fears among lawmakers that Chinese government officials can gain access to the United States user data under Chinese law, which can compel TikTok to hand over information. TikTok, on the other hand, has insisted that United States user data is safely stored outside China and that it is out of reach of the Chinese government.

While the Chinese social media giant has seen its operations get affected due to several issues, including political and operational, the firm had continued to record strong growth in both the domestic and international markets. In 2023, TikTok is planning to further expand its footprint in the global e-commerce market. Brazil, Spain, and Australia are among the other markets, where TikTok plans to step-up e-commerce efforts over the next 12 months. With its expansion strategy, PayNXT360 expects the social commerce platform to further record strong growth in its e-commerce volume over the next three to four years.

To know more and gain a deeper understanding of the global social commerce market, click here.