TikTok Gears Up for US Market Entry

TikTok is reportedly preparing to launch live shopping just in time for the holidays. Recent job listings on LinkedIn also indicate the company’s plans to build out its own fulfillment network in the US, allowing them to play in the big leagues. 🥊

An interesting and not totally unexpected play for the platform that practically reinvented the concept of virality, going so far as to spawn the FOMO-fed trend, “TikTok made me buy it.” 

If any platform can make this work for them, TikTok has a better chance than most.

New Disruptor

According to the Financial Times, the Chinese social commerce app is bringing TikTok Shop, a Quality Value Convenience (QVC)-style shopping feature, to North America through TalkShopLive. The two companies are still in talks, which is why no official announcement has been made yet.

TalkShopLive runs an online platform for live streaming and home shopping shows featuring various brands, retailers, and influencers. Once its partnership with TikTok is finalized, it will provide the technology and support that TikTok needs for its live commerce efforts.

Owned by ByteDance, TikTok Shop would enable sellers to advertise and sell products on the short video platform as they stream videos live to their followers. It’s quite similar to how Instagram lets users buy items directly from stores on IG.

TikTok has found massive success in Southeast Asia (SEA) but failed to establish a foothold in the UK in 2021.

If the UK didn’t embrace live online shopping, does this mean TikTok Shop will also flop in the US?

After canceling its plans to expand in Europe, TikTok has instead set its eyes on the land of milk and honey.

However, expanding the business to the US won’t be a breeze. Here’s why:

Live Commerce Struggles to Take Off in the US

As we’ve previously reported, the US live commerce market is still in its early stages and no company, including social media giant Meta, has figured it out yet. 

While live selling worked out great in China with sales estimated to hit $423 billion in 2022, it has failed to attract large audiences in the US, with only $11 billion in sales in 2021. But that didn’t stop US eComm giants Shopify and Walmart from recently investing in live shopping, while Facebook decided to remove its live shopping feature this month.

In a Times post, Ying Zhu, an assistant professor in the Faculty of Management at the University of British Columbia, theorizes that the slow adoption of live commerce in the US is probably because consumers themselves don’t understand how it really works. 

“[Live commerce] is a really good concept,” Zhu added. “But without building up infrastructure and educating consumers, suddenly dropping this idea into the market and expecting it to just be successful is kind of naive.”

But with TikTok’s proven live shopping feature and popularity among more tech-savvy shoppers (aka Gen Z’s), it may succeed in turning things around. 

“TikTok likely won’t ever be an Amazon killer,” Insider analyst Andrew Lipsman says.

“But its unique algorithm could help break new ground in the social commerce space by turning social shopping into a more habitual practice. TikTok is really good at serving up the content that people want based on their behavior,” 

“If it can use its algorithm to tee up the right products,” that could help attract more consumers to the app and increase buys.

TikTok Faces Scrutiny in the US over Data Privacy

Another obstacle to TikTok’s entry to the US is its close ties to China.

A report from Forbes reveals that 300 current employees at TikTok’s parent company, ByteDance, used to work for state media outlets, indicating “significant connections between the app and the propaganda arm of the Chinese government.” 

Some speculate that Beijing could use TikTok to access American user data to manipulate public opinion, and even track the location of its users. 😟

TikTok is currently working with the Biden administration to come to an agreement, under which it would make changes to its data security practices to resolve national security concerns, but the agreement is only in the preliminary stages.

TikTok Plans to Create its Own US Fulfillment Network 

🤔 It is even more likely that TikTok Shop will be pushed through in the US, seeing that the company is already planning on building out its own supply chain infrastructure, as indicated by several new job openings recently published on LinkedIn.

The US is TikTok’s largest market outside of China. No wonder the company’s doubling down on its expansion plans to make the country its next major revenue stream.

In a report from Axios, the new entrant is looking to fill a Logistics Solutions Manager position for a global fulfillment center.

Part of the job description is to “plan and design fulfillment centers and eCommerce logistic solutions that include the transportation of goods, order prediction, and inventory management.”

Other job openings indicate the need for a team responsible for a global logistics and warehousing network.

In sum, live shopping has potential in the US, although getting more people to get used to it is still a struggle for many eCommerce companies. This represents an opportunity for TikTok to bring about improvement in the live commerce market if it can get the approval of US lawmakers and the public. However, concerns about data privacy may delay its launch. 
It’s an exciting time. The eComm cold war between giants is nothing if not wildly entertaining. I, for one, am reaching for my popcorn. 🍿