Background:

Reports are circulating that TikTok is planning to launch its own online retail store in the US in July, with an initial story appearing from global news provider Semafor.

Details and Implications:

TikTok appears to be looking to take on Amazon, Shein and others by opening a retail store in the US version of its app, potentially as soon as next month, and will use the store to feature its own line of products like toys and kitchen gadgets .

While TikTok’s existing TikTok Shop feature enables brands to sell products on its platform for a commission, the new store is different as it will be completely run by TikTok. The ByteDance owned platform plans to purchase inventory, handle warehousing and logistics and manage customer service. It is believed that most of the items sold will come from manufacturers in China.

US users will be able to buy goods from both the TikTok Shop feature and the new store, via a dedicated e-commerce tab in the app.

The latest move is a shift in TikTok’s e-commerce strategy after learning that Chinese manufacturers were struggling to provide satisfactory customer service to Western consumers on TikTok Shop. The company has also previously tried to replicate the success of China’s $400 billion livestream shopping industry in the West, but the feature has yet to gain traction outside of Asia.

TikTok now hopes that by running its own e-commerce store, it could be more successful. Douyin, the Chinese version of TikTok, has a similar shop and sales of clothing, bags, and accessories surpassing Alibaba’s Tmall earlier this year.

One of the benefits of this approach for TikTok is the insight it has into what is trending on the platform, allowing it to easily identify what products are gaining traction in videos and ensuring these are part of its offering.

Providing more substance to the rumors, TikTok confirmed last week that it is testing a ‘Trendy Beat’ shopping feature in the UK, where products are sold and shipped to users by a Singapore-based company also owned by ByteDance. It would seem that this feature is the basis of the US offering, as a trademark application for ‘Trendy Beat’ in the US has also been reported.

Summary:

TikTok’s venture into becoming a US e-commerce company, despite lacking experience in the market, is hugely ambitious and not without risk. While the setup of this experiment is costly, the potential payoff could be a game-changer and disrupt online retail.

Further Reading:

Semaphore | Fast Company | MediaPost | TechCrunch |