Will the model work? TikTok parent Bytedance has a strong track record of ecommerce success with Douyin, TikTok’s sister app, in China; over 10 billion items were sold on the platform in the fiscal year that ended April 2022 and gross merchandise value increased 320% year-over-year (YoY) in the same period, the company said.
- However, Western retail ecosystems are dramatically different from China’s, which means what works in China may not translate to other markets. For example, TikTok’s UK foray in liveshopping was hampered by poor sales, causing influencers and brands to lose interest even when offered incentives and cash benefits.
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That hasn’t stopped TikTok from continuing to experiment. TikTok is set to partner with TalkShopLive to bring liveshopping to the US just months after abandoning a similar initiative.
The big takeaway: TikTok is making a risky bet on logistics. While the lure of control and unlocking a new revenue stream is enticing, building out an ecommerce supply chain is a capital-intensive, challenging endeavor for even the most sophisticated companies.
- Take Amazon, which built its business around its ability to efficiently store and ship items, and now has excess capacity after aggressively expanding its warehouse footprint throughout the pandemic in response to the surge in ecommerce demand.
- TikTok might be better off focusing on expanding and iterating on its shopping ad offerings rather than building out a new business unit.
Go further: Read our new Social Commerce Forecast 2022.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.