Topline
TikTok is expanding its empire and launching an e-commerce business to sell Chinese-made goods in the U.S., the Wall Street Journal reported Tuesday, as the fast-growing social media app attempts to compete with other online shopping platforms like Shein and Temu.
TikTok’s new e-commerce business will compete with rivals Shein and Temu.
Key Facts
Beginning in August, the social media platform will offer an Amazon-like marketplace called TikTok Shop Shopping Center, which will allow users to go to one place to view and buy goods, according to the Journal, which cited unnamed sources.
Everything from clothes to electronics will be manufactured and sold in China and then shipped to U.S. customers from both TikTok’s program and other retailers, with TikTok handling marketing and logistics, the Journal reported.
Chinese suppliers will only be paid by TikTok after finding U.S. buyers, and if items are unpopular the platform plans to return those items to the suppliers to avoid being stuck with inventory, people familiar with the matter told the Journal.
With the new platform, TikTok is aiming to increase the total transaction amount of goods on the platform from $5 billion last year to $20 billion this year, the paper reported.
Key Background
TikTok’s e-commerce business will soon have to compete with Temu and fast-fashion platform Shein, which have been offering online customers shockingly low prices and a wide variety of selection. Temu, a Boston-based Chinese-owned retailer, has seen increased success this year from a popular Super Bowl ad and TikTok exposure. Temu has claimed the way it keeps prices low is by “cutting out the middleman” by allowing Chinese vendors to sell directly to American buyers and shipping directly from China. Meanwhile, Chinese-based Shein has become one of the most popular clothing brands in the world, earning $100 billion in sales in 2022. But that success has not come without critique. Shein has been repeatedly criticized for selling products made in workshops with unsafe working conditions. The fast fashion empire has also faced criticism for its environmental impact. Both Shein and Temu have also faced criticism for the poor quality of their clothing. In Shein’s case, some clothing potentially contained dangerous chemicals like lead.
Big Number
$800 million. That’s how much rival online shopping platforms Temu and Shein made in 2022, according to the Journal.
Tangent
Yesterday, in another effort to expand its global reach, TikTok announced it was going to allow users to post text-based posts, challenging social media platforms Instagram and Twitter. The app—owned by Beijing-based Bytedance—has surged in popularity in the United States in recent years, drawing fears that Americans’ data could be within reach of the Chinese government (TikTok says it has never shared data with Chinese officials).
What To Watch For
In the future, TikTok plans to open the new program to merchants and manufacturers outside China, people familiar with the matter told the Journal.
Further Reading
TikTok Lets Users Post Text-Based Posts—Challenging Twitter And Instagram (Forbes)
TikTok’s Next Plan for U.S. Dominance: Selling Made-in-China Goods (Wall Street Journal)
