Reports from WSJ indicate that TikTok, the well-known app for short-form videos, is planning to expand its presence in the United States. It will be launching an e-commerce platform in the US, where China-made goods will be sold. The goal of the TikTok e-commerce platform is similar to other e-commerce platforms, which is to provide more access to Chinese goods for Americans. The people of the US will have the freedom to choose whether or not to purchase these goods. This decision is viewed as a strategic move to establish TikTok’s dominance and compete with other leading shopping platforms.
Like Amazon’s “Sell by Amazon” program, TikTok has announced that it will offer storage and shipping services for various products, such as clothing, electronics, and kitchen appliances. According to reports from IT Home, TikTok will handle the shipping of goods for brands and sellers in China, while also managing marketing, sales, and after-sales services.
According to TikTok, it will use a “full-service model,” whereby it will pay Chinese brands only after finding buyers in the United States. This approach allows TikTok to minimize risks and ensure that there is demand for the products before making payments to brands. Also, a report from The Wall Street Journal claims TikTok plans to return unpopular items to the brands, further limiting the process. This means that TikTok will be bearing very little risk if buyers in the U.S. do not find the goods worth buying.
Implications and Opportunities
TikTok’s entry into the e-commerce market presents several implications and opportunities. Here are some key points to consider:
1. Higher Competition: This new plan from the company will add to the already competitive landscape of online shopping platforms. This rivalry can lead to innovation, better user experiences, and likely lower prices for buyers.
2. Access to China-Made Goods: The platform will provide US buyers with access to a wide range of China-made products. This can introduce new and unique items to the market and cater to the growing demand for products from China.
3. Influencer Marketing: TikTok’s e-commerce platform can create new opportunities for influencers to promote and sell products. These people on TikTok can use their large followers to drive sales and generate revenue. The funds will be mainly from affiliate marketing or sponsored content.
4. Global Trade Relations: The move to sell China-made goods in the United States can have implications for global trade relations. It highlights the link between the global economy and the role of tech platforms in facilitating cross-border commerce.
Certain Chinese companies such as Huawei and ZTE are prohibited from selling their products in the United States. However, brands like OnePlus from China are flourishing in the US market. Therefore, if TikTok gets the approval of the US government, the writer believes that the selling of Chinese products in the US through TikTok would result in increased competition and access to distinctive products with no major consequences.
Relevance and impact of TikTok selling Chinese goods in the US
The effects of TikTok’s selling of Chinese goods in the US on the market are uncertain, but HBR suggests it could offer more options for consumers and potentially disrupt the e-commerce industry. It is currently unclear how relevant and impactful TikTok’s sale of Chinese goods in the US will be. However, HBR notes that livestream commerce, which involves selling products through live video on platforms like Taobao and TikTok, has become a significant market in China. HBR predicts that by 2023, it could account for as much as 20% to 25% of online sales.
HBR also claims thatĀ most of the large US social media platforms are embracing livestream commerce. However, it says that TikTok seems to be the favoured format due to its design for video and young demographics. Nasdaq and Gazette claim that TikTok’s e-commerce program in the US is seeking to replicate the American success of Chinese shopping platforms Shein and Temu.
Temu has been recognized by Data.ai as the top-ranking “Breakout” shopping app for 2022 based on downloads in the U.S. By March 2023, within six months of its launch in September 2022, over 50 million consumers have installed the Temu app according to Apptopia’s estimates. According to data from UBS Evidence Lab, Shein is the second most popular shopping app downloaded in the US. Shein has the highest number of followers on TikTok compared to all other apparel retail brands. Additionally, UBS data reveals that Shein is the most searched apparel retailer in the US on Google. This clearly shows that Shein and Temu are very successful in the U.S.
Potential drawbacks or criticisms
There are several potential drawbacks or criticisms of TikTok selling Chinese goods in the US:
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1. National Security Concerns:
The US government has expressed concerns that American user data on TikTok could fall into the hands of the Chinese government. According to CNBC, this is due to a law in China that compels firms to hand over info to Beijing if they are requested to do so. Washington is also concerned that TikTok could be used to influence operations by China. Bloomberg reports that the Biden govt has demanded that TikTok’s Chinese ownership sell the app or face a possible ban in the US.
TikTok executives have made several statements regarding the data of American users entering the hands of the Chinese govt. Shou Zi Chew, TikTok CEO said TikTok does more to protect young users than rival social media platforms. He also claims that TikTok has a $1.5 billion plan to protect American users. The company will do this by housing U.S. data in domestic. The server is not owned by the company but by an American company,Ā Oracle Corp. Chew has stated that American data is stored on American soil, by an American company, overseen by American personnel. He claims that there is no way this data will leave the U.S. without the consent of the American govt.
2. Mental Health and Content Issues:
Legislators have blamed TikTok for a range of issues from harming mental health to allowing drug-related content.
3. Privacy Rights:
According to Politico, critics of TikTok have accused the app of mass data collection, particularly in the US. In jurisdictions that do have strict privacy laws, TikTok faces wide allegations of failing to comply with them.
4. Chinese Govt Control:
TikTok is run by ByteDance, a Chinese – owned company, which has led to wide fears about Chinese govt control and surveillance of people in other nations. However, many US firms either manufacture in China or rely upon parts developed in China. Thus, TikTok’s connection with China is far from an anomaly in the market.
According to Human Right Watch, there is no official link between TikTok and the government in China. However, since TikTok is owned by ByteDance, a Chinese company, several reports claim that the Chinese government will have access to TikTok’s data. TikTok has been consistent with its response that it has no links to the government in China. In November last year, a TikTok spokesperson told The GuardianĀ āSince beginning transparency reporting in 2019, we have received zero data requests from theĀ Chinese government,ā
According to a report on CNN, TikTok’s data may be used by the Chinese government for intelligence gathering or disinformation campaigns. Forbes also warns that TikTok’s data collection could give the Chinese Communist Party access to the personal information of Americans. However, it is important to note that there is no conclusive evidence that TikTok is following orders from Beijing, either directly or indirectly.
TikTok’s e-commerce
According to reports out of China (from IT Home), TikTok has been making giant strides in the e-commerce industry. Big Commerce claims that TikTok has become a hub for merchants to reach new audiences. It makes use of its large users to drive more sales with features such as analytics tools, product links, and ad options. TikTok for Business gives business owners the option to connect their online store with their TikTok Business account. In fact, Big Commerce is partnering with TikTok so that merchants can start selling.
TikTok Business account also supports product showcase. According to Shopify, its users have a tendency to engage in social shopping. Shopify also claims that no social platform has the level of engagement that TikTok earns from its users. The company will likely leverage this huge engagement to attract buyers.
We earlier said that TikTok will offer a diverse range of products for sale in the United States. These may include clothing, electronics, and kitchen appliances. As for how it plans to attract buyers, there are already millions of users in the U.S. In a 2020 survey by TikTok, two-thirds of respondents said they were inspired to shop on the platform. Also, Forbes in another 2020 survey claims that only 40% of Americans say they won’t buy Chinese products. Going by the Forbes survey, 60% of Americans are either indifferent or will buy Chinese products.
Also, according to MPI tabulation of data from the U.S. Census Bureau’s 2021 ACS, there are 5.4 million Chinese in the U.S. Though small, this could be a target market for the company.
Final Words
TikTok wants to make good use of the millions of users on its platform and open a marketplace for users. The app is quite popular in the U.S., especially among young users. Though not all users in the U.S. will want to buy products made in China, some may want to. This will give more options to consumers in the U.S. and it will be good news to those that like Chinese products. The U.S. is a very diverse nation. Thus, despite its tension with China, it still maintains some sort of relation with the Asian country.
Author Bio
Efe Udin is a seasoned tech writer with over seven years of experience. He covers a wide range of topics in the tech industry. From mobile phones to tablets, Efe has kept a keen eye on the latest advancements and trends. He aims to provide insightful analysis and reviews to inform and educate readers. This article was first published on July 26th.
