Another big move from TikTok reshaping the e-commerce department and putting more effort into the live-streaming business!

TikTok makes big move to focus on live-streaming and reshape e-commerce

The question of whether to be reborn through nirvana or to struggle to return to the sky is worth pondering.

In recent months, TikTok has been continuously adjusting its e-commerce department. On May 16th of this year, TikTok Shop made a major adjustment to its cross-border business and confirmed the launch of the fully-hosted mode. At present, the fully-hosted mode of TikTok Shop has opened up the Saudi Arabian and British markets for investment. With the launch of TikTok Shop’s fully-hosted mode, competition between major e-commerce platforms has further intensified, but TikTok is not stopping there. According to the Financial Times, TikTok is restructuring its e-commerce business and refocusing on markets such as the United Kingdom and the United States. TikTok is committed to widely applying the live shopping model overseas. In addition, in order to enter markets outside of China, TikTok has suspended its international expansion plans and refocused on countries and regions where it has already launched sites. The Financial Times previously reported that TikTok’s planned international expansion last year was repeatedly postponed. The development of TikTok Shop in the UK and US has stalled. As the earliest Indonesian and British sites opened by TikTok Shop, the development trends of the two are completely different. According to the latest data from Data.ai, TikTok Shop is the third-ranked shopping app in the Indonesian Play store. Not only that, but the Indonesian market accounts for the majority of TikTok’s $4.4 billion e-commerce GMV in Southeast Asia in 2022. The overall development of TikTok Shop’s Indonesian site can be described as smooth sailing. In contrast, the development of the British site has been full of twists and turns and is bleak. The low entry threshold of the British site at its inception resulted in uneven product quality on the platform and a surge in customer complaints. Moreover, British small businesses entered the market with a low-price strategy, triggering vicious price competition and disrupting the local market balance. Previously, according to foreign media reports, the working hours and intensity of the TikTok Shop UK site were criticized by local people. TikTok’s European e-commerce head, Joshua Ma, angered London employees with his statement that “companies should not provide maternity leave”, at which point half of the team resigned. Combining the “car accident” experience of the British site, TikTok Shop’s development in the US market can be described as extremely cautious. From the announcement of its partnership with Shopify in October 2020 to the official launch of the US site in November 2022, TikTok spent two years preparing to develop the US e-commerce market. This year, TikTok Shop has launched discount offers, freight subsidies, and other benefits to recruit more US sellers, and has also launched a “marketing alliance” program for sellers to collaborate with influencers to increase product sales using influencers’ content and audience traffic. However, the response from US sellers has been mediocre. TikTok Shop’s actual development has not met expectations. On the one hand, strict merchant qualification review, high entry threshold, fierce competition in the US domestic e-commerce market, and US political factors have limited TikTok Shop’s ability to shine in the US. On the other hand, Temu, a latecomer who entered the market later than TikTok Shop, has already “killed the four directions” in North America and has held the top spot on the North American e-commerce shopping app list for multiple months in a row. This has also brought some pressure to TikTok, but TikTok does not seem to have bet all its chips on the fully-hosted mode. What is the prospect of live shopping? Fundamentally, consumers in the UK and US are not very interested in live shopping.

In a joint interview program by Insider Intelligence and eMarketer, analysts Sky Canaves and Carina Perkins analyzed why live shopping has not caught on in the UK and US. TT123 summarized some of their viewpoints:

1. E-commerce and social commerce have developed differently in the East and West. In China, social media is synonymous with business. People go to social media platforms with the mindset of shopping. In the UK and US, people still view social networks purely as social networks. Therefore, this is a mindset change that requires some time.
2. Live shopping in China is more entertaining. Chinese live streaming has entertainment elements, which UK and US have not been able to fully achieve. Carina Perkins said, “Hosting live shopping is completely different from what we have seen with more traditional internet celebrities. Therefore, it is necessary to find the right people to do this. It is the factors such as discounts and interaction that truly make live shopping a unique proposition.”
3. In the UK and US, live shopping is not essential. During the pandemic, live shopping received global attention. UK and US consumers tried this way of shopping during the pandemic, but analyst Sky Canaves pointed out that “live shopping is a last resort,” and “live shopping is more like a nice feature, not a must-have feature.” As offline life resumes, UK and US consumers’ interest in live shopping is slowly declining.
4. UK and US consumer shopping habits are deeply rooted. The transition from mobile browser shopping to app-based shopping is a very gradual process. Just as Instagram has difficulty allowing users to shop within the app, TikTok also has difficulty getting users to accept live streaming in the US. UK and US consumer shopping habits are not easily changed. According to a study by The Influencer Marketing Factory, only 25% of UK consumers have purchased something during a live stream, while the figure for the US is 35%.

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Although live shopping has not been well-received in the UK and US, it is undeniable that as a new trend in shopping, live shopping still has great potential for development. According to the UK’s Financial Times, TikTok’s strategic changes have led to the restructuring of its European e-commerce business in mid-April. Insiders revealed that employees responsible for launching TikTok Shop in Brazil are being transferred to markets that have already been launched, such as the UK and the US. At the same time, as changes occur in the executive positions of European companies, those who have been working to bring TikTok Shop to Spain are also moving to London. Insiders familiar with the business said that these changes correspond to the slowdown in the pace of TikTok Shop’s expansion to the US and the frequent movement of senior personnel to markets such as the UK and the US. TikTok stated that there are no plans or dates for the final determination of TikTok Shop’s expansion to markets outside the UK, the US, and Southeast Asia, and that it will continue to evaluate opportunities for further international expansion. The delay in expanding to other sites and the frequent transfer of senior personnel to markets such as the UK and the US also demonstrates TikTok’s determination to promote live shopping in the UK and the US.

The author’s name is /AMZ123✎.

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