What other information has TikTok Shop released since the launch of its new business model?

What other info has TikTok Shop released after launching new business model?

After the launch of the TikTok Shop fully hosted mode, we have received many inquiries from customers about how to use the new mode and what impact it will have on current merchant operations.

Previously, we discussed our views on the launch of the new TikTok Shop mode. Regardless of how the mode changes, the platform and traffic remain the same, with only slight adjustments to the gameplay.

First, let’s understand what the fully hosted mode and platform mode are.

The fully hosted mode is a worry-free mode for merchants where they only need to provide goods and supplies, and the platform is responsible for all aspects of operation, logistics, after-sales service, etc., with settlement based on the supply price. It is a purely supply-based mode that allows merchants to fully utilize their supply chain and product advantages without worrying about operations.

• TikTok is testing search ads, here are five things that brand owners need to know
• TikTok Shop Full-service management mode launched
• Amazon launches QZ Tray a tool for batch printing Buy Shipping labels

The platform mode is simply the operational model that merchants used on the platform before the fully hosted mode was launched. The platform provides open resources and specific rules, while the specific store operations, logistics, fulfillment, after-sales service, etc. are all managed by the merchants themselves.

For merchants who specialize in supply chain management and product development, the fully hosted mode is undoubtedly a good choice, as it can solve the problems of store operations and traffic. After all, specialization is key to success. By fully utilizing the advantages of both merchants and platforms and reducing unnecessary costs, sales of products can be maximized, achieving a win-win situation.

The fully hosted mode is becoming a new trend in e-commerce platforms.

Temu adopted the fully hosted mode when it launched overseas in September last year. Since then, AliExpress and Lazada have also announced the launch of fully hosted mode. There are reports that Shopee is also urgently following suit.

The fully hosted mode is highly regarded by platforms for good reason. With merchants fully utilizing their supply chain and product advantages, the quality and quantity of products are guaranteed, while the platform provides various sales and operational services to standardize the entire e-commerce process. For cross-border merchants, they can “earn while lying down” after supplying goods, greatly improving the shopping experience for end consumers.

Currently, TikTok Shop’s full-service management model is only open to the UK and Saudi Arabian markets for investment. This means that it is still in the trial phase. Although the new business model will certainly bring a new wave of entry dividends, the platform also points out that participating in this model is suitable for those who have supply chain resources, such as manufacturers or traders with stable and continuous supply and delivery capabilities. After all, in this model, it is the competition of the supply chain, and the cost-effectiveness of the goods is crucial.

In the short term, the earlier you enter the market to seize the opportunity, the more dividends you can get, especially since the platform has launched various business guarantees. From a long-term perspective, businesses with less advantage in product quality or cost-effectiveness need to consider carefully. Once there are more choices of platform suppliers, there will be various comparisons between products, and there may be a possibility of being replaced.

Of course, if you are not operating in the UK or Saudi Arabian market, but are a cross-border merchant operating in Southeast Asia or other regions, the platform recommends that you prioritize operating through the platform model.

Southeast Asia is the key self-operated market for TikTok Shop

For TikTok e-commerce, although there have been some setbacks in the European and American markets, the Southeast Asian market is still highly regarded and the official website has clearly stated that “Southeast Asia is the key self-operated market for the platform“.

Official data shows that the average monthly compound growth rate of TikTok Shop’s GMV in the Southeast Asian market in 2022 is close to 90%. This year, TikTok Shop was also the first to pilot shelf e-commerce in Southeast Asia, launched a shopping mall function, increased sales channels, and accelerated sales growth.

The Southeast Asian e-commerce market has similar social attributes to China. Southeast Asian and Chinese Internet users have similar acceptance levels for short videos and live broadcasts, and their willingness to interact is relatively strong. As of July 2022, TikTok’s advertising coverage in Southeast Asia has reached more than half of the total number of Internet users over the age of 18 in the region, totaling 265.6 million users.

Moreover, the potential for e-commerce development in Southeast Asia is still huge. According to Bain & Company’s forecast, the e-commerce market in Southeast Asia will reach $234 billion by 2025, maintaining a compound annual growth rate of 18%.

With such a large development space and the “shelf + content” dual-drive model, TikTok Shop is obviously better suited for Southeast Asia. In addition, the company stated that it will further strengthen the construction of TikTok Shop and invest more resources to boost business growth.

We will continue to update BusinessDialogue; if you have any questions or suggestions, please contact us!