TikTok Plans To Take On Amazon In US, Aiming For A $17.5 Billion E-Commerce Business

ByteDance, the parent company of social media giant TikTok, has revealed plans to grow the size of its e-commerce business to as much as $17.5 billion in 2024, according to Bloomberg, which cited sources with knowledge of the situation.

Experts see the ambitious initiative as a direct challenge to American e-commerce behemoth Amazon.

TikTok Turns Focus To E-Commerce As It Plans To Launch TikTok Shop In US And Latin America

Sources say that during a recent internal meeting, ByteDance executives proposed launching TikTok Shop – a feature within TikTok that lets users buy items that they find interesting while scrolling through the short-form video app – in the US. However, the plans are not concrete yet and may change depending on how well the venture works out in the world’s largest economy. 

Sources say the US version of TikTok Shop is currently under review by the company. 

ByteDance’s big plan not only sets it up against Amazon but also its Chinese counterparts Temu and Shein, who have been making significant progress in the US, especially among younger customers. 

What makes TikTok stand apart from the competition is its massive social media outreach and the allure of viral content that could entice consumers. 

Bloomberg reports that TikTok was forecast to amass approximately $20 billion in global merchandise value last year, with users from Southeast Asian countries contributing to the bulk of sales through TikTok Shop. 

The company is counting on its success in the Asian market to bolster sales in the US and Latin America, where the company plans to kickstart its e-commerce operations in the coming months. 

Bloomberg’s sources said the move is reflective of the company’s strategy to diversify and expand its revenue streams. 

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TikTok Shop Blends Amazon’s Convenience With The Product Discovery Element Of Instagram

TikTok Shop is regarded as one of the fastest-growing areas of business for the Beijing-based company. The feature enables users to purchase items they see while browsing through short videos and live streams within the TikTok app. 

ByteDance, which was founded by Zhang Yiming and Liang Rubo over a decade ago, has grown into a leading internet-based company worth over $200 billion, thanks largely to the popularity of its short-video platform TikTok and Douyin. 

In 2023, the Chinese tech giant’s revenue surged roughly 30% to more than $110 billion, outpacing the projections of its well-established rivals Meta and Tencent – the owner of WeChat. 

TikTok reportedly has 150 million users in the US alone. 

ByteDance says its shopping format aims to blend Amazon’s convenience with the product discovery element of Instagram. The strategy has already helped Douyin capture a substantial portion of Chinese consumer spending from Alibaba and JD, especially during the COVID-19 pandemic when lockdowns forced people to spend more time shopping online. 

TikTok is already making moves to promote its shopping feature and solidify its e-commerce foothold globally. In the US, influencers who endorse various products such as gadgets, clothes, and makeup through videos and live streams on the app are offered incentives like free shipping and subsidies. 

In November, Black Friday and Cyber Monday deals led to 5 million new users in the US buying something through TikTok Shop. 

However, recently the platform, which has a significantly lower commission fee compared to Amazon, announced a 6% merchant fee increment on each sale from April, with plans to further increase the rate to 8% across most product categories from July onwards. 

The move indicates TikTok’s plans to diversify its revenue stream by focusing more on e-commerce.

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