ByteDance launches TikTok Shop in US market in bid to monetise the video app’s huge popularity
- TikTok Shop is inviting American influencers and merchants to register for the new feature, according to a notice on its official website
- TikTok has slashed its advertising revenue target for this year from US$12 billion to US$10 billion, its chief executive Shou Zi Chew reportedly told some employees
TikTok, the hit short video app owned by Chinese internet giant ByteDance, has quietly rolled out an e-commerce feature in the US as it seeks to boost revenue in its most important overseas market despite ongoing scrutiny over its alleged ties to Beijing.
TikTok Shop, a marketplace built into the TikTok app that facilitates transactions while users watch short videos and live streams, is inviting American influencers and merchants to register for the new feature, according to a notice on its official website.
According to the notice, any company with a US company registration document or an individual with a US-issued passport or driving licence can apply. The commission fee for each order is 5 per cent, which will be reduced to 1.8 per cent for the first 90 days. TikTok later amended this information on its website, to say that “TikTok Shop was in the early testing stage in the US and the commission rate would be updated in due course”.
There is no minimum requirement for the number of followers, according to the website.
The expansion of TikTok in the US from an app for short-video creation to e-commerce platform comes as the Chinese-owned business faces heavy scrutiny from some US politicians. Senator Marco Rubio, a China hawk, and Representative Mike Gallagher, wrote a commentary in The Washington Post last week that called for a nationwide ban of the app, citing concerns over its alleged links to Beijing.
The launch of TikTok Shop in the US, where the video app has more than 100 million active users, shows that ByteDance is putting on a brave face despite the political headwinds. The e-commerce feature was launched last year in the United Kingdom and Indonesia, and expanded to five more Southeast Asian countries this year, including Singapore and Thailand.
Last month, TikTok posted job openings for an e-commerce operation in the US and Chinese media reported it hired new leadership in Brazil, another one of its biggest overseas markets.
“With revenue from standard social advertising falling across every platform, TikTok has to diversify products to capture what’s left of demand”, said Ellie Bamford, the global head of media and connections at design and consulting company R/GA.
TikTok has slashed its advertising revenue target for this year from US$12 billion to US$10 billion, its chief executive Shou Zi Chew told a handful of employees recently, according to Bloomberg News.
The entire US digital advertising industry is facing headwinds, which has put pressure on platforms like Facebook and Snapchat. American advertisers are predicted to spend US$65.3 billion on social media this year, up by just 3.6 per cent, or around 10 times slower growth than in 2021, according to research firm eMarketer.
TikTok’s US operations were recently restructured to be less dependent on advertising. Its general manager Sandie Hawkins, who oversaw business operations, sales and marketing, was last week appointed as the new head of TikTok Shop in the US, the Financial Times reported.
US internet giants have also been seeking growth beyond advertising. Earlier this month, Snapchat and Amazon teamed up to offer augmented reality (AR) shopping experiences in the social app, while YouTube partnered with Shopify in July to launch integrated live-stream shopping.
“Live shopping experiences have been hot on YouTube for the past year,” Bamford said. “TikTok can offer shopping with greater scale and probably more creativity, if they stay true to their brand and don’t lose the ‘entertainment’ factor.”