TikTok wants to make its TikTok Shop U.S. business much bigger this year. A recent report from Bloomberg says they aim to increase it by ten times, up to $17.5 billion. The company talked about this goal for the merchandise volume in 2024, and they might change it as the year goes on.
TikTok aims to compete not only with Amazon(which is founded by Jeff Bezos) but also with Chinese-owned companies like Temu and Shein, which are gaining popularity in the U.S. What sets TikTok apart is its widely used social media platform, which can use viral videos to connect with buyers – something the other two companies lack.
TikTok Aims to Grow Shop Business in the U.S
According to an earlier Bloomberg report, TikTok was set to reach approximately $20 billion in global gross merchandise value last year, with most of the sales happening in Southeast Asia. Now, TikTok wants to replicate that success in the U.S. Additionally, the report mentions the company’s plan to introduce TikTok Shop in Latin America in the next few months.
The report shows that over 5 million new U.S. customers bought items through TikTok Shop during the Black Friday and Cyber Monday season in November. To put it in perspective, the social media app currently has about 150 million users in the U.S.
This information follows a report from The Information stating that TikTok plans to increase the commission it takes on most items, raising it from 2% to 8% per transaction. TikTok Shop is also cutting back on some subsidies for merchants. It’s important to mention that even with these changes, the commissions on TikTok are still much lower than the seller fees on Amazon, which typically run around 15% for most product categories.
TikTok Shop was introduced in the U.S. in September 2023. It enables creators to tag products, allowing users to purchase items featured in in-feed and live videos. Brands have the option to create their own product collections accessible from their profile pages. The platform includes a dedicated tab for users to search for various items, explore recommended products, browse categories, and handle their orders.
TikTok is aiming to grow its TikTok Shop business in the U.S. by a significant amount, targeting $17.5 billion in 2024. This move positions TikTok against major competitors like Amazon, utilizing its social media influence. The report notes successful Black Friday sales and TikTok’s plans to expand globally. Despite adjustments, TikTok’s commission rates remain lower than Amazon’s.