Weekly Prompt: TikTok Shop aims for 10x growth in U.S. and more

TikTok targets tenfold growth for TikTok Shop in the U.S.

TikTok is setting its sights on growing its TikTok Shop U.S. business tenfold to as much as $17.5 billion in 2024, according to a new report from Bloomberg. In addition, the company is also looking to launch TikTok Shop in Latin America soon.

TikTok Shop allows users to find and directly purchase products used in live videos, tagged in content shown on their ‘For You’ page, pinned on brand profiles or marketed in a “Shop” tab. The company officially launched TikTok Shop in the US in September 2023 and with its ambitious new growth goal, TikTok would not only be looking to take on Amazon, but also fellow Chinese-owned companies Temu and Shein, both of which have become popular in the U.S. But TikTok has something the others don’t - an extremely popular social media network that could leverage viral videos to reach buyers.

TikTok was on track to achieve around $20 billion in global gross merchandise value in 2023, with the majority of this from sales in Southeast Asia. TikTok wants to replicate that success in the U.S. and soon in Latin America too. To encourage sustained engagement within the app in the U.S., TikTok incentivizes influencers with complimentary shipping and subsidies for promoting products in their videos and live streams. The company reports that the Black Friday and Cyber Monday promotions in November led to more than 5 million new U.S. customers making purchases on the app.

Meanwhile, TikTok is adjusting its commission structure, planning to increase charges from 2% to 8% per transaction, and reducing some subsidies for merchants. Despite these adjustments, TikTok's commissions remain lower than Amazon's typical 15% seller fees.

Sources: Bloomberg (sub needed), MediaPost, TechCrunch

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