TikTok's quest to conquer Western markets with in-stream commerce has hit multiple roadblocks in recent years. While its Chinese counterpart, Douyin, thrives on in-stream sales, TikTok's attempts have fallen short among Western consumers, prompting a rethink of its strategy.
Reports suggest TikTok is geared up for a colossal surge in its US e-commerce business, eyeing a potential tenfold growth to a staggering $17.5 billion in the upcoming year. However, the exact blueprint for achieving this ambitious goal remains hazy.
Douyin's success with live-streaming commerce contrasts sharply with Western audiences' tepid response to impulsive in-app purchases during live broadcasts. This discrepancy could stem from concerns about TikTok's Chinese ownership or simply a lack of enthusiasm for live-stream shopping.
Despite this, TikTok's overall expenditure is on an upward trajectory. In 2023 alone, users splurged $3.8 billion in-app, signaling a 15% year-over-year increase. Notably, US consumers significantly contributed, primarily through TikTok Coins for virtual gifts, hinting at their willingness to spend within the app.
To expand its shopping horizons, TikTok might venture into food delivery—a success story for Douyin. Additionally, replicating Douyin's local services and integrating Temu-style deals could entice more users to embrace in-app spending.
For TikTok, bolstering commerce isn't solely about revenue but a lifeline for creators. The platform faces challenges with revenue sharing for its Creator Fund and lacks viable ad-share processes. Direct commerce integrations offer creators a chance to earn as salespeople or brand ambassadors, incentivizing consistent content creation.
While TikTok's commerce aspirations harbor uncertainties, if successful in attracting younger demographics for product discovery and shopping, it could solidify its market presence. Yet, as TikTok makes strides, anticipate heightened opposition, potentially prompting renewed calls for bans, amplifying competition with Amazon.
