TikTok aims to change its lukewarm live shopping business in the UK despite rocky performance

July 13, 2022 0 Comments

Despite the fact that TikTok has become a global phenomenon, its live-streaming e-commerce is struggling to attain widespread success. It has now opted to scale back its expansion plans and aims to succeed by investing in more e-commerce-related services in the United Kingdom, the one and only developed nation where TikTok operates a live shopping business.

According to an article published by the Financial Times last week, the short video platform is abandoning plans to expand its live e-commerce “TikTok Shop” concept to the United States and more European countries, including Germany, France, Italy, and Spain.

The TikTok Shop is being discontinued due to its poor success in the United Kingdom. Since arriving in the European nation last year, its first market outside of Asia, TikTok has made a variety of moves to increase its profile, including partnering with well-known brands and influencers to offer discounts. However, consumer awareness and acceptance in the United Kingdom remain low.

Now, the company is focusing on making TikTok Shop a success in the United Kingdom. rather than expanding its retail capabilities in other Western countries. The rationale is straightforward: if TikTok Shop can flourish in the UK, its first established market, it will have a stronger chance of doing so in the United States and other European nations.

While customer behavior varies widely between China and the United Kingdom, consumers will never reject cost-effective products. “Actually, some products that sold well on Douyin in the early days also sold well on TikTok,” an employee of TikTok’s e-commerce division told PingWest. Douyin is the Chinese equivalent of TikTok and is accessible to users on the Chinese mainland.

The slow growth of e-commerce in the UK is primarily down to TikTok’s inadequate support services and logistics. “Good customer service, after-sales support, and reliable logistics can help platforms create a good shopping experience, build a solid reputation, and boost sales,” the employee said. “Cross-border logistics are now too time-consuming, and supporting services are not ideal—all of these contribute to a bad experience for customers.”

Nowrain, a Chinese womenswear company that mostly sells on TikTok, faced a storm of negative reviews on Trustpilot. The majority of these concerns were about logistics and after-sales service.

Nowrain’s livestreaming on TikTok

“Avoid Nowrain at all costs. I ordered a single top from them weeks ago and still haven’t received it. They told me to track it, and you can’t make head or tail of their tracking service…I’m just glad I didn’t spend any more than £9 with this awful company,” Marry Gillies left her review on Trustpilot .

“I have contacted you multiple times about my product not arriving. They haven’t said anything after being weeks past their due date. Poor customer service and they don’t answer well. Do not trust!” Amrita Bhakar said.

Similar complaints have been lodged against other small and medium-sized cross-border vendors on TikTok. “My thoughts regarding TikTok live e-commerce are conflicted.” Tommy, a 29-year-old London resident, told PingWest that although the prices are enticing and the devices are occasionally unique, neither the quality nor the customer service can be guaranteed.

He had previously purchased an electronic device during the live broadcast, only to discover that it did not perform as advertised. It was difficult to reach customer support for the return, and the Chinese retailer insisted he pay for expensive cross-border logistics if he wanted to return the item and receive a full refund.

“It’s ludicrous. The product is less than 15 pounds, but I have to pay 30 to 40 pounds to send it back to China,” he said. In the end, the seller refunded him half the price and said there was no need to send the product back.

At the moment, to swiftly seize the market and also due to the absence of support services and logistical services, merchants can only provide relatively low-priced products with slim margins. The employee believes that if TikTok can get its logistics and ancillary services in order, the platform will be able to bring in better sellers and higher-quality merchandise.

More than a year after its launch, 50% of TikTok’s gross merchandise volume (GMV) is reported to come from Chinese cross-border retailers, with orders typically taking between 10 and 30 days to reach the United Kingdom.

Therefore, logistics is a key area where TikTok Shop has decided to invest more in the United Kingdom. According to the Chinese tech news outlet LatePost’s report on July 1, the company is preparing to launch a warehousing program called “Aquaman” in the country in an effort to reduce order fulfillment times.

TikTok’s proposed solution is comparable to Amazon’s “Fulfillment By Amazon” in that it would allow businesses to pre-stock selected goods at local warehouses in the United Kingdom. to expedite delivery.

TikTok is also building warehousing facilities in China to accelerate the entire distribution process. This will allow pre-stocked products to be shipped straight from the warehouse to foreign destinations, reducing domestic transit time.

William August, who owns a TikTok shop in the United Kingdom, is enthusiastic about the Aquaman project and believes that it will make TikTok a formidable competitor in the industry. Prior to starting TikTok Shop, William was a prominent influencer on Chinese social media due to his proficiency in Mandarin and understanding of China.

The influencer, known in Chinese as Fulinfang (拂菻坊), told PingWest that while his country lags behind China in livestreaming e-commerce adoption, it’s just a matter of time before more consumers and retailers adopt the e-commerce channel due to its clear benefits.

“One livestream can get tens of thousands of eyeballs on your products. It’s direct marketing for many brands and a way to gain more exposure,” said William. “I still remember when people said they’d never purchase from Amazon, and now it’s all they purchase from.”

Bloomberg reported that TikTok expects its e-commerce business to generate $2 billion in sales by 2022 and $23 billion yearly by 2023, representing an increase of more than 10 times.

Achieving this goal is not easy, so gaining traction in developed markets is crucial, as they may contribute higher GMV than emerging markets. Despite reportedly canceling the launch of live-streamed shopping in the United States., TikTok is continuing internal testing in the world’s biggest consumer market

In addition, the small startup is working diligently to create a more reliable shopping environment. Ebong, citing sources with knowledge of the situation, stated that TikTok has conducted repeated rounds of crackdowns on illegal retailers this year and has shut a number of stores selling knockoffs and counterfeits between late June and early July.

So far, outside the United Kingdom, TikTok’s e-commerce business focuses on Southeast Asian nations, such as Indonesia, which debuted in 2021, and Thailand, Malaysia, Vietnam, the Philippines, and Singapore, which opened in recent months. According to people familiar with the matter, Indonesia contributes most of the revenue to the entire e-commerce business.

Photo by Libby Penner on Unsplash

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