TikTok expects its e-commerce sales to reach 470 billion in 5 years
TikTok Shop, the e-commerce division of the short video app TikTok, has achieved over $1 billion in gross merchandise volume (GMV) in the first half of 2022, according to a LatePost report. The number equates to its GMV of the whole 2021.
ByteDance launched TikTok Shop in the UK in late last year, which mirrors the shopping function on Douyin, TikTok’s Chinese counterpart. Social shopping, or live shopping has been implemented successfully by a number of social platforms in China, including Douyin, Kuaishou and Xiaohongshu.
However, the TikTok Shop business was in turmoil since its launch in the UK. The company faced a PR crisis earlier this year when an executive reportedly spoke against maternity leaves. Employees of TikTok in the UK calls the workplace “toxic”, and “built on fear”, according to a report by Business & Human Rights Research Center. Half of TikTok’s London ecommerce team’s original staff has left, while others are “on the brink of quitting”, per Financial Times.
TikTok Shop had to pause its expansion plans in Europe and the US, according to a Financial Times report in July.
Unlike the UK, the Southeast Asia market responded well to TikTok Shop. According to LatePost, the average monthly GMV in Indonesia is $200 million while the average monthly GMV in the UK is $24 million.
In the first half of 2022, TikTok e-commerce was launched in Thailand, Vietnam, Malaysia, the Philippines and Singapore. TikTok waived the first month of platform commission fee and 1% of payment channel fees for new sellers in aforementioned countries. The five countries contribute at least 50% of the GMV for TikTok’s in Southeast Asia, according to LatePost.
TikTok Shop has been able to take advantage of the Ramadan, a period which Indonesians shop most frequently during the year, much like the winter holidays in the west. TikTok laughed a round of promotions to attract users, and its orders increased by 493% and GMV increased by 92% during the promotions.
The TikTok team has set a goal to achieve a GMV of $470 billion in five years, which is ambitious to say the least — it has taken global e-commerce giant Amazon almost 30 years to hit $600 billion net sales in 2021. The team plans to expand in more than 10 countries by the end of 2023, according to LatePost quoting TikTok.