Recently, TikTok has continued to develop cross-border e-commerce. Although it is not yet the largest cross-border e-commerce platform in the world, it can be used in short video with its unique business model, good reputation among users, and the support of many brands. The field continues to hold its own.
TikTok is a short video social platform owned by ByteDance. It was launched in May 2017 with the vision of "Inspire Creativity and Bring Joy".
According to the latest app ranking data from Sensor Tower, TikTok will still rank first in overall downloads in the first quarter of 2022. In terms of Google Play downloads, TikTok ranks third, following Instagram and Facebook.
TikTok's traffic is too large, with 1 billion daily activities, which is almost equal to two Douyin, and it is still in its early stages. Although TikTok is not a shopping app, it is already closely related to shopping.
TikTok users' shopping-related habits on the platform are becoming more and more obvious-while leading the global cultural trend, TikTok brings users a new e-commerce shopping experience and subtly influences users' purchasing decisions.
01
Global layout
In 2020, TikTok announced a partnership with Canadian e-commerce platform Shopify. After the two parties establish a cooperative relationship, Shopify independent website sellers can directly use the main functions of the "Ads Manager" page of the TikTok For Business platform through the new TikTok Channel to advertise and promote brands and products.
In December 2020, TikTok cooperated with Wal-Mart to launch a one-hour live shopping event, which will also be TikTok's first test of "live streaming" in the United States.
In February 2021, TikTok launched the first TikTok shop Indonesian site, which is similar to the domestic Douyin shop.
In April 2022, four sites in Thailand, Vietnam, Malaysia, and the Philippines were launched in Southeast Asia. In June, the UK store and the Singapore site were launched, and cross-border business is gradually deployed globally.
02
Obvious advantages
At the same time, other cross-border e-commerce companies, such as Amazon, Shopee, etc. are now basically saturated, and the cost of customer acquisition is getting higher and higher. TIKTOK has undoubtedly greatly reduced the cost of customer acquisition, and there is also a huge natural flow. The prospect is definitely very impressive .
Five Advantages of TikTok Shop
First, convenience.
TikTok Shop can save the use of device capacity. The entire transaction process is carried out in the app, and sellers do not need to have large-capacity devices.
Second, product promotion has great advantages.
TikTok has 1 billion monthly active users, so it will be easier for sellers to reach a large audience and thus attract potential customers. TikTok's FYP function can be seen by more users. At the same time, in the short video, you can also make a review video about product reviews to persuade the audience to buy the product.
Third, the live shopping function.
Sellers can use live broadcasts to promote products, attract customers through real-time product introductions and reviews, and sell products at special prices. It is very intuitive and can be presented in front of customers. Compared with the previous evaluation methods, it can capture customers' desire to buy.
Fourth, promotions and free shipping programs.
TikTok Shop is not inferior to other e-commerce companies, not only increasing the percentage of sales, but also providing promotions and free shipping policies and programs for sellers.
Fifth: Product screening.
TikTok Shop will minimize fraud, make it easier for sellers and buyers to trade in TikTok Shop for safety and after-sale protection.
03
current performance
The launch of TikTok's e-commerce business in the UK at the end of 2021 seems unacceptable to consumers. According to the latest data from TikTok Shop, the average monthly GMV in Indonesia is US$200 million, compared to US$24 million in the UK.
This stark contrast is "depressing". There is a huge gap between a long-established developed country and a developing country. At the same time, in 2020, the actual per capita consumption expenditure of the United Kingdom is 21,633 US dollars, and that of Indonesia is 2,195 US dollars.
UK business tepid
Why did TikTok Shop hit a wall in the UK? Ostensibly, TikTok UK employees say the company has set "unrealistic targets".
TikTok's expected monthly live broadcast sales are as high as 400,000 pounds, but the average seller's live broadcast is less than 5,000 pounds, and there are even many live broadcasts with zero sales.
In June 2022, TikTok’s British team set off a wave of resignations. One of the main reasons was that TikTok’s radical entrepreneurial spirit was “unacceptable” in the UK.
Members of the TikTok e-commerce team in London mentioned that working hours often exceed 12 hours a day, working into the wee hours of the morning and working on holidays are seen as role models.
And in terms of e-commerce infrastructure, it still takes a lot of time to build logistics and supply chains and cultivate user habits. By the end of 2021, only 50% of TikTok’s total e-commerce transactions in the UK will come from localized e-commerce, and half of the products will be sent from China to the UK. Improve the construction of infrastructure, but it will take time.
Southeast Asia region is gaining momentum
Indonesia is one of the countries with the highest concentration of TikTok users. Indonesia's TikTok Shop "opened" in February 2021, two months earlier than the UK, and performed far better than the UK, with nearly 10,000 live broadcasts with goods every day.
TikTok has tried crazy subsidies, turned offline merchants online, introduced Chinese sellers to Indonesia, etc., coupled with the fact that Chinese e-commerce teams have started businesses in Southeast Asia, TikTok Shop has achieved good results. This is related to the large scale of the Indonesian market, mature infrastructure and the formation of online shopping habits of users.
In the Southeast Asian market, for developing countries, the "low price strategy" has undoubtedly achieved great success.
For example, in Indonesia, the $3.594 Whitening Body Lotion sold 418,700 bottles in July with a GMV of $1,465,250, making it the best-selling product of the month.
In the UK, where wireless earphones are the best-selling product, the data shows that the price of wireless earphones as high as $23,537 sold 15,700 units, which is equivalent to a GMV of $85,064.
tiktok shop is constantly improving the shopping experience in the Southeast Asian market. According to news on October 11, tiktok shop’s cross-border e-commerce business is open to all cross-border sellers, and the COD (cash on delivery) function is launched in Thailand, Vietnam, Malaysia, and the Philippines.
04
Development issues
The industry is short of talents
The first is the anchor. Foreign anchors, especially white anchors, are the first choice, but they are expensive, have low "professional quality", and conflict with the work culture of the Chinese team. Many TikTok players comment on foreign anchors.
TikTok once built a national anchor library in China, which included foreigners and Chinese, full-time and part-time, but it was finally discontinued. “During peak hours, the price of a part-time white anchor in Beijing is $150/hour.”
As for domestic anchors, English + delivery, there are not many suitable people after screening. People with English ability and overseas study background may not be willing to be anchors. Many TikTok players can only train anchors from scratch.
William August, the first generation of foreigner Internet celebrity Futufang, is now doing TikTok Shop-related work in his hometown in the UK, and is also carrying out Internet celebrity incubation and live broadcast operations in the UK.
To recruit foreign anchors in China, it is difficult to recruit suitable candidates only by relying on traditional recruitment websites. Enterprises need to approach and recruit these candidates more proactively.
technical skills
Unlike Douyin, the commercialization of TikTok is still in its infancy. At the same time, because TikTok has gathered a large number of users from all over the world, the current user labels are very messy, which makes the ROI data of many advertisers very ugly. As more and more merchants enter TikTok in the future, its requirements for paid traffic will also increase.
Inventory and Logistics
When it comes to logistics, TikTok is still in the stage of cooperating with third-party logistics transportation companies, and has relatively low control over logistics services. For a long time, TikTok needs to make great efforts to establish a closed loop of capital flow, logistics, business flow, and information flow.
In the UK, buying things through Amazon and other platforms can already achieve one-day delivery and next-day delivery, while buying things on TikTok takes several days or even ten days.
05
future outlook
At present, most foreign TikTok players are still in the stage of "recording a good life", and the awareness of making money with goods has not been cultivated. In the eyes of the audience, TikTok's positioning is still a social platform.
In addition, different from the "sweeping wool" psychology of domestic users, the strategy of "high cost performance" is not very popular abroad.
In addition, tiktok also faces many powerful opponents.
In European and American countries represented by the United States, more than 50% of users still choose brand official websites or online platforms such as Wal-Mart and Carrefour when shopping.
When e-commerce in Southeast Asia is becoming more and more popular, TikTok, which wants to compete for a larger share in this field, still faces many opponents with strong backgrounds.
Shopee and Lazada, the top local e-commerce giants in Southeast Asia, both launched e-commerce live broadcast platforms to help sellers seize traffic dividends, namely Shopee Live and LazLive. It is understood that Shopee Live has been watched for more than 10 million hours. At the same time, the "Double Eleven" promotion report in 2021 pointed out that the purchasing power of Lazada Southeast Asian consumers watching live broadcasts this year is twice that of last year.
As a rising star, TikTok’s status as a “foreign visitor” prevents TikTok from fully and quickly adapting to the local cultural environment, and its localization foundation is weak.
There are huge opportunities in the short video live broadcast e-commerce. If you want to make a breakthrough in the cross-border battlefield where new and old giants gather, you need to use real skills.
TikTok's road to globalization is long and difficult. Whether it is the shaping of correct values to adapt to going overseas, or the adjustment of local strategies, only by cultivating internal strength can it stand the test of time.