According to a new report from The Information, TikTok plans to prohibit links to external e-commerce sites such as Amazon. The reported change is seen as a way for the company to force people to use TikTok Shop if they want to buy something they see on the app.
According to the report, TikTok Shop is on track to lose more than $500 million in the United States this year. The $500 million loss is due to the company’s significant investment in hiring, setting up a delivery network, and supporting businesses that provide discounts and free shipping.
By outlawing external e-commerce links, TikTok would stop creators from promoting products like furniture and kitchenware that are offered on their Amazon storefront. An influencer receives a small commission if someone purchases an item from their Amazon storefront. Following these alleged changes, creators would be unable to do so.
TikTok declined to comment when contacted.
Once the ban is implemented (the exact date is unknown), users of TikTok will only be able to purchase goods promoted by creators through TikTok Shop. While some creators have TikTok Shop storefronts embedded in their profiles, some TikTok Shop links allow users to buy goods directly from videos.
It is believed that TikTok will take the alleged action as a ploy to boost sales in its TikTok Shop, which is not currently gaining much traction. According to the report, Americans are now spending between $3 million and $4 million daily on TikTok Shop, up from between $500,000 and $1 million daily in June. TikTok staffers expect this number to exceed $10 million by the end of the year.
TikTok Shop is a lot more successful in Southeast Asia, where it has been available since 2021. In Southeast Asia, TikTok Shop’s daily gross merchandise volume is around $50 million to $60 million. TikTok hopes to increase this number to around $90 million by the end of the year.
ByteDance wants TikTok to establish a global online marketplace like Douyin, which sold more than $200 billion worth of goods in 2017. According to The Information, the business anticipates TikTok will achieve comparable levels by 2028. Of the $200 billion, ByteDance anticipates earning between $40 billion and $60 billion in revenue from the United States.
According to the report, TikTok has been trying to entice businesses to use its platform. For instance, the company’s staff members look at the top-selling products on Amazon before contacting the sellers and persuading them to join TikTok Shop by promising them no commissions for the first three months.
TikTok recently confirmed that it is testing a new in-app “Trendy Beat” shopping section where it is offering goods for sale that are shipped and sold by a subsidiary of ByteDance. This is just one of the company’s many e-commerce expansion strategies. In addition to TikTok Shop, the company also plans to launch its own e-commerce platform. Given that TikTok registered Trendy Beat as a trademark in the US in May, the feature will probably also be made available in the U.S. while it is currently being tested in the U.K.
Internally known as “Project S,” ByteDance’s strategy to begin selling its own goods on the video app makes use of TikTok’s knowledge of goods that are becoming more and more popular therein, enabling ByteDance to either buy or produce those goods. It is said that ByteDance sources these products from a network of suppliers.
Even though TikTok’s e-commerce initiatives are still relatively new in the United States, the video app already has a significant impact on users’ purchasing decisions. In fact, the phrase “TikTok made me buy it” has gained popularity due to TikTok’s propensity to encourage impulsive purchases. On TikTok, the term has currently received 7.4 billion views, and the hashtag has 67 billion.
As TikTok expands TikTok Shop, the company announced that its Shopify storefronts will close on September 12. Back in 2021, when TikTok’s e-commerce options in the United States were quite limited, TikTok and Shopify launched the storefronts. Now that TikTok Shop is available, TikTok no longer sees the need for storefronts.