TikTok to Ban Outside E-Commerce Links, Encouraging Use of TikTok Shop
TikTok is planning to ban links to outside e-commerce platforms like Amazon, according to a report from The Information. This move aims to drive users towards using TikTok Shop for their purchases instead.
Losses Expected for TikTok Shop in the U.S.
The report also states that TikTok Shop is projected to have a loss of over $500 million in the United States this year. This loss encompasses investments in hiring, establishing a delivery network, and subsidizing merchants offering discounts and free shipping.
Creators Impacted by Link Ban
By prohibiting outside e-commerce links, TikTok would prevent creators from promoting items available on their Amazon storefronts, such as kitchen items and furniture. Currently, influencers earn small commissions when someone buys an item from their Amazon store. These reported changes mean that creators will no longer be able to do so.
Increase in Sales on TikTok Shop Anticipated
Although it’s unknown when the link ban will take effect, once implemented, TikTok users will only be able to purchase products through TikTok Shop if they are promoted by creators. Some TikTok Shop links even allow direct purchasing from videos, while others have TikTok Shop storefronts embedded in their profiles. Going forward, this will be the sole method to link products for purchase within the app.
TikTok’s Focus on Boosting TikTok Shop
This move is seen as an effort by TikTok to increase sales on TikTok Shop, which currently has limited traction. In the U.S., consumers currently spend around $3 to $4 million per day on TikTok Shop, a notable increase from half a million to one million dollars per day in June. According to the report, TikTok staff predict this number will exceed $10 million by year-end.
TikTok’s International E-Commerce Aspirations
ByteDance, the parent company of TikTok, aims for TikTok to become an international online shopping platform akin to Douyin, which achieved a merchandise volume exceeding $200 billion last year. The Information reports that ByteDance hopes TikTok can reach similar levels by 2028, with expectations of generating $40 to $60 billion in revenue from the U.S. out of the $200 billion total.
TikTok’s Approach to Attract Merchants and Expand E-commerce
The report reveals TikTok’s efforts to bring merchants onto its platform. TikTok employees identify popular items on Amazon and convince the merchants to join TikTok Shop, initially offering them zero commissions for the first three months.
TikTok Explores New Shopping Features
TikTok recently confirmed testing of a new in-app “Trendy Beat” shopping section in the U.K., where products are sold and shipped by a subsidiary of ByteDance. This feature may also be introduced in the U.S., as TikTok filed a trademark application for Trendy Beat in May.
TikTok Influences Shopping Habits
While TikTok’s e-commerce initiatives are still relatively new in the U.S., the app already exerts significant influence over users’ shopping habits. The phrase “TikTok made me buy it” has gained popularity to describe the app’s ability to drive impulse sales, with 7.4 billion views and 67 billion hashtag uses on TikTok.
Sunsetting of Shopify Storefronts
As TikTok focuses on promoting TikTok Shop, the company will discontinue its Shopify storefronts on September 12th. These storefronts were launched in 2021 when TikTok’s e-commerce offerings in the U.S. were limited. With the availability of TikTok Shop, the need for these additional storefronts is no longer present.
