Social Media

TikTok Shop Slowed by Governments, Consumers

TikTok continues to pursue ecommerce via a live-stream platform despite U.S. and E.U. investigations into user privacy. TikTok Shop allows brands and influencers to link products in videos or live broadcasts for purchase within the application.

The results thus far are mixed. It is now focusing on markets where it has gained traction. Live-stream shopping is immensely popular in China but not (yet) in the U.S. or Europe. TikTok has halted its rollout of Shop’s features in the U.S., and sellers cannot sign up for Shop without a TikTok employee assisting them.

Analysts speculate that U.S. businesses have not shown sufficient interest. TikTok has limited the U.S. version of Shop to U.S. residents and registered companies, barring overseas merchants, making Shop less competitive with Amazon and Walmart. Both allow overseas merchants to sell on their American sites.

Screenshot of TikTok Shop home page

TikTok Shop allows brands and influencers to link products in videos or live broadcasts for purchase within the application.

In 2021 TikTok Shop launched in the U.K., its first market outside Asia. There most of the revenue comes from uploaded videos that link to products rather than live-stream selling.

But Shop is successful in Southeast Asia, where it launched in 2022, serving Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand. As of May 2023, Indonesia has 113 million TikTok users, the second largest country after the U.S., per Statista. Insider Intelligence estimates users as of May in all of Southeast Asia at 135 million.

TikTok Shop’s 2022 gross merchandise value in Southeast Asia was $4.4 billion, a four-times increase over 2021, per CNBC. However, that is a fraction of competitor Shopee at $73.5 billion in GMV. Both Shopee and Lazada, another Southeast Asian competitor, have invested heavily in logistics for faster deliveries, which are difficult in the rural areas of Southeast Asia. TikTok sellers often navigate logistical problems themselves.

In China, TikTok is called Douyin. China-based ByteDance owns both. Douyin is popular, with Chinese consumers having purchased over 10 billion products since its debut in 2016.

Government Actions

American merchants’ adoption of TikTok Shop has presumably been hampered by Congress’s efforts to ban the application. ByteDance has refused Congress’s request that it sell to an American company.

Similarly, the Biden administration has threatened the company with a total U.S. ban, citing a law in China that gives the government power to access private business info for national security reasons. In March of this year, the U.S. and Canada banned using TikTok on government-issued mobile devices. More than half of the U.S. states have banned TikTok on government-issued devices.

Canada and European countries are also trying to restrict access to TikTok by residents. The state of Montana has banned TikTok on all devices, effective January 1, 2024. TikTok has sued the state, challenging the legality of the ban. Five TikTok content creators in Montana have also filed a lawsuit against the state in federal court.

France and the U.K. Parliament have banned TikTok on government staff mobile phones. The European Parliament, European Commission, and the E.U. Council have also imposed bans on TikTok on staff devices. India, once one of TikTok’s largest markets, banned TikTok in mid-2020.

Attempts to ban TikTok use by American citizens may fail due to a First Amendment infringement. Regardless, the company’s efforts to establish a robust ecommerce platform in the U.S. and E.U. must first overcome the lack of enthusiasm for live-stream shopping in these regions. Government actions are likely secondary.

Marcia Kaplan
Marcia Kaplan
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