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time is the most luxurious resource on tiktok.

by gao honghao
editor: huang junjie

tiktok's sale crisis in the united states seems less urgent: the outcome of the presidential election is unpredictable, and its lawsuit against the u.s. federal government is still ongoing. but front-line employees now need to face a more difficult business problem - how to turn a product with 1 billion daily active users worldwide into a profitable business.

we understand that tiktok's e-commerce business has not yet reached its expected goals since its trial run in the united states in may 2023. in the first half of this year, tiktok's e-commerce daily sales (gmv) in the united states exceeded us$20 million, doubling from the end of last year, but there is still a big gap from the annual daily average of more than us$45 million. in contrast, as of may this year, temu's global daily average gmv was around us$90 million, with the us market accounting for more than 35%. pinduoduo denied the above data.

a person familiar with the matter said that tiktok e-commerce has another daily peak target, that is, the daily gmv peak in the us market in the second half of the year will reach 75 million us dollars, which is still a long way off. at the end of last year, this figure was around 16 million us dollars.

tiktok e-commerce initially only accepted merchants in the united states who had already shipped goods to the local area. faced with competition from temu and shein, it launched its hosting business in august 2023, directly shipping goods from chinese warehouses to american consumers. it is understood that the current top priority of tiktok's hosting business team has shifted from chasing gmv to maintaining profits.

the united states is tiktok's most important market, with the largest advertising and retail industries in the world. taking it means tiktok will have sufficient funds to continue competing with giants like google and meta.

in 2021, one of the main reasons why tiktok e-commerce chose the uk as its first choice when entering europe and the united states is that the consumption habits and spending power of the british are similar to those of the united states, which can pave the way for the development of the us market in the future.

we also learned that in 2023, tiktok e-commerce had temporarily suspended its entry into brazil, ireland, spain and other countries, precisely to make way for its official launch in the united states at the end of the year; the following year, the biden administration of the united states signed a bill that banned tiktok if it didn’t sell. against this background, tiktok e-commerce once again temporarily suspended its entry into eight countries, including japan, south korea, and germany, in order to first concentrate resources and stabilize the united states. a tiktok person said that if american merchants cannot feel the platform’s continued investment, they may flee in panic.

but the united states is also the most difficult market for tiktok e-commerce. like europe, users here have no habit of live shopping, there is a shortage of anchors, offline business is equally developed, and there is a more intense competition environment than in europe and southeast asia. in addition to giants like amazon, temu has sold its products to 48 countries around the world with its low prices. after more than a year in the united states, temu has become the second most popular e-commerce app here, and about 15% of americans have bought things on temu.

live streaming e-commerce has already proven its feasibility and market potential in china. given enough time and patience, tiktok may also be able to cultivate such consumer habits in europe and the united states, just as amazon or shein spent more than a decade building their own supply chains.

"this thing will definitely succeed, it's just a matter of whether it will take one year or five years," said a tiktok e-commerce employee. but now, time is precisely the most luxurious resource at tiktok.

the same problem as the uk market

when tiktok e-commerce was launched in the uk in 2021, it was expected to quickly replicate the success of douyin e-commerce. but they soon found that this was not realistic - there were no successful cases of live e-commerce overseas, and buying things through live streaming was not a consumer habit accepted by users. more than two years later, tiktok e-commerce was officially launched in the united states, and the same problem reappeared.

the first problem is the lack of content supply. similar to when it first entered the uk, tiktok e-commerce anchors in the united states were mostly from chinese merchants. however, since most of them have poor english expression skills, they are unable to provide more original live broadcast content to local american users, which once had a great negative impact on the user experience of the tiktok main site.

since 2024, more and more american sellers have entered tiktok, and the anchors on the platform have gradually become local experts. but a new problem has arisen - both the overall number of anchors and their investment in the united states lag significantly behind other regions.

according to our understanding, the average daily broadcast time of tiktok southeast asian e-commerce anchors is about 2.5 hours, while in the uk and the us it is about 20 minutes. generally speaking, 20 minutes is only enough for a domestic anchor to explain 2-3 products. short broadcast time will result in the anchor not getting stable traffic support, thus affecting conversion, and it is difficult for the platform to form a thriving live e-commerce atmosphere.

a tiktok e-commerce service provider complained about the lack of professionalism of local anchors, saying, "each person needs to live stream for at least 6 to 8 hours a day to see real results." however, there is no successful case like li jiaqi in the us market, and bloggers have no motivation to do time-consuming and laborious live streaming of goods. unlike the domestic ecosystem, overseas bloggers can make money more easily through advertising on platforms such as youtube and instagram.

a tiktok e-commerce insider revealed that internally they believe there are only two ways to solve the above problems. one is to promote successful benchmark cases and suggest that mcn agencies bring european and american anchors to china for training; the other is to guide domestic mcn agencies to go overseas.

in order to encourage mcn agencies to develop in the united states, agencies that have cooperated with tiktok can receive up to 70% subsidies for a single live broadcast in the united states, that is, for every $100 worth of goods sold, the platform will return $70.

american users are not used to live shopping and rarely make impulse purchases. they tend to put a product into the shopping cart after seeing it in the live broadcast room, and then jump out of tiktok to compare prices on other platforms before making a decision. if the product on tiktok does not have a clear price advantage, it is likely to be just an advertisement for merchants on other e-commerce platforms.

the usual means of attracting new users in china, such as providing users with coupons for "20 off for purchases over 100", have also become ineffective in the united states. a tiktok e-commerce person said that american users prefer direct discounts rather than completing a series of troublesome tasks and then obtaining a coupon with a usage threshold.

the bigger problem is that the algorithm recommendation is not accurate. tiktok launched closed-loop e-commerce in the united states relatively late, and many american tiktok users mostly do not have shopping behavior, so their labels are relatively rough and vague, usually only the country they are in and the approximate age range. for the live broadcast room, "judging what is an excellent live broadcast room, or how to increase traffic, is a complete black box." the above-mentioned mcn agency person said. the platform recommendation algorithm still needs a long-term rehearsal process to become more accurate.

faces more constraints than temu and shein

in the united states, temu has always been a competitor to tiktok.

in 2021, tiktok opened a semi-closed loop e-commerce in the united states, allowing users to click on external links to jump to other e-commerce platforms for shopping. two years later, tiktok internally estimated that the average daily gmv of toktok's us e-commerce was around 6 million to 7 million us dollars. but at this time, temu's gmv, which had only entered the united states for a year, was already ten times that of tiktok. soon tiktok e-commerce followed temu's example and launched a fully managed business.

the so-called full-hosting business means that cross-border merchants only need to be responsible for listing goods, while the platform is responsible for product selection, pricing, warehousing, logistics, after-sales, etc. full-hosting can get sufficiently low product prices, lowering the threshold for selling goods overseas to the lowest level, and involving a large number of merchants in fierce bidding.

however, a year later, tiktok's hosting business has made limited progress and currently accounts for only one-fifth of tiktok's e-commerce market. a tiktok e-commerce person said that in order to cope with the fierce competition with temu and shein, tiktok's e-commerce cross-border product subsidy rate was as high as 40%, but users quickly lost users as soon as the subsidy ended.

a temu source said that tiktok e-commerce has no advantage in terms of price and category, so it can only rely on the limited conversion brought by content. before tiktok e-commerce builds the shelf scene, it will be difficult to replicate the success of temu.

compared with relatively pure trading platforms such as temu and shein, tiktok e-commerce is built on a social platform. their sizes are also very different. temu is a platform developed from scratch, shein's users are more limited to the female group, and tiktok has more than 180 million users in the united states. this determines that tiktok will inevitably face greater regulatory risks.

tiktok e-commerce has also imposed stricter restrictions on merchants opening stores in the united states since its launch. in may 2023, tiktok e-commerce u.s. stores began testing, initially requiring stores to have local qualifications such as u.s. business licenses, u.s. legal persons (chinese shareholders not exceeding 25%), and to have u.s. overseas warehouses and be able to ship locally; two months later, tiktok e-commerce opened cross-border stores for chinese-funded u.s. companies in the united states (accu), which also required a u.s. business license, local warehousing, and local shipping; at the end of the year, tiktok e-commerce opened cross-border stores in the united states.

tiktok's e-commerce live broadcast room has also consciously reduced content related to china.

a tiktok insider revealed that tiktok e-commerce will classify live broadcast rooms into several levels to judge the quality of their content. the specific performance of low-level live broadcast rooms includes: poor native english experience, poor english speaking or mixed chinese and english, too many chinese style elements, and the host said too much content that is inconsistent with local cultural habits. they also restricted the traffic of some cross-border live broadcast rooms in the united states in order to create a sense of native content and provide local users with a more local shopping experience.

to avoid risks, tiktok employees also have difficulty accessing data, such as not being able to obtain detailed user ids (unique user identifiers) of american users to help them analyze the purchasing behaviors, social network relationships, personalized preferences, etc. of different users on the platform.

the uk was once the starting point for tiktok to develop e-commerce business in europe and the united states, but now the growth of this market has been extremely slow, and its scale is even much smaller than that of asian countries such as thailand, vietnam, and malaysia. the conflicts and challenges that tiktok's e-commerce has experienced in the uk have fully demonstrated that whether it can succeed in such a difficult business as e-commerce depends on the extent to which it can return from a global company to a more "chinese-style" company - an aggressive expansion rhythm, a high-profile marketing model, and a greater reliance on china's infrastructure (anchors and mcn agencies, goods and logistics). however, in today's us market and complex geopolitical environment, such a "return" seems to be more difficult to achieve.

title image source: visual china