TikTok enters the European and American markets
TikTok forms partnership with US warehouse
The development of TikTok e-commerce is getting faster and faster. Recently, in order to ensure that the products traded on its app can reach consumers smoothly, TikTok provides sellers with services such as storing goods, packaging and shipping goods. At present, it has established a cooperative relationship with a US warehouse and signed a logistics agreement. Obviously, Tik Tok did not choose to build its own warehouse and logistics network, but to provide better fulfillment services for American sellers through cooperation with third-party logistics companies that lease and operate warehouses. The purpose of Tik Tok is to challenge strong opponents such as Amazon, SHEIN, and Temu.
Targeting Southeast Asia, TikTokShop has worked very hard. In 2022, TikTok Shop has successively entered Southeast Asian countries such as Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand, and then successively launched the online mall function in Southeast Asian countries such as Indonesia, Thailand, and the Philippines. Under the layout of TikTok Shop, its GMV in Southeast Asia reached $4.4 billion in 2022, an increase of more than four times compared to 2021.
In the European and American markets, Tik Tok has not stopped. The TikTok Shop UK mall has just officially opened, and it is expected that the TikTok Shop US mall will also be launched in July. TikTok Shop is speeding up the layout of the UK and the US, also in order to tap new market increments outside the fast-growing Southeast Asian market. Compared with Southeast Asian users, the potential market space for European and American users is huge.
SHEIN and Temu
In China’s e-commerce market, Pinduoduo.com quickly seized users by relying on core strategies such as subsidies, and became the third largest e-commerce giant after JD.com and Ali. In the cross-border e-commerce market, Temu, which copied Pinduoduo’s strategy, has gradually become a new development of overseas retail e-commerce with its affordable price and original social group method. Temu’s global expansion speed is quite amazing, especially in Europe and the United States. As of the first quarter of 2023, Temu’s GMV is close to $1 billion. Faced with this situation, TikTok Shop has also accelerated its deployment in the European and American markets.
Last year, SHEIN’s global revenue was about $23 billion, a year-on-year increase of about 50%, and its profit reached $800 million. In 2022, SHEIN’s global downloads reached the top, and its current downloads in the United States are second only behind Amazon. In April, the average order value for SHEIN in the U.S. was about $70, compared with $93 for Zara, $52 for Walmart and $46 for Amazon. Based on these data, even if the opponent is Amazon, the world’s largest online retailer, SHEIN still has great advantages. In 2022, nearly 30% of SHEIN’s annual revenue came from the United States. All in all, if TikTok Shop wants to stand in the international market, the Southeast Asian market is not enough. It can only have a future by challenging Temu and SHEIN and entering the European and American markets.
The battle for the market has started
Today, cross-border e-commerce has entered an accelerated stage, while the competition for users has just begun. It was previously predicted that the global e-commerce penetration rate will reach 24% in 2026, and the market size will exceed $910 million, which is in a stage of rapid growth. In order to compete for the market share of cross-border e-commerce, AliExpress, Temu, and TikTok Shop have successively begun to promote the full managed model, combining four forms of warehouse management, contract performance management, settlement management, and traffic management to enrich product categories. SHEIN also opened up third-party sellers to settle in not long ago, continuing the full managed model.
Whether it is SHEIN, which has been cultivating overseas for many years, or Temu, which has just entered the international market, or TikTok Shop, which has a huge user base, how to capture users is always the most important. As the overseas e-commerce market matures, the platform needs to lay out user experience more comprehensively, improve user stickiness, and grasp user psychology. In the next few years, e-commerce platforms such as TikTok Shop must continue to attract new users and create differentiated competitive advantages in order to achieve long-term development.
To sum up, TikTok Shop will focus on developing Southeast Asian markets such as Indonesia, supplemented by expanding business scale in Europe and the United States, and challenge cross-border e-commerce platforms such as Amazon, SHEIN, and Temu.
