activity-banner

Black Friday, limited time discount! Annual plan up to 60% off + Free 25G IP

EN
HomeBlogE-commerceTikTok e-commerce enters the US: a new blue ocean for global merchants

TikTok e-commerce enters the US: a new blue ocean for global merchants

cover_img

The blue ocean market is gradually heating up

TikTok e-commerce is accelerating its entry into the US market. This huge market is not only key to TikTok e-commerce's global layout, but also an opportunity that non-US merchants should not miss.

“The GMV of the US market has already surpassed that of the UK,” a well-known TikTok e-commerce seller pointed out. ”TikTok is doing its best to develop the US market. Currently, the average daily GMV of the US site has reached 2 million US dollars, and the daily revenue of some merchants can even reach 100,000-200,000 US dollars.”

Although this figure still lags behind the Indonesian market (with an average daily GMV of around 15 million US dollars), the growth rate of the US market is remarkable. According to data from the third-party analysis platform EchoTik, starting in July 2023, the number of TikTok Shops in the US increased by more than 80% compared to June, and the total sales growth rate exceeded 100%. Another data shows that the number of TikTok shops in the US has grown from more than 300 in April to nearly 6,000 in July, and the corresponding monthly GMV has also soared from 6.23 million yuan to 340 million yuan.

These increases are inseparable from TikTok E-commerce's many new initiatives in the US market:

Cross-border business opening

In July 2023, TikTok e-commerce opened up the cross-border TikTok Shop store model for the US market, initially only for specific categories such as jewelry and crystal, and gradually opening up to more categories in the future. This provides a starting point for non-US merchants to enter the US market. At the same time, TikTok also increased its efforts to attract local merchants after July, providing more support for US sellers.

Fully managed service launched

In August 2023, TikTok e-commerce launched a cross-border “fully managed” model. Under this model, merchants only need to provide the goods, and TikTok is responsible for almost all aspects of operations, from marketing and transactions to logistics and after-sales. This service not only lowers the entry barrier for merchants, but also provides a path for non-US merchants to easily participate.

Local infrastructure construction

To improve fulfillment capabilities, TikTok is building a local warehouse and logistics network in the United States and plans to partner with third-party logistics companies. Previously, TikTok successfully launched a similar FBT (Fulfillment by TikTok) service in the UK, a one-stop solution covering warehousing, packaging and delivery. In the future, this model will also be adopted in the US market to provide stronger logistics support for cross-border merchants.

Focus on closed-loop e-commerce

TikTok is gradually closing the “semi-closed shop” model (where TikTok drives traffic to Shopify to complete purchases), and shifting its focus to “closed shops” to achieve a full-process experience from browsing to purchasing to payment. The promotion of this model means that merchants can more efficiently capture the purchasing power of platform users.

The addition of a professional team

To enhance its competitiveness in the US market, TikTok has introduced a number of retail industry veterans from Amazon and Meta to strengthen the operation of its e-commerce business in the US. These moves not only improve TikTok's competitiveness in the US market, but also create a more stable cooperation environment for cross-border merchants.

This series of arrangements by TikTok marks the release of the huge potential of the US market. For global merchants, TikTok is providing a brand new window of opportunity, especially through its cross-border model and localized support, which makes it easy for non-US merchants to compete in this market.

TikTok E-commerce's global business goal for 2023 is to achieve a GMV (total merchandise value) of 20 billion U.S. dollars – almost quadrupling from less than 5 billion U.S. dollars last year. According to industry estimates, TikTok's GMV in the Southeast Asian market is expected to reach 15 billion U.S. dollars this year. So, where will the remaining 5 billion U.S. dollars come from?

The US market is undoubtedly the key battleground for TikTok's future e-commerce development. TikTok has more than 150 million users in the US, accounting for nearly half of the total population. This huge user base provides a natural advantage in terms of traffic for e-commerce businesses. However, TikTok cannot afford to be complacent in the face of the strong expansion of emerging platforms such as Temu and SHEIN in the US market.

In order to seize the market, TikTok Shop has adopted a strategy of paralleling three models in the US market: local stores, cross-border stores, and fully managed stores, to comprehensively cover the needs of different merchants. When the flood of traffic is fully released, whoever can seize this wave of dividends first will become the winner of TikTok e-commerce.

Vigorously promote the entry of local small and medium-sized businesses in the United States

As TikTok e-commerce rapidly expands in the US market, one of the platform's core strategies is to vigorously promote cooperation with local small and medium-sized businesses. Industry insiders point out that TikTok is strengthening cooperation with more local US businesses. The key is for businesses to be able to achieve localized fulfillment capabilities to ensure a smooth operation and logistics system.

Requirements for becoming a local business on TikTok US

To become a local partner business on TikTok US, businesses need to meet some rigid conditions, mainly including:

  1. US-based company: merchants must be registered in the US and accept that no more than 25% of the legal representative is Chinese.
  2. Local inventory: merchants must stock goods locally in the US to ensure timely fulfillment.
  3. High sales requirements: merchants must have annual sales of more than 2 million US dollars in a single category on Amazon US. The higher the sales, the higher the priority for merchants on the TikTok platform.
  4. Suitable product categories: The ideal product is a small, lightweight item with an order value between 15 and 50 US dollars and more than 100 SKUs.

The turnover requirement is particularly high, which has become a barrier for many small and medium-sized cross-border merchants. This condition makes it difficult for some merchants who have a strong supply chain advantage but have not yet reached this turnover standard to directly enter the TikTok US market.

Challenges faced by local US merchants

Although many cross-border merchants are eager to enter the US market, the difficulties they face in the process of operation still make many of them choose to wait and see. For example, some merchants are worried that the profit cycle may be too long, and the policy environment of the platform is still unstable. In addition, the high labor costs in the United States also put a lot of pressure on merchants.

For example, logistics and warehousing costs are extremely high in the United States, and inventory management and order fulfillment require huge expenses. The labor cost of warehousing in the United States is high, and every step in the operation process may incur additional expenses. For example, even if the goods are thrown away from the warehouse to dispose of substandard inventory, a fee of 15 USD/hour is required. In addition, compared with the Chinese market, other costs of operating in the United States, such as labor costs for packaging and operations, are also relatively high. Although the costs of anchors and sales personnel are lower, the overall operating expenses are still not negligible.

Opportunities to attract local small and medium-sized sellers

Facing these challenges, TikTok e-commerce continues to make efforts to attract local small and medium-sized sellers in the United States. The TikTok team is seeking to attract SMB (small and medium-sized businesses) in the United States through incentive policies. These businesses have traditionally relied on independent websites, offline businesses, or other social media platforms for sales, but now they are also turning to the TikTok e-commerce platform for greater traffic and business opportunities.

It is estimated that there are about 2 million small businesses in the United States. Although these businesses are small, their transaction volume in their local markets and on social media platforms is considerable. Now, TikTok is actively attracting these businesses and enhancing the market penetration of the platform through cooperation with them.

TikTok's multi-level development in the US market

At present, TikTok's e-commerce layout in the US market can be divided into three levels:

  1. Local small and medium-sized businesses: These businesses have limited inventory and are relatively small in scale, but they can quickly enter the TikTok platform to provide localized goods to American consumers.
  2. Introduction of mid- to high-level Amazon sellers: These sellers have already achieved certain results on other platforms, but due to the suitability of the categories, there are certain difficulties in adapting to the early TikTok market.
  3. Fully managed cross-border business model: This model quickly organizes the supply chain of goods through centralized front-end operations to help cross-border sellers expand in the US market.

In addition, TikTok is also considering introducing products from major American brands to the platform, and is attempting to cooperate with major channels such as Walmart and Target to further expand the platform's product range and attract more local American brands to the platform. To achieve this goal, TikTok is increasing its cooperation with the local American business development (BD) team to ensure localized operations in the US market.

Through this multi-level market penetration strategy, TikTok is striving to achieve rapid and comprehensive growth in the US market and enhance the platform's competitiveness in the global e-commerce sector.

How cross-border merchants can use TikTok's “fully managed” model to enter the US market

Background and opening of the fully managed model

TikTok Commerce is actively expanding into the US market. Although local merchants on the platform are the focus, cross-border merchants still have the opportunity to enter this market through the “fully managed” model. At the end of August 2023, TikTok Commerce officially opened the fully managed business to cross-border merchants. This model allows non-US merchants to directly manage the listing, marketing, shipping, and after-sales service of their products through the platform.

The core of the fully managed model is to display products on TikTok's official shopping channels (such as “Trendy Beat” and “TikTok Shop Shopping Center”), ensuring that products can reach local users in the United States efficiently and quickly.

How the fully managed model works

For cross-border merchants, using the fully managed model means that they do not need to bear the responsibility for each aspect of platform operations. Merchants only need to supply products to the designated warehouse, and TikTok will then be responsible for product listing, traffic promotion, order processing, logistics and delivery, after-sales service, etc.

This provides a convenient entry method for cross-border merchants who do not have the ability to operate locally. The display of goods will be on TikTok's own shopping channel, not just limited to local merchants' goods, further increasing the exposure of cross-border goods.

Advantages and challenges of the fully managed model

  1. Increased efficiency: The fully managed model helps to improve the overall efficiency of cross-border e-commerce by fully controlling the operation process through the platform. Merchants no longer have to worry about marketing, after-sales and other links, and can focus more on product development and understanding of market demand.
  2. Solving industry pain points: TikTok combats grey production, empty packaging, fake goods and other issues through unified management, ensuring product quality and the user shopping experience. This model can effectively avoid the credibility issues commonly seen in cross-border e-commerce in the past, and enhance consumer trust in the platform.
  3. Quick start: Because the fully managed model can put products on the market and promote them effectively in a short period of time, it is a shortcut for cross-border merchants to quickly enter the US market. The platform will provide merchants with high-quality traffic support, which will help new merchants quickly accumulate a user base.

Concerns for merchants

Despite the obvious advantages of the fully managed model, some merchants still have concerns about this model. In particular, merchants may worry that under this model, pricing, shipping, and after-sales will be managed by the platform, which may undermine the merchant's autonomy.

However, some cross-border merchants have pointed out that the fully managed model still maintains the merchant's control over the goods, and the platform, as a consignment seller, is mainly responsible for operations and channel promotion. Inventory management and sales strategies are still determined by merchants. For industry-leading enterprises with obvious advantages in the supply chain but lack of e-commerce experience, the fully managed model is an ideal choice to reduce operating costs and quickly expand the market.

Key support for influencer-led businesses

For many small and medium-sized merchants, it is difficult to enter the TikTok US market, especially in terms of local businesses and cross-border fully managed businesses. Therefore, focusing on the layout of the traffic end and becoming a merchant through influencer-led businesses has become another possibility for merchants to explore the US market.

The rise of TikTok influencer-led businesses

In the past, TSPs (TikTok service providers) and MCNs (influencer marketing service providers) mainly helped merchants sell products, but with the launch of TikTok's fully managed hosting model and mall function, the role of TSPs and MCNs has changed. Now, they are not just service providers for merchants, but sellers on the TikTok platform, responsible for assisting the platform in promoting products and connecting products with consumers. Therefore, influencer marketing has gradually become an emerging market full of potential.

The earning potential of TikTok influencer marketing

For teams and individuals who are good at creating short videos or live streaming, the influencer marketing model provides a profit opportunity. Under this model, merchants no longer need to deal with issues such as product inventory, shipping, and store operations, and can instead focus on creating content and attracting an audience. Due to the high commissions, many influencers can earn a considerable income by collaborating to promote products. Based on TikTok's target of $20 billion in GMV this year, a 10% commission would amount to a market capacity of $2 billion, which provides huge market potential for influencers.

TikTok's support for product-promoting influencers

In order to motivate product-promoting influencers, TikTok E-commerce is also constantly increasing its support for them. For example, for a period of time, if influencers in the US participate in the “Select Alliance” and display relevant products in their videos, the platform will reward them with a bonus of 30 US dollars. This incentive has attracted more influencers to participate in product promotion on the platform, helping to boost sales.

Continuing challenges: cultural differences and market adaptation

Although TikTok e-commerce has attached great importance to product placement influencers, it is not easy to succeed in the US market. Cultural differences make short video content, live streaming product placement methods, and product selection strategies highly demanding. Consumers in the US market pay more attention to a sense of intimacy with brands and products, rather than just price discounts. For example, William, the founder of the TSP agency Outandish, pointed out that in the US market, discounts in live streaming product placement do not always attract viewers, and instead, more creative and interactive methods are needed to attract attention.

Rooted in the US market: a deep understanding of local culture

To operate successfully in the US market, teams must truly understand and integrate into the local culture. Gu Jun mentioned that although TikTok US has an abundant supply of goods, to impress American consumers, products that conform to mainstream American culture and values are often needed. For example, a Korean brand has quickly risen to the top three on TikTok through precise market positioning that closely follows mainstream American culture. This successful case demonstrates the importance of cultural adaptation in the US market.

Overall, TikTok is supporting different types of merchants through its influencer marketing and fully managed model, especially those who can adapt to the culture of the US market and effectively utilize the platform's resources.

FAQ: TikTok e-commerce in the US market

1.What is the market outlook forTikTok e-commerce in the US?

TikTok e-commerce has huge potential in the US market. With TikTok surpassing 150 million users in the US, the US market has become an important part of its global e-commerce layout. Despite challenges from competitors such as Temu and SHEIN, TikTok has attracted a large number of merchants through cross-border small shops, a fully managed model and localized support, and is expected to continue to expand in the next few years.

2.What new initiatives has TikTok E-commerce adopted in the US to promote market growth?

TikTok has adopted initiatives including opening cross-border business, launching fully managed services, and building localized infrastructure to help non-US merchants enter the market easily and improve the platform's fulfillment capabilities and competitiveness. In addition, TikTok has strengthened its cooperation with local small and medium-sized merchants and launched a closed-loop e-commerce model to improve the user experience and purchase efficiency.

3.How can I successfully operate in the US market through TikTok e-commerce?

Merchants can participate in the US market through the three models provided by TikTok (local store, cross-border store, and fully managed model). In particular, the fully managed model allows merchants to provide only the goods, while TikTok takes care of other operational aspects such as marketing, transactions, and logistics, greatly reducing the entry barrier and helping merchants quickly integrate into the US market.

4.How does TikTok's “fully managed” e-commerce model work?

The “fully managed” model is a comprehensive service provided by TikTok for cross-border merchants. Merchants only need to supply their goods to TikTok's designated warehouses, and the platform will take care of the product display, traffic promotion, order processing, logistics and after-sales service. This model helps merchants quickly enter the market and reduce operational pressure, while also improving the efficiency of cross-border e-commerce.

5.How can merchants in the US market meet TikTok's entry criteria?

To become a local merchant on TikTok in the US, merchants need to meet the following criteria: register a company in the US, carry out local stocking, meet high sales standards (for example, annual sales of more than 2 million US dollars on Amazon), and the products need to be small and light goods suitable for TikTok e-commerce. Merchants that meet these conditions will be given higher priority and enjoy more support from the platform.

6.How does TikTok support local small and medium-sized businesses in the United States?

TikTok is attracting small and medium-sized businesses in the United States through incentive policies and cooperation models. In particular, by cooperating with retailers and small and medium-sized enterprises in the United States, TikTok helps these businesses expand their markets and increase their exposure through the platform's traffic support.

7.How does TikTok e-commerce cooperate with large brands and retailers?

TikTok is enriching the platform's product variety by strengthening cooperation with large retailers (such as Walmart and Target) and introducing more local brands. These partnerships not only bring more merchandise to the platform, but also provide merchants with a wider range of sales channels.

8.How does TikTok support product placement influencers and KOLs?

TikTok provides a variety of support for product placement influencers, including incentives such as the “Featured Affiliate” program to reward them for promoting products. Influencers can focus on content creation and audience interaction, while TikTok takes care of operational management and traffic support, providing product placement influencers with considerable profit opportunities.

9.How can cross-border merchants overcome the logistical and cost challenges of the US market?

While high logistics and warehousing costs in the US market are a challenge for cross-border merchants, TikTok's “fully managed” model helps merchants solve this problem. Through the platform's localized warehousing, logistics and operational support, merchants can reduce the burden of these costs and quickly gain a foothold in the US market.

10.What is the forecast for future growth of TikTok e-commerce in the US market?

As TikTok continues to expand its e-commerce presence in the US market, it is expected that TikTok e-commerce's market share will grow rapidly in the next few years. With its large user base and innovative e-commerce model, TikTok will occupy an important position in the US e-commerce sector, especially cross-border merchants and small local merchants working together will become an important driver of growth.

Share to

DICloak Anti-detect Browser keeps your multiple account management safe and away from bans

Anti-detection and stay anonymous, develop your business on a large scale

Related articles