According to media reports, TikTok’s online shopping service in the US is failing to attract sellers in significant numbers. Despite attracting hundreds of registrations from interested parties when it first launched in November 2022, it is suggested that fewer than 100 retailers are actively selling on the platform.
TikTok Shop: The Opportunity
On paper, TikTok looks like a fantastic sales opportunity. The social media platform recently celebrated that 150 million Americans (nearly half the nation’s population) are now on TikTok. TikTok also claims the app is now home to almost 5 million businesses that use the platform for marketing their services.
The platform is particularly attractive to businesses targeting younger audiences. According to Jungle Scout, more Gen Z consumers (43%) start their online shopping searches on TikTok than on Google or another search engine.
TikTok also makes it incredibly easy to sign-up for the service, promising to set sellers up for business on the platform within one day.
The fact that TikTok only allows US-registered businesses to sell in its US store, effectively blocking foreign sellers from flooding the market with cheap products as happens on eBay and Amazon, should be seen as a huge incentive to engage with the channel.
So why are so few US retailers selling on TikTok?
Is TikTok About To Be Banned?
The current geopolitical situation doesn’t help. With alleged spy balloons shot down in US airspace, rising military tensions in the Pacific, and concerns regarding the security of the app leading to governments and organizations around the world banning TikTok from official devices, there is growing concern that TikTok might be about to be banned in the US and other territories.
TikTok, which employs 7,000 workers in the US, is fiercely defending the app against allegations that it is a threat to national security.
A recent statement from TikTok said, “To proactively address US national security concerns, we’ve taken unprecedented steps by enhancing safeguards for our US users. Over the last two years, we’ve invested $1.5 billion in setting up TikTok US Data Security and have been building a comprehensive framework to isolate protected US user data. Today, we are also proud to launch the U.S. Data Security (USDS) site aimed at providing transparency into our commitments and answering common questions around our efforts to safeguard data.”
Despite this, many online retailers will need convincing that TikTok is in it for the long run.
Retailers Have a Choice of Where to Invest Their Time, Effort and Money
Regardless of whether there is a real threat to the future of TikTok in America or not, online retailers won’t want to invest in any strategy that is potentially riskier than others. This risk is amplified when sellers consider the alternative channels they can invest their time, effort, and money in.
Highlighting this abundance of choice, Suzy Davidkhanian, vice president of content, retail, and ecommerce at the market research company, Insider Intelligence, said, “There are so many marketplaces, social platforms, and white-label delivery services that retailers can sell on that they have to be strategic about which to invest in. They have a tough enough time maintaining inventory visibility between their online and offline businesses. There would be no economies of scale if they used the services offered by each platform.”
Is Social Shopping a Viable eCommerce Platform?
While TikTok struggles to build a successful eCommerce business in the United States, it’s worth noting that its competition is also facing a tough time.
Meta has refocused its social shopping efforts on Instagram in favour of more traditional advertising models. With access to such a large user base, some industry insiders suggest that TikTok would be better off following Meta’s lead and focusing on its advertising business.
This isn’t to say that social shopping won’t be a big thing. It just won’t be the next big thing. With that said, keep a close eye on the market and be ready to move when the market is ready to support you.
Do This Before You Open a TikTok Shop
Before you open a TikTok shop, there are numerous other eCommerce strategies you should invest in. This includes optimising the channels you currently sell on.
eBay and Amazon remain the most lucrative online sales channels available to online retailers today.
If you have had your head turned by the latest unproven sales channels, it might be time to look at the online marketplaces with the greatest opportunity to deliver a return on investment first.
To learn more about how Frooition can help optimise your business on eBay through listing and design best practices, visit our free eBay Optimisation application or book a call with one of our eBay experts today.