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The year of TikTok commerce
As TikTok navigates its path to e-commerce success in 2024, the big question remains – can it finally captivate Western consumers with its in-stream shopping options? The apps foray into in-app sales follows its success in China, where Douyin, the local version, thrives on in-stream purchases, a model TikTok aspires to replicate globally.
Expansion goals
Reports indicate TikTok’s ambition to skyrocket its U.S. e-commerce business, targeting a tenfold growth to reach up to $17.5 billion in 2024. The challenge lies in how TikTok will achieve this substantial expansion, especially considering Western audiences’ historical reluctance towards in-stream shopping.
In-stream shopping challenges
In China, Douyin’s in-app shopping is predominantly driven by live streams, a trend that hasn’t gained the same momentum among Western users. Whether attributed to concerns around TikTok’s Chinese ownership or a general hesitation towards live-stream impulse buying, the social media company faces hurdles in replicating its Chinese success.
Spending trends
Despite challenges, they see promise in user spending within the app. In 2023, users spent $3.8 billion, marking a 15% YoY increase. While U.S. users primarily invested in Coins for virtual gifts, the willingness to spend in-app signals an opportunity for the platform to diversify its revenue streams.
To boost in-app spending, the app may consider incorporating food delivery, drawing inspiration from Douyin’s success. Douyin’s expansion into local services, propelled by a content feed featuring local businesses, could serve as a model for the app’s broader utility and revenue expansion.
Trends
In its quest for commerce success, TikTok may emulate the strategy of Chinese retailer Temu, enticing consumers with lower-than-cost deals and fostering the thrill of budget-friendly shopping. This approach aligns with its mission to convert user engagement into revenue, not only for the platform but also for its creators.
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