TikTok is ramping up its social commerce platform to diversify its revenues amid a slowdown in digital advertising.
TikTok looks to FinTech for social commerce
Social commerce, where users can buy items without leaving the social media app, has seen massive success in China and is also a growing trend in other markets.
TikTok’s sister app Douyin enjoyed a 300% rise in sales year on year in the 12 months to May, with users buying more than 10 billion products. according to the FT.
China’s ByteDance, which owns both TikTok and Douyin, plans to expand this model globally through TikTok Shop, which launched last year in the UK and south-east Asia.
But TikTok’s e-commerce rollout has been hit with a series of problems.
Staff have left the department complaining of burnout, brands have abandoned the platform due to a lack of sales, and customers have complained about shipping delays and being sold counterfeit products.
TikTok has begun working with a handful of FinTech in recent weeks to remedy some of these issues and encourage sellers and buyers to use the platform.
This includes ChannelEngine, TalkShopLive and YunExpress, which specialise in software that integrates shopping technology and fulfils orders.
The decision to outsource some operations to external companies is the latest effort by TikTok to boost its social commerce arm, an area of the market it is betting on becoming a core revenue stream in the future.
TikTok’s doubling down comes as the company slashed its global revenue targets for 2022 by at least 20% in September as it struggles to meet ambitious goals.
Social media rivals, including Meta and YouTube, have experimented with shopping features over the past few years in an attempt to diversify their revenue streams.
Earlier this month, the FT revealed that YouTube was testing shopping links in Shorts, its short-form video offering set up to chase TikTok’s exponential growth.
Instagram has also been experimenting with shopping over the past few years, with limited success.
Multiple retailers and brands have previously said they ended partnerships with TikTok Shop as the technology was too difficult to navigate and the level of resources needed to sell on the app was not worth the returns.
