TikTok eyes $17.5 billion shopping business on Amazon’s turf ByteDance’s TikTok aims to grow the size of its US e-commerce business tenfold to as much as $17.5 billion this year, according to people familiar with the matter, posing a bigger threat to Amazon.com. The 2024 merchandise volume goal for the US version of TikTok Shop — which melds online entertainment with impulse buying — was discussed in internal meetings in recent weeks and may still change depending on how the business goes, said the people, who asked not to be named discussing private information. TikTok’s ambitious target sets up a clash not just with Amazon but also fellow Chinese-owned outfits Temu and Shein, who’ve been making big strides among younger American shoppers. Unlike its two rival discounters, TikTok is counting on its social media reach and the appeal of viral videos to hook buyers. TikTok was last year on track to amass around $20 billion in global gross merchandise value, with Southeast Asia contributing the bulk of sales through its platform, Bloomberg News reported. Now, the company is seeking to expand sales in the US and Latin America, where it’s planning to launch the e-commerce operation in coming months, two people familiar with the matter said. ByteDance, founded more than a decade ago by Zhang Yiming and Liang Rubo, grew into an internet leader worth more than $200 billion thanks to the virality of short-video platforms TikTok and Douyin. TikTok Shop is one of the fastest-growing features for the Beijing-based, closely held company, which is seeking a new growth driver beyond social-media advertising. ByteDance’s revenue surged roughly 30% in 2023 to more than $110 billion, outpacing the projected growth of far more established social media rivals Meta Platforms and Tencent Holdings. TikTok Shop lets users buy items while scrolling through a perpetual feed of short videos and live streams within its main social media app, hoping consumers use it as an alternative to Amazon or Sea’s Shopee. That format — an effort to combine the ease of shopping on Amazon with the product discovery afforded by apps like Meta’s Instagram — has already helped Douyin snatch a significant portion of Chinese consumer spending from Alibaba Group Holding and JD.com, particularly after lockdown rules during the pandemic drove people to spend more time online. ByteDance is intent on exporting its e-commerce model globally. In the US, TikTok is offering free shipping and subsidies to influencers who peddle gadgets, clothes and makeup in videos and live streams. In November, boosted by Black Friday and Cyber Monday deals, more than 5 million new US customers bought something on TikTok, the company said. It has roughly 150 million users in the country. TikTok on Wednesday announced it will increase fees imposed on merchants to 6% of each sale beginning in April and to 8% in July in most product categories, marking an end to promotions used to entice sellers. Those commissions are still significantly lower than Amazon seller fees, which are typically about 15%, but the boost signals TikTok is quickly moving to generate revenue from its e-commerce platform. Americans are increasingly comfortable shopping on Chinese e-commerce apps, including the popular fashion site Shein and PDD Holdings’s Temu, which has exploded in popularity since airing a Super Bowl ad in February. It’s unclear what sales targets TikTok Shop has set globally or for other markets. In Indonesia, TikTok has taken control of GoTo Group’s e-commerce unit Tokopedia in a $1.5 billion deal, which allowed the company to restart its online retail service after months of scrutiny by the local government. Follow us on Twitter, Instagram, LinkedIn, Facebook
Logistics, good or bad, are driven by the states and the commerce ministry has a LEADS (Logistics Ease Across Different States) report, based on perceptions. The 2023 version was released in December. Since states are heterogenous, in the reporting, they are divided into four groups—coastal, landlocked, north-east, and UTs. States that do well are called achievers. Nomenclature matters. Thus, states that are middling aren’t called average. They are called fast movers. States that are sub-par are called aspirers. Let me highlight coastal states, since 75% of export cargo is estimated to originate from them. Among coastal states, ones that do well are Andhra Pradesh, Gujarat, Karnataka, and Tamil Nadu. The ones that lag are Goa, Odisha, and West Bengal. While India’s logistics performance may have improved over time, that’s not true of every state. Some have slipped. Most states have a state-level logistics policy, including Goa and Odisha. West Bengal, bottom of the pecking order in the coastal category, doesn’t have one. To quote from LEADS 2023, “Looking ahead, the State (West Bengal) could benefit from formulating a State Logistics Master Plan and State Logistics Policy to drive efficiency improvements and facilitate investments within the logistics sector and undertake consultation with the logistics stakeholders for educating and informing them about the initiatives State is undertaking for the development and improvement of logistics sector.”
Logistics has been talked about for a long time and India has also focused on improving performance. We are now getting some precise data on measurement and quantification. That helps.
Bibek Debroy, chairman, EAC-PM. Views are personal.