Could 2024 be the year shopping becomes TikTok’s core business? According to a new report from Bloomberg, TikTok is eyeing a tenfold increase in merchandise sales in the US this year, amounting to a total of 17.5 million USD. The short-video platform will be facing stiff competition against Amazon, as well as from Chinese upstarts Temu and SHEIN, which both expanded aggressively in 2023. Replicating its success in Southeast Asia in the US market will be crucial if TikTok wants to get anywhere near unseating the giants of the sector.
To achieve the hoped-for surge in merchandise volume, TikTok will be utilising its world-beating algorithm to direct users’ attention to its in-app shopping features. TikTok Shop, which launched in the US in September 2023, lets users seamlessly view and purchase products promoted by creators on their content feed. For the time being, these are mostly clothes and beauty products as reflected by the most popular content categories across social media.
TikTok has also announced merchant transaction fees for most product types will be increased to 6% in April and then to 8% in July, up from 2% at present. Whilst this will squeeze merchants’ profit margins, these fees are still considerably lower than Amazon’s.
As for how TikTok’s ambitious objective for 2024 compares to last year’s sales, it’s too early to say. Whole-year financial figures from 2024 are yet to be released, but Bloomberg previously speculated that TikTok expected to make around 20 billion USD in global gross merchandise value for the year, with the bulk contributed by Southeast Asia. We also know TikTok probably lost close to 500 million USD launching TikTok Shop in the US, which has hopefully laid the much-needed groundwork for turning a profit in the year ahead.
