TikTok Shop Launch Delayed to June
Low Seller Recruitment Due to US Regulations
TikTok Desperate for Live Commerce Overseas Markets
China's short-form video platform 'TikTok' plans to delay the launch of its live commerce service 'TikTok Shop' in the U.S. market, the Wall Street Journal (WSJ) reported on the 10th (local time). TikTok is facing difficulties in launching new services as it is at risk of being expelled from the U.S. market due to U.S. government regulations.
According to WSJ, citing anonymous sources, TikTok's parent company ByteDance notified sellers who had contracted to sell products on TikTok Shop that the service launch would be postponed until next month. WSJ reported that ByteDance originally planned to launch TikTok Shop in the U.S. market this spring.
TikTok Shop is a service that adds a product selling feature to the social media platform TikTok, which provides short-form content. Sellers can register products they want to sell directly within TikTok. In 2021, TikTok added a feature allowing sellers to sell products through live broadcasts, transforming it into a live commerce platform. ByteDance started TikTok Shop services in Southeast Asian countries such as Thailand, Vietnam, Malaysia, and the Philippines, beginning with India and the UK in 2021.
However, it has not been able to enter the U.S. market. The U.S. government has attempted to expel TikTok from the market citing national security concerns, causing difficulties in attracting investors and sellers. WSJ, citing anonymous sources, reported that TikTok planned to launch TikTok Shop in March but faced challenges in recruiting sellers for TikTok Shop.
Investors and sellers are concerned about the sustainability of TikTok's services as the U.S. government's moves to expel TikTok intensify. Recently, the U.S. demanded that TikTok's Chinese founders sell their stakes, citing security concerns. In March, a bill was introduced in the U.S. Senate (the Information and Communications Technology Risk Control Act) to ban foreign information technology that poses a security threat. If this bill takes effect, TikTok is expected to be effectively expelled from the U.S. market.
Gary Wang, a U.S.-China technology consultant at Boston Consulting Group, said, "If TikTok usage is banned in the U.S., customers in U.S. allied countries may face significant burdens in doing business with ByteDance."
In this situation, ByteDance's attempt to launch TikTok Shop in the U.S. market is aimed at generating revenue. ByteDance has developed 'Douyin,' the Chinese version of TikTok, into a live commerce platform and is earning substantial profits in China. Currently, the live commerce industry accounts for 10% of total e-commerce sales in China. However, ByteDance has not yet secured a stable revenue base sufficient to cover its massive operating losses. WSJ reported that ByteDance recorded operating losses exceeding $7 billion in 2021.
ByteDance immediately denied WSJ's report. A ByteDance spokesperson said, "We are committed to testing the service," adding, "Reports of a delay in the service launch are not true, and we are pleased to expand testing by recruiting more sellers in the U.S."
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