Tuesday, June 25, 2024

TikTok abandons ecommerce expansion in Europe and US

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TikTok has abandoned plans to expand its live ecommerce initiative in Europe and the US, after the social media platform’s foray into QVC-style shopping in the UK was hit by internal problems and struggled to gain traction with consumers.

The Chinese-owned company’s venture called “TikTok Shop” was launched in the UK last year, its first market outside Asia. Brands and influencers broadcast live and sell products through a clickable orange basket on the screen of the viral short-video app.

Livestream commerce is seen as the future of shopping by social media platforms. They take a commission on sales, with rivals YouTube and Instagram developing similar features in Europe. The model has proved lucrative for TikTok parent ByteDance, which has seen sales on Chinese sister app Douyin more than triple year on year, selling more than 10bn products.

TikTok had planned to launch the feature in Germany, France, Italy and Spain in the first half of this year, before expanding into the US later in 2022, according to several people briefed on the matter.

But the expansion plans have been dropped after the UK project failed to meet targets and influencers dropped out of the scheme, three people said.

“The market just isn’t there yet,” a TikTok employee said. “General consumer awareness and adoption are still low and nascent.”

Many TikTok Shop livestreams have achieved poor sales despite the company offering subsidies and cash incentives to encourage brands and influencers to sell through the app.

A Financial Times investigation last month revealed there had been a mass staff exodus from the company’s ecommerce team in London, who complained of an aggressive working culture enforced by the company’s Chinese leadership.

After the revelations, Joshua Ma, a senior ByteDance executive who ran TikTok Shop in Europe, was replaced, as the company investigated comments made to London-based staff that he “didn’t believe” in maternity leave.

TikTok said it had no current plans to roll out shopping features in Europe and was focused solely on making the proposition a success in the UK. The product was recently launched in Thailand, Malaysia and Vietnam and has been available in Indonesia since last year.

“We are always looking at ways to enhance our community’s experience and regularly test new features that inspire creativity, bring joy and innovate the TikTok experience in markets around the world,” it said. “We’re excited to experiment with new commerce opportunities that enable our community to discover and engage with what they love.”

Additional reporting by Eleanor Olcott in Taipei

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