In-stream shopping has become the key revenue driver for the Chinese version of TikTok, and the company is determined to make it a thing in Western regions too, despite limited interest, thus far, from users.
TikTok’s latest effort on this front is a new “Fulfilled by TikTok” program in the UK, which will see TikTok itself act as the intermediary, to ensure that products are shipped faster to UK shoppers.
As explained by TikTok:
“Fulfilled by TikTok is a logistics offering available in the UK where TikTok Shop stores, picks, packs and then ships merchants' products to the TikTok community. It’s designed to help free merchants from time-consuming logistics via a simple, fast and affordable solution, so they can focus on important aspects of their business such as marketing, content and product development.”
So TikTok itself becomes the store, with merchants providing their products to TikTok’s fulfillment center in order to streamline delivery.
“Merchants that sign up to FBT will hand over a volume of their stock, which is then stored at a warehouse. Merchants don't have to store all of their SKUs at the warehouse, or use FBT for all of their products; they can select particular items which they would like to store and ship through FBT.”
TikTok will then facilitate all orders direct, with additional charges for warehousing, shipping and other services (labelling, pre-packing and inserting leaflets).
The program offers same-day fulfillment for all orders made by 7pm, Monday to Saturday
TikTok has been moving in this direction over the last few months, with a new push to improve response times and offerings in the app by hosting its own products, which could help to improve trust and reliance in its eCommerce offerings.
Back in June, TikTok launched its initial ‘Trendy Beat’ showcase in the UK, which is an in-app showcase of products made by TikTok itself.
The concept here is that TikTok’s looking to inject itself into the consumer supply chain, by offering popular products, made by Chinese suppliers, based on TikTok trends.
If TikTok can tap into the right trends as they happen, that could encourage more users to make purchases in the app, because the latest, coolest items are available right then and there, and distributed by TikTok itself. TikTok’s also been meeting with Chinese manufacturers to offer free listings, free shipping, and zero commission on sales for an initial period, if they provide TikTok with their products.
As noted, it’s the latest push by TikTok to encourage in-stream shopping, and get Western users spending money in the app. Live-stream commerce has become the platform’s key earner in its homeland, but Western consumers haven’t been as responsive, while its various in-app shop experiments have also failed to catch on with European and American users.
But the earnings potential is simply too significant for TikTok to abandon, especially as a means to provide supplementary income to creators, with effective revenue share remaining a key challenge for the app.
Douyin, the Chinese version of the app, reported a 320% increase in product sales in 2022, as the platform continues to eat into the market share of Asian eComm giants like Alibaba, JD, and Pinduoduo. And with other providers like Temu and Shein making a big push to expand their operations into more markets, now is the time for TikTok, too, to enact its own similar push, in order to capitalize on its existing market presence, and facilitate more revenue opportunities.
It remains to be seen whether TikTok can actually become a major eCommerce player outside of China. But given the billions in play, based on what it’s seen on Douyin, you can bet that it’s going to try everything that it can to get more people shopping in the app.
Which could eventually be a game-changer for retailers, and those looking for more ways to reach potential shoppers. It’s still not a key option as yet, but if TikTok’s product fulfillment drive takes off, that could become a much bigger consideration, as more users discover more products in-stream.
Definitely, the rates of online shopping are steadily rising, it’s just a matter of how TikTok can overcome existing hesitation. Becoming a provider itself could be a key step in this.
It’s an interesting experiment, no matter what the eventual outcome.