TikTok is targeting to increase the size of its global e-commerce business to as much as $20 billion in merchandise for this year. This effort is being pushed through despite having problems in the US market and relying upon the rapid growth in Southeast Asia.
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The TikTok logo is displayed outside TikTok social media app company offices in Culver City, California, on March 16, 2023. - China urged the United States to stop "unreasonably suppressing" TikTok on March 16, 2023, after Washington gave the popular video-sharing app an ultimatum to part ways with its Chinese owners or face a nationwide ban.
TikTok Shop Seeks $20 Billion Growth
ByteDance's TikTok reportedly aims to quadruple the size of its e-commerce business called TikTok Shop to as much as $20 billion in merchandise this year. According to Bloomberg, this would be a huge increase compared to last year's $4.4 billion goal in merchandise value, representing the total worth of goods sold through its online marketplace.
As TikTok struggles to keep up with the market in the United States, the company is betting on markets in Southeast Asia, especially in Indonesia, as influencers in this country sell products in live-streamed videos. TikTok Shop usually lets customers purchase products like denim jeans, and cosmetics through links on the app during live broadcasts.
US and Europe are also included in the expansion of sales. However, those markets make up a small portion of the $20 billion goal. TikTok aims to grab a bigger slice of the $17 trillion online commerce arena as its advertising business slows down during an economic downturn.
Also Read: TikTok Shop to Deliver Fulfillment Centers like Amazon-Is it the Next Big e-Commerce Platform?
National Security Concerns
Reuters reported that this effort comes as the company is currently facing investigations from US governments and regulators regarding helping China harvest user data or advance its interests. Forming good ties with merchants in the country could help the company gain allies as they fight against allegations.
TikTok has already proposed several measures to address the regulators' concerns about the company's operations. It includes allowing Oracle Corp. to review its technology and cordoning off data of American users.
Local governments such as Alabama, Alaska, Arizona, Arkansas, Delaware, Idaho, and Texas had already imposed a TikTok ban on government devices. On the other hand, Montana is set to impose a state ban on the app's download starting next year, making them the first state in the US to ban the app completely.
Montana's ban will significantly prevent the app from operating in the state. Montana Governor Greg Gianforte signed the bill into law last month. Companies such as ByteDance, Apple, and Google could face substantial fines if they continue distributing the app within the state after the law takes effect in January 2024.
While it is currently limited to the state and does not represent a nationwide ban, this move could set a precedent that could influence other states to follow the ban.
Related Article: TikTok to Launch In-app Shopping Feature: How the App Expands From Videos to E-commerce
