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In March, the<\/span> U.S. House of Representatives overwhelmingly passed<\/a> a bill that could force ByteDance to divest TikTok or face a ban in U.S. app stores. M<\/span>uch of the related discussion and debate<\/a> has centered around American <\/span>data security and speech rights<\/a>, but a potential move also highlights something else: TikTok is growing its focus on e-commerce, but the interplay of tech giants and geopolitics is squeezing smaller merchants.<\/span><\/p>\n Over the past few months, merchants \u2014 many of them from China \u2014 looking for an Amazon<\/a> alternative have flocked to TikTok to peddle clothes, cosmetics, electronics and a variety of other products to U.S. buyers, by way of TikTok Shop. In interviews with TechCrunch, sellers from Shenzhen \u2014 the Chinese megacity that\u2019s a major hub for Amazon merchants<\/a> \u2014 \u00a0said they felt a collective sense of frustration over rising geopolitical tensions and \u201chelplessness\u201d about a potential TikTok ban.<\/p>\n \u201cThe situation is not within our control,\u201d a retailer specializing in maternity and baby products told TechCrunch. \u201cIt\u2019s just difficult to know how things will develop.\u201d With existing supply chains hard to shift, \u201cwe just have to play it by ear.\u201d (The sellers asked not to be named due to political sensitivities.)<\/p>\n TikTok Shop officially launched in September 2023 with 200,000 merchants already on board. But since then it has not provided any updated numbers on how many merchants are currently on the platform, nor how much they sell there, nor how many sell elsewhere (and where else that might be).<\/p>\n Research<\/a> from Jungle Scout, an Amazon data intelligence provider, provides some idea of TikTok\u2019s e-commerce impact, however. It found that 20% of Amazon sellers, brands, and businesses have plans to expand to TikTok Shop this year. <\/span>Before the current political backlash took off, ByteDance reportedly<\/a> projected that it had the potential to grow its U.S. e-commerce business tenfold to $17.5 billion this year.<\/span><\/p>\n TikTok isn\u2019t the only platform on the list for merchants looking for more channels beyond Amazon to expand their customer bases. Its rise is part of a bigger shift we\u2019ve been seeing<\/a> around alternative marketplaces like Temu commanding more attention not just from shoppers, but from a Chinese e-commerce exporters and merchants. And Amazon is reportedly taking notice<\/a>, another sign that alternatives are picking up traction.<\/p>\n TikTok did not immediately reply to a request for comment.<\/p>\n TikTok has been trying to boost its e-commerce business since the U.S. launch las September.<\/p>\n The app is famous \u2014 or infamous, depending on who you talk to \u2014 for how it tightly controls what content is surfaced for whom. TikTok Shop also has a strong dose of curation to it.<\/p>\n Unlike Temu<\/a>, known for its seas of cheap, white-labeled products from Chinese factories sold directly to U.S. consumers, TikTok\u2019s strategy has been to onboard and highlight more branded goods, making it a more of a direct competitor to Amazon.<\/p>\n TikTok is also looking to attract sellers with more traditional subsidies. According to reports, to encourage merchants to sell goods at a steep discount during the most recent Black Friday sales period, TikTok doled out subsidies to those merchants to mark down their prices by as much as 50%<\/a>.<\/p>\n Incentives and algorithms aside, merchants have been interested in selling on the app simply because TikTok\u2019s short video platform generates massive engagement. According to a survey from Tabcut<\/a>, a Chinese firm that tracks TikTok Shop performance, nearly 70% of sellers reported an increase in sales year-over-year for the first 11 months of 2023.<\/p>\n This is also borne out by consumer behavior, where products endorsed by influencers continue to gain ground, especially with coveted younger consumers. <\/span><\/p>\n According to Jungle Scout, nearly 20% of consumers began their search for products on TikTok in the first quarter of 2023, up 44% from a year ago. While 56% of all consumers still preferred to start their product search on Amazon, 40% of the Gen Z demographic preferred TikTok for search instead of Google.<\/span><\/p>\n The heavy concentration of young shoppers is unsurprising, given 52% of TikTok\u2019s U.S. users are aged 18-34, according to Pew Research<\/a>. TikTok has the opportunity to reshape how America\u2019s younger generations shop online.<\/p>\n Outside of leaning on its dynamics, TikTok has been doing some pretty bald media spinning to push its message.<\/p>\n Earlier this month, the commercial research firm Oxford Economics published a report<\/a> on the impact of TikTok on the SMB sector in the U.S. It was funded by TikTok, and perhaps unsurprisingly, it provided a ringing endorsement of TikTok\u2019s economic impact: it estimated that a presence on the platform (through advertising or just marketing themselves via accounts) led to $14.7 billion in revenues for the 7 million SMBs in the U.S. using it.<\/p>\n TikTok seems to be serious about making inroads into e-commerce, but it\u2019s still in flux. On one hand, the company \u2014 even as it faces a potential U.S. ban or forced sale \u2014 continues to roll out new e-commerce features, such as a new video shopping format<\/a> it previewed at a conference this month. On the other, it\u2019s modifying or enforcing seller policies seemingly on the fly as it tries to navigate how to grow under a particularly glaring spotlight.<\/p>\n \u201cTikTok [Shop]\u2019s internal management is a bit chaotic right now. It\u2019s a new platform, so it hasn\u2019t started squeezing sellers, but its policies are still changing,\u201d said a merchant selling lamps, who has been selling on Amazon since the mid-2010s.<\/p>\n One of those policies appears to be related to what its algorithms are surfacing to which consumers. Merchants out of China say that in recent months, TikTok Shop in the U.S. has ramped up efforts to prioritize U.S.-based shops over foreign ones. Sellers tell TechCrunch that it\u2019s led to the rise of black market \u201cagents\u201d \u2014 parties that broker deals between foreign sellers and American residents, who in turn set up TikTok Shops that appear U.S.-owned but are really run by the foreign merchants.<\/p>\n Merchants are willing to jump through these hoops to grow their touchpoints with users, and diversifying their channels as one giant emerges after another.<\/p>\n \u201cMargins on Amazon are getting thinner and competition is increasingly fierce because of Temu, so TikTok gives us another option,\u201d said the lamp seller.<\/p>\n To gauge TikTok\u2019s impact on Amazon, \u201cwe need to understand the overall retail market in the U.S.,\u201d said Richard Xu, partner at Starting Gate Fund, who invests in cross-border retail solutions between China and the U.S.<\/p>\nA new way to sell and buy<\/h2>\n
Amazon challenger?<\/h2>\n