TikTok Reportedly Set To Ban External E-Commerce Links To Promote Its Own Digital Marketplace

TikTok is reportedly planning to ban links to external e-commerce sites, pushing users towards TikTok Shop.

What happened: According to a report from The Information, TikTok is planning to banish links to outside e-commerce platforms like Amazon Inc. AMZN. This move is perceived as an effort to compel users to utilize TikTok Shop for in-app purchases.

The report highlights that TikTok Shop is projected to incur a loss exceeding $500 million in the U.S. this year. This significant loss results from the company’s substantial investments in recruitment, establishing a delivery network, and supporting merchants with discounts and free shipping.

See also: Despite Facing Enormous Hurdles In US, TikTok Prepares To Fight Spotify, Apple Music – Spotify Technology

Such a ban would hinder creators from endorsing products available on Amazon Inc. AMZN and similar platforms. Once implemented, users could only buy items promoted by creators via TikTok Shop. Some of these links allow direct purchases from videos, while others are integrated into creators’ profiles.

Despite the slow traction of TikTok Shop in the U.S., its daily consumer spending has risen from $500,000-$1 million in June to $3-$4 million currently. The company anticipates this figure to surpass $10 million by year-end.

In contrast, TikTok Shop has seen significant success in Southeast Asia, with daily gross merchandise volume ranging from $50-$60 million. The platform’s parent company, ByteDance, aspires to emulate the success of Douyin, aiming for a merchandise volume of over $200 billion by 2028.

To bolster its platform, TikTok has been actively courting merchants. The company’s strategy includes identifying top-selling items on Amazon and persuading those merchants to join TikTok Shop, offering commission-free incentives for the initial three months.

Furthermore, TikTok is exploring other e-commerce avenues, such as the “Trendy Beat” shopping section, currently under testing in the U.K. This feature, internally termed “Project S,” leverages TikTok’s insights into trending products, enabling ByteDance to acquire or produce these items.

Photo by Mehaniq on Shutterstock

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