TikTok reshapes e-commerce drive in bid to crack Western markets

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TikTok has restructured its e-commerce business in a bid to refocus on markets like the UK and US as the Chinese-owned group struggles to export its live-stream shopping model outside its home country. ‘origin.

Staff in Brazil working on the launch of TikTok Shop, the social media group’s in-app marketplace, in that country are being relocated to markets where the service is already being introduced such as the UK, US and Southeast Asia, according to people familiar with the renovation.

Those who had worked to bring the service to Spain have been moved to London amid a wider reshuffle of management positions at the top of European business, these people said.

A pause in expansion in Europe echoes a slowdown in the full rollout of the feature for sellers in the US, according to people familiar with the business. Tick ​​tock said it has not finalized any plans or launch dates for the feature outside of existing markets.

Group owner, Beijing-based ByteDance, launched TikTok Shop in the UK in 2021, its first market outside of Asia. The service allows brands and influencers to connect products to buy on video or broadcast live to sell products available for purchase within the app.

While the social media ecommerce model has been wildly successful in Asia, TikTok Shop has been plagued with problems elsewhere, most notably failing to gain full traction with Western consumers and content creators.

In an effort to crack markets outside of China, TikTok has put its international expansion plans on hold to refocus on the countries where its e-commerce service has launched. THE Financial Times previously reported that nationwide expansions initially planned for last year had been delayed multiple times.

TikTok’s shift in strategy led to the restructuring of its European e-commerce operations in mid-April, according to those familiar with the move. All staff working in Spain were told they could not stay there and would have to move to London, where they would be offered two flights home a month, plus six months’ rent in their new homes, they added. people.

Joe Jiao, former head of e-commerce in Spain, was recently promoted to manage UK e-commerce for small businesses. He has been with ByteDance since 2017, according to his LinkedIn profile.

These moves represent the latest of several changes TikTok’s London office has undergone since the FT revealed a culture clash within the e-commerce team, which has led to high staff turnover and complaints about a business environment. toxic work. Joshua Ma, who ran TikTok Shops in Europe, stepped down from his role after it was revealed he told staff he “didn’t believe” in maternity leave, but remains with the company.

His interim replacement, Patrick Nommensen, has seen his reach narrow in recent months to focus on key UK clients and brands, according to two people familiar with his role.

TikTok said maintaining key accounts and small businesses required different approaches, so it made sense to have dedicated leaders for both areas as the product grew. Nommensen continued to have oversight of overall UK operations, he added.

E-commerce employees in London were recently told they have to be in the office five days a week on a mandatory basis since September, reflecting the company’s emphasis on the project, while other departments have more flexible working situations.

TikTok said its policy was to work from the office three days a week, with a minimum of two days required, but leaders had “the power to decide” alternative policies for specific teams.

ByteDance, the parent of TikTok, hopes to turn social commerce into a major moneymaker in Western markets, as the model has proven profitable on its sister app Douyin, which has sold more than 10 billion products. ByteDance’s earnings before interest, taxes, depreciation and amortization jumped 79% to about $25 billion in 2022, according to two investors knowledgeable about the numbers.

In particular, live shopping, where users can purchase products from vendors during a live broadcast and which is a hugely popular format in Asia, seems to be failing to resonate with Western consumers.

Most of the revenue TikTok Shop makes in the UK comes from uploaded recorded videos linking to certain products, rather than live streams selling items, according to multiple people familiar with the matter.

Two of the people said the feature is estimated to generate £20 million a quarter in UK sales. TikTok claimed the figure was higher without specifying further.

Full access to US sellers, where they can sign up without a TikTok employee manually assisting them, was due to begin earlier this year, according to three people familiar with the plans. Timelines have been delayed until June at the earliest due to not engaging enough local U.S. small businesses, they added.

TikTok CEO Shou Zi Chew’s appearance before the US Congress in March, as well as discussions by lawmakers about whether to ban the app, also played a role in the slowdown, they said.

TikTok said the US launch hasn’t been delayed and it’s “excited” to continue expanding its test in the country by inviting more sellers to join the TikTok Shop.

The company added that it has not finalized any plans or launch dates for the TikTok Shop outside the UK, US and Southeast Asia “while continuing to evaluate opportunities for further international expansion.”

Additional reporting by Hannah Murphy in San Francisco