TikTok Expands Online Retail Offerings, Taking on Rivals like Shein and Amazon

Introduction

TikTok, the popular viral video app, is venturing into the online retail sector, with its Chinese parent company, ByteDance, selling products through the app. This move is aimed at challenging competitors like Shein and Amazon. Recently, users in the UK have noticed a new shopping feature within TikTok called ‘Trendy Beat’, which offers popular items featured in videos. These products are shipped from China and are sold by a Singapore-registered company owned by ByteDance.

A Shift in TikTok’s Shopping Marketplace

Unlike its existing shopping marketplace, where sellers can list and sell items through TikTok Shop, the Trendy Beat feature allows ByteDance to exclusively sell goods and keep all proceeds. This model is similar to how Amazon produces and promotes its best-selling items. The shift in TikTok’s strategy reflects ByteDance’s ambition to monetize the platform and justify its $300 billion valuation.

Testing and Early Stages

TikTok has stated that it is currently testing the Trendy Beat feature and exploring new ways to enhance the community’s experience. This early stage experimentation with shopping features aligns with ByteDance’s plans for an initial public offering in the next two years. The company is eager to find new revenue streams to support its high valuation.

“Project S” and the Expansion of ByteDance’s Retail Unit

Internally known as “Project S,” ByteDance’s effort to sell its own products is led by Bob Kang, head of e-commerce at ByteDance. Kang recently traveled to TikTok’s London offices to coordinate the project. ByteDance is building an online retail unit to compete with fast-fashion brand Shein and Pinduoduo’s sister app Temu. By leveraging TikTok’s knowledge of viral items on the app, ByteDance aims to acquire or produce these items and heavily promote them over rival sellers on TikTok.

Recruiting Employees and Douyin’s Success

To boost its e-commerce business, ByteDance has recruited employees from Shein. A source revealed that Bob Kang is particularly inspired by Temu’s success and aims to replicate it by getting involved in the supply and sales process. ByteDance has been looking to expand TikTok’s e-commerce offerings, drawing from the success of its Chinese sister app Douyin, which generates significant sales annually. The company believes that TikTok’s marketplace, TikTok Shop, has potential in Southeast Asian markets like Indonesia and Vietnam, despite struggling to gain traction in the UK.

Previous Attempts and Restructuring

ByteDance’s previous attempts to imitate Shein and Temu’s model through independent apps like Dmonstudio, Fanno, and If Yooou have failed and were eventually shut down or abandoned. The company now aims to build its own brand within the TikTok app rather than creating separate apps. The recent restructuring at TikTok has focused on redirecting e-commerce efforts to existing markets like the UK, instead of expanding into other Western markets.

The Role of Seitu and If Yooou

Seitu, a company registered in Singapore, is linked to Trendy Beat’s shopping page and is claimed to be owned by ByteDance. Additionally, Seitu is associated with If Yooou, a retail business owned by ByteDance. Lim Wilfred Halim, head of TikTok’s global e-commerce security and anti-fraud manager in Singapore, is listed as a director of Seitu. These connections suggest a strategic integration of different entities within ByteDance’s e-commerce operations.

Conclusion

TikTok’s expansion into the online retail sector through its Trendy Beat feature signifies ByteDance’s ambition to capitalize on the app’s popularity and generate new revenue streams. By leveraging TikTok’s viral items and promoting its own products, ByteDance aims to challenge competitors like Shein and Amazon. The company’s restructuring efforts and focus on existing markets like the UK demonstrate its commitment to refining and scaling its e-commerce operations. With the success of Douyin in China, ByteDance sees vast potential in monetizing TikTok’s marketplace and replicating its achievements.

TikTok is expanding its online retail offerings, with its Chinese parent company selling products via the viral video app as the group looks to take on rivals like Shein and Amazon.

In recent weeks, users in the UK have started seeing a new shopping feature within the TikTok app called ‘Trendy Beat’, a section offering items that have proven popular in videos, such as tools for extracting earwax. or brush pet hair off clothes.

All advertised items are shipped from China, sold by a Singapore-registered company owned by Beijing-based TikTok parent company ByteDance, according to documents and people familiar with the operations.

The model, similar to how Amazon produces and promotes its range of best-selling items, represents a huge shift from TikTok’s existing shopping marketplace. It currently allows other sellers to sell items through TikTok Shop, which then takes a small commission.

Instead, ByteDance would take all proceeds from sales made through the Trendy Beat feature on TikTok, four people familiar with how it works said.

TikTok said it is currently testing the feature. “We’re always exploring new ways to improve our community’s experience, and we’re in the early stages of experimenting with new shopping features,” the company said.

ByteDance is looking for new revenue that can justify its $300 billion valuation, which makes it the world’s most valued privately held start-up, ahead of an initial public offering expected in the next two years.

The effort to start selling its products is known internally as “Project S,” according to six people familiar with the internal deliberations. They added that ByteDance was building an online retail unit to challenge groups like fast-fashion brand Shein and Pinduoduo’s sister app Temu, a site that sells low-cost goods and features heavily on social media.

Project S is led by Bob Kang, head of e-commerce at ByteDance, who recently traveled from Shanghai to coordinate efforts at TikTok’s London offices, according to two employees. TikTok said Kang was in the UK for a variety of reasons and reports to the app’s chief executive Shou Zi Chew.

Project S uses TikTok’s knowledge of items going viral on the app, allowing ByteDance to acquire or make those items itself, according to people familiar with the plan. The company then heavily promoted Trendy Beat products over rival sellers on TikTok, the people said.

TikTok said the brand used a network of suppliers to produce items for its Trendy Beat offering.

To boost its e-commerce business, ByteDance had recruited employees from Shein, two employees said.

“Bob Kang is obsessed with Temu and replicating his success, and thinks he can do that by getting into the supply and sales process,” said another person familiar with the strategy in the UK.

ByteDance has been pushing to expand TikTok’s e-commerce offerings to replicate its success with Douyin, its Chinese sister app, which has achieved sales of more than 10 billion products annually. ByteDance generated $85 billion in sales in 2022, most of which came from its business in China.

TikTok’s marketplace, TikTok Shop, has enjoyed success in Southeast Asian markets including Indonesia and Vietnam, but is still struggling to gain traction in the UK, where it launched more than two years ago, according to several people who are familiar with the operations.

TikTok has undergone a significant restructuring last month in a bid to refocus its e-commerce efforts on its existing markets, such as the UK, instead of embarking on a broader international expansion into other Western markets.

Previous attempts to imitate Shien and Temu’s model failed. Three ByteDance shopping apps — Dmonstudio, Fanno and If Yooou — have been shut down or abandoned, two ByteDance employees said.

“ByteDance realized they wanted to build their own brand into the TikTok app instead of creating an independent app like Shein and Temu,” said one of the employees.

Trendy Beat’s shopping page links it to a company called Seitu, registered at an address in Singapore. Three people familiar with Project S claimed Seitu was owned by ByteDance, and TikTok confirmed it was a subsidiary.

According to public records, Seitu is also linked to If Yooou, a retail business owned by ByteDance. Lim Wilfred Halim, head of TikTok’s global e-commerce security and anti-fraud manager in Singapore, is registered as a director of Seitu.

Additional reporting by Mercedes Ruehl in Singapore and Eleanor Olcott in Hong Kong