TikTok aims to transform itself into TEMU, but it is not an easy task
The "mission" of every Chinese internet company is perceived as stifling the existence of every small and medium-sized player within the ecosystem
"Back and forth, more than 100 products were submitted, but only 50 were approved. We followed all the requirements, but didn't even receive a response or read our messages. The information we, as sellers, send is never acknowledged."
"We have reached the sample submission stage. We have labeled and packaged the samples, but we can't reach the account manager, and we don't have the shipping address for the samples. How can we proceed?"
A supplier recently complained to me about these issues. Similar problems are frequently encountered by sellers in the TikTok Shop fully-managed merchant group on Feishu (a messaging platform).
As early as September 2022, Pinduoduo's overseas version, TEMU, first introduced the fully-managed model, followed by platforms such as AliExpress and SHEIN, which also launched similar models.
In simple terms, the "fully-managed model" is an e-commerce business model where sellers are responsible for the supply of goods, while the platform takes care of store traffic, operations, and sales. It can be understood as the platform, which previously provided only the venue and basic infrastructure like "water and electricity," now assumes the role of the "seller" and the original sellers become the "suppliers."
A month ago, TikTok Shop held its first promotional event for the fully-managed model, targeting merchants. The product categories include clothing, home goods, outdoor products, beauty, and electronics. Prior to this, TikTok Shop had officially announced the launch of the fully-managed model for cross-border e-commerce and started attracting merchants from the Saudi Arabian and British markets. At this moment, the four major players in Chinese cross-border e-commerce (Alibaba, Pinduoduo, SHEIN, TikTok) have all pinned their dreams of overseas e-commerce success on the fully-managed model.
By taking control of pricing, the platform not only disrupted the pricing dynamics in cross-border e-commerce but also revealed its ambitious pursuit of maximizing profits.
In the entire year of 2020, the GMV (Gross Merchandise Volume) of Douyin's e-commerce business exceeded 500 billion yuan. In February 2021, TikTok Shop Seller University was launched, followed closely by TikTok's cross-border e-commerce business in Southeast Asia, the UK, and the US. TikTok swiftly built teams and attracted more merchants, aiming to replicate the success of Douyin's e-commerce business overseas.
While Douyin's e-commerce ventures into the realm of comprehensive e-commerce, TikTok continues to explore new models and services. As TikTok dives into e-commerce, are merchants benefiting financially? How far has TikTok's overseas e-commerce dream been realized?
The competition in overseas e-commerce is intensifying, and TikTok is feeling the pressure.
Recently, TikTok has been making significant moves in the e-commerce space.
On June 25th, according to a report by "Jiemian News," TikTok has established partnerships with warehouses in the United States. It has also signed agreements with external logistics companies that lease and operate warehouses to store, package, and ship orders for sellers. This move aims to ensure that products transacted within the TikTok app can reach consumers smoothly and compete with platforms like Amazon and TEMU.
Furthermore, according to the Financial Times on June 21st, TikTok has launched "Project S," intending to expand its online retail business. Additionally, a new shopping feature called "Trendy Beat" has appeared within the TikTok app. It offers popular items showcased in videos. Reportedly, all the shops associated with products labeled as "Trendy Beat" are operated by a company called "Seitu," which is registered by TikTok in Singapore.
These series of actions by TikTok are possibly related to the intense competition in the overseas e-commerce market.
E-commerce platform Pinduoduo, which rose to prominence with its "social group buying" model, has not only ignited a price war in the domestic market but its overseas version, TEMU, has also adopted the slogan "Team Up, Price Down" to extend its low-price strategy to overseas e-commerce. TEMU was among the first to implement the fully-managed model.
Keep reading with a 7-day free trial
Subscribe to China Business Observer to keep reading this post and get 7 days of free access to the full post archives.