The FT reported that TikTok had plans to scale back plans to expand its UK-launched QVC-style live eCommerce initiative – TikTok Shop – in the US and the rest of Europe. The format involved influencers and brands selling their products live on the app via a clickable orange basket icon. Although TikTok disputed the story, saying it had never even planned to debut in Europe during the first half of this year, reports said the company's early launches didn't get enough traction with consumers in the UK after a few months. The recent mass exodus across TikTok's eCommerce team in London may have also played a role in the flop. Rest assured, TikTok still makes bank through other avenues like game publishing, Twitch-style subscriptions, music distribution and advertising. Just a single day run of a TopView ad on TikTok (the first thing users see when they open the app) can cost as much as $2.6 million, according to a document Bloomberg reviewed. For reference, a 30-second SuperBowl advert costs $6.5 million. With over a billion users – primarily part of the coveted Gen Z demographic – the app sounds like every brand's dream arena. Users spend around three addicting hours per day viciously scrolling through its sophisticated algorithm. So why hasn't TikTok Shop worked here? We've speculated a bit.
Is it too soon to embrace the livestream shopping model?
While the QVC format has been hugely successful on TV in the US, most Western consumers aren't as enthusiastic about it on social media. In fact, most platforms here haven't succeeded in making live shopping a hit yet. Amazon is relying on influencers to make Amazon Live take off, while Nordstrom is also trying its luck with the format.
Influencers and merchants selling via the model complained they were at a loss and gave up on TikTok Shop. Many of them told the FT their profit had been significantly cut, highlighting issues with shipping, limited stock, lack of support and a push to downgrade their products.
Not the right market?
TikTok's massive audience in Asia has propelled the app into a significant eCommerce destination in the market. In South Asia the TikTok Shop expansion appears to be in a more promising position, although the app is still perceived mainly as an entertainment platform. ByteDance's Chinese version of TikTok, Douyin, has seen live sales turn into massive events that are lucrative to creators and influencers, a different story to what happened here.
Are big brands wary of TikTok's cancel power?
From a big brand point of view, influencer marketing in a non-programmatic format is still crucial. Can you build solid relationships quickly enough on TikTok? If “cancel culture” is brutal on Twitter, you can only imagine how that plays out in a format as immediate like TikTok. Take the rapid-fire consequences of one influencer's unboxing video on TikTok. In December, she posted a disappointing review of the Chanel advent calendar, leading to over 15 million views and PR havoc. Many users claimed Chanel deleted its TikTok account following the drama, although the brand denies this.
Is doing business with China a bit dodgy?
The app's meteoric growth and impact on the news industry have made leaders around the world a bit apprehensive. Despite ByteDance's promise that China's government has no involvement or access to the platform's data, deep down there’s a strong feeling that's not the case. After all, the Chinese government does own a stake in ByteDance. China has a history of manipulating the news and social media, and by law, Chinese companies must provide their intelligence to the government if ordered by Beijing. There are also multiple reports, including leaked audio from internal meetings, proving that there have been numerous occasions where China-based employees had access to private data from US users.