TikTok Plans to Ban External E-Commerce Links, Focusing on TikTok Shop

In a recent development, the popular social media platform TikTok is allegedly bracing up to ban external eCommerce links, including those of Amazon.

According to a report, this move is likely to encourage TikTok users to shop directly from the app, bolstering its own eCommerce ecosystem.

Currently, Shop seems to be struggling in turbulent waters. The potential losses in the US are estimated to be more than $500 million in the current year.

This loss stems from the substantial investments made by the company in recruitment, supporting merchants to offer discounts and free shipping, and establishing a robust delivery network.

Ban On External E-Commerce Links May Impact TikTok Content Creators

The ban on external e-commerce links could impact content creators. They wouldn't be able to promote items from external platforms such as Amazon through their social media profiles.

This decision might prompt a higher number of users to engage with the in-house shopping features of the store.

Currently, influencers earn modest commissions when users purchase products listed on their Amazon stores. However, with the restrictions kicking in, content creators would have their revenue system disrupted.

TikTok has refrained from providing an official statement on these changes. Therefore, it remains to be seen when the platform implements the new set of norms.

Once effective, TikTok users would have to purchase products promoted by creators solely through the platform's own TikTok Shop. The consumption pattern on TikTok Shop has witnessed a gradual growth.

Currently, daily transactions on TikTok Shop range between $3 million to $4 million in the U.S. This is a significant rise from the initial figures of half a million to $1 million daily transactions in June.

TikTok staff seems to be optimistic and expects this figure to cross the $10 million mark by the end of this year.

Interestingly, the fate of TikTok Shop largely hinges on demographics. With the Southeast Asian market embracing TikTok Shop, the daily gross merchandise volume ranges between $50 million to $60 million.

By the end of this year, the social media platform aims to increase this number to approximately $90 million.

Bytedance Aims To Establish A More Expansive E-commerce Infrastructure

ByteDance, the parent company of TikTok, aims to establish a more expansive eCommerce infrastructure. Inspired by the success of Douyin in China, which witnessed its merchandise volume exceeding the $200 billion mark last year, ByteDance holds similar plans for TikTok.

TikTok plans to generate revenue worth $40 billion to $60 billion from the US market itself.

TikTok, to achieve this goal, has been attracting merchants to its business ecosystem consistently. The approach of this platform involves top-selling products on Amazon and persuading its sellers to join TikTok Shop.

Often, they offer incentives to these sellers, like zero commissions for the initial three months.

TikTok's ambitions to venture into the eCommerce sector don't stop at TikTok Shop. They have recently confirmed having trials for an in-app Trendy Beat" shopping section in the U.K.

This would be offering products directly sourced from a subsidiary of ByteDance. TikTok is likely to introduce this feature in the U.S. as well, as the company filed an application for a trademark for Trendy Beat in the U.S. last May.

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