TikTok considers banning external e-commerce links to boost in-app shopping platform

TikTok is allegedly considering prohibiting external e-commerce links, a move aimed at strengthening its in-app shopping platform, TikTok Shop. This strategy mirrors that of Douyin, TikTok's Chinese counterpart, which banned external e-commerce links in 2020.

Currently, TikTok Shop records daily spending of $3-4 million in the U.S. and aims to reach $10 million by year's end. However, due to costs associated with recruitment, delivery network setup, and merchant incentivization, the platform is projected to incur a loss exceeding $500 million in the U.S. this year. In contrast, TikTok Shop has found more success in Southeast Asia, generating daily gross merchandise volume of $50-60 million and aiming to hit $90 million by the end of the year.

ByteDance, TikTok's parent company, aspires to replicate the success of Douyin, setting a goal for TikTok's global shopping business to match Douyin's $200 billion merchandise volume by 2028. This could potentially generate $40-60 billion in revenue from the U.S. segment. TikTok is enticing merchants to join its platform by offering zero commissions for the first three months and studying Amazon's top-selling items. The company is also testing a "Trendy Beat" shopping section, aimed at leveraging TikTok's product popularity data to acquire or manufacture trending products.