AliExpress, Shein, TikTok Shop, and Temu, known as China’s “four little dragons” of e-commerce, share a common goal: boosting their gross merchandise volume (GMV). Yet, their strategies have begun to diverge in striking ways.
TikTok has zeroed in on live commerce, capitalizing on its short video platform’s strengths to drive interest-based e-commerce. The company has been actively promoting flagship live commerce examples in the US and UK, rolling out new policies aimed at encouraging platform sellers to embrace live commerce.
Recently, foreign media reported that TikTok Shop intends to raise the base commission fee for UK sellers from 5% to 9%, effective September 2. This move is part of TikTok Shop’s broader strategy to advance live commerce and shoppable content, with the ultimate goal of creating a “marketplace of the future.”
To facilitate this, TikTok Shop introduced a “Seller Missions” program allowing UK sellers to reduce their commission fees by creating a set number of TikTok live streams or live shopping videos. Sellers can also collaborate with TikTok creators to produce these videos. TikTok Shop explained that “these incentives are designed to help sellers grow their audience through live streams and live shopping videos.”
Since its 2021 launch in the UK, TikTok Shop’s seller fees have largely remained stable. Additionally, TikTok plans to introduce a co-funded shipping model on September 4, offering free shipping services by sharing the cost with sellers to increase order conversion rates.
It’s clear that TikTok remains dedicated to live commerce in overseas markets, despite early setbacks and cultural challenges. Since 2023, TikTok’s live commerce strategy has become more precise, cautious, and focused.
Crafting get-rich-quick success stories
In late June, British beauty brand Mitchell Halliday took part in TikTok Shop’s UK summer promotion, hosting a 12-hour live stream where founder Halliday sold one cosmetic product every second, generating USD 830,000 in revenue and surpassing USD 1 million in sales within 24 hours.
A month later, beauty brand P. Louise shattered another record, achieving USD 2 million in sales within 12 hours on TikTok Shop.
Similarly, in the US, top influencer Jeffree Star hosted a TikTok live stream at the end of May, generating USD 665,000 in sales, primarily from beauty and personal care products.
As these get-rich-quick success stories surfaced, TikTok introduced a series of supportive policies.
TikTok’s journey into live commerce has not been without its twists and turns. The UK was one of the first markets where TikTok Shop launched, but its growth was rocky over the past two years. In 2022, many UK influencers withdrew from TikTok’s live commerce collaborations due to an immature market, leading to unstable and low revenues, which in turn caused many sellers to exit.
However, in early July this year, TikTok Shop introduced a UK support plan to help new merchants achieve GBP 1 million (USD 1.3 million) in revenue on the platform, offering incentives such as 90 days of commission-free sales and priority seller support services. TikTok Shop will also provide merchants with dedicated promotional support to enhance brand exposure. Sellers can also participate in TikTok Shop’s academy program to learn about market trends and operational skills.
The US has also seen official boosts. In early June, TikTok Shop announced an initiative aimed at helping US cross-border merchants achieve significant GMV growth, specifically targeting the USD 1 billion mark. The plan includes commission reduction incentives, logistics services, and other supportive policies.
The first TikTok live stream in the US to break USD 1 million in a single day occurred in June, with influencer Stormi Steele achieving USD 1.02 million in sales.
According to data from third-party platform Tabcut, Steele’s previous three live streams had not even broken USD 10,000 in sales.
Similar narratives have long played out in China, where major influencers have consistently created billion-RMB sales records with the help of platforms like Douyin, the Chinese equivalent of TikTok. For example, Chinese internet celebrity Luo Yonghao’s first live stream on Douyin in 2020 generated sales of RMB 110 million (USD 15.4 million).
The Western e-commerce market is vastly different from China’s. While live commerce is a novel concept, e-commerce platforms must invest heavily in building the necessary infrastructure, including nurturing influencers, providing platform support, and managing overseas logistics and supply chains.
Western consumers’ acceptance of live commerce remains uncertain, and influencers must dedicate significant time to refining their approach.
At least in the Southeast Asian market, a TikTok seller told 36Kr that “Southeast Asian influencers are still not proficient at live commerce—they struggle to present products effectively. We plan to write scripts for them and gradually teach them.”
Building a stronger foundation
TikTok is somewhat anxious about the progress of its e-commerce business.
Bearing ambitious expectations, TikTok projected its US commercial sales to grow tenfold by 2024, aiming for USD 17.5 billion. However, Tabcut data reveals a stark reality: from January to May 2024, TikTok’s total GMV in the U.S. was under USD 2 billion, casting serious doubts on those growth prospects.
TikTok’s GMV target for the US market in the second half of the year is USD 12–13 billion, with the cross-border business expected to contribute about one-fifth.
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TikTok has also continuously adjusted its US merchant recruitment policies. The latest standard, effective from August 16, 2024, requires US cross-border self-operated merchants to pay a deposit of USD 500 per store. If a merchant opens multiple stores under the same name, a deposit must be paid for each store. This requirement is not particularly high and can help regulate merchant operations.
In June, TikTok significantly lowered its entry threshold. For example, for Amazon partner stores, the requirement at the end of 2023 was an annual sales volume of over USD 2 million on Amazon, with at least one product ranked within the top 100,000 on Amazon. After the banning incident, the threshold was lowered to USD 2 million in total platform sales. By June, the USD 2 million sales threshold was completely eliminated.
In addition to aggressively recruiting merchants, TikTok has also strengthened cooperation with brand merchants overseas to enhance its appeal. Retailers such as ASOS, Zara, THG’s LookFantastic, and WHSmith in the UK have all signed up for TikTok Shop, as have beauty brands Elf Beauty and COSRX in the US.
Furthermore, TikTok Shop has even ventured into secondhand luxury goods in the UK. Multiple foreign media outlets reported that TikTok partnered with British brands to allow consumers to purchase secondhand luxury items on its app.
The secondhand luxury market has been growing rapidly overseas in recent years. TechCrunch predicts that global sales of secondhand designer goods will reach USD 49.3 billion in 2023. TikTok Shop’s introduction of secondhand luxury goods is a strategic move to tap into this growing market.
After more than four years of navigating the highs and lows of live commerce overseas, TikTok has started to replicate its success globally. The platform is now zeroing in on local life services in Southeast Asia, pushing live streams in the UK and the US, and prioritizing infrastructure development, while putting its e-commerce expansion in other European markets on hold for now.
However, the popularity of live commerce in China is due to a unique combination of factors. Live streaming has been thriving in China for many years, with multi-channel network (MCN) agencies deeply rooted in the domestic market, adept at discovering and nurturing influencers. China’s advanced e-commerce environment has seen the frequent emergence of billion-RMB live streams, backed by the unique circumstances of the pandemic. None of these factors currently exist in overseas markets, and TikTok will undoubtedly need a long time to cultivate them.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Leslie Zhang for 36Kr.