TikTok is establishing a warehouse and fulfillment network to boost its eCommerce operations.
On one hand, the report says, the company is betting on the idea that taking on fulfillment on behalf of sellers will attract more merchants. But unlike Amazon, TikTok is outsourcing its logistics, the report said, forging deals with companies like ShipBob and Newegg.
TikTok Shop “will only be as good as what you can buy there,” Kelsey Chickering, principal analyst at market research firm Forrester Research, told the WSJ.
If the company can “make it a better experience for merchants and brands to sell items and make it easy for them — or turnkey at least for them — to start selling, all that does for TikTok is give them a better experience for their users because the products are better.”
TikTok, a hugely popular social media platform, debuted its online shopping feature in the U.S. earlier this year, adding shoppable videos and live streams to users’ “For You” feeds.
As the WSJ report notes, TikTok faces some obstacles outside of its logistics efforts in cracking the eCommerce market. For example, a number of U.S. officials have called the app — owned by China’s ByteDance — a threat to national security and pushed for it to be banned.
And experts tell the WSJ TikTok will need to gain consumer trust, as many of its potential customers aren’t used to providing social media apps with credit card info to make purchases from a third-party seller.
Still, social media has become a powerful tool for consumers to find and purchase products, as PYMNTS wrote last week.
“Platforms like TikTok, Instagram, and YouTube have transformed the way people shop, with each channel catering to different consumer interests,” that report said. “The influence of these platforms is evident in the billions of views and viral purchases associated with hashtags like #TikTokMadeMeBuyIt, for example.”
The research found that TikTok has 39 million consumers who browse products and reviews, with 17% of them buying what they find.