TikTok e-commerce creates stars, will it create another Dong Yuhui?

Tiktok is still involved in the ban storm, and the sellers on the platform have already started to make plans. In this case, it is necessary to set a benchmark to give users confidence, just like Dong Yuhui. In this article, let's analyze the situation of Tiktok.

While the shadow of the ban has not yet dissipated, TikTok's commercialization in the North American market has ushered in new progress.

According to Fastmoss data platform monitoring, in early June, TikTok beauty brand anchor Stormi Steele's live broadcast sales exceeded the "single-game $1 million" mark, breaking the US single-game live broadcast sales record. Previously, top live broadcasters Jeffre Star and Mandy Pena set single-game GMV live broadcast records of $665,000 and $700,000 respectively.

TikTok has been constantly launching influencers to promote products, while continuing to recruit merchants and gradually relaxing the entry threshold. TikTok has lowered the entry requirements for sellers and allowed Amazon sellers to enter with "zero turnover".

TikTok was involved in a ban in the United States in March this year, and the situation has not been settled yet, and its future is unpredictable. Many sellers have chosen their own futures. Some small sellers choose to leave, some large sellers wait and see whether to enter the market, and some medium-sized sellers who choose to advance and retreat with the platform have ushered in a boom of "explosive orders".

01 Sellers don’t want to compromise, the platform starts creating stars

At the beginning of this year, Yiwu foreign trade businessman Wang Liang joined TikTok. He is a "veteran" in cross-border e-commerce and has experience in operating platforms such as Amazon, Shopee, Lazada, and Shein.

Wang Liang, who has witnessed the rapid growth of Douyin e-commerce, does not want to miss out on the huge dividends brought by TikTok. He concluded that TikTok still follows the logic of Douyin e-commerce in the US e-commerce market, using popular short videos and live broadcasts by celebrities to attract traffic for products and continuously create popular products.

Compared with Southeast Asia, which is "low-price-driven", the profit margin of the North American e-commerce market is larger. However, it also places higher demands on the supply chain of merchants.

"For sellers with overseas warehouses and complete supply chain resources, the North American live streaming e-commerce market is the market with the most long-term investment value. There is a relatively large consumer group in the local area, and logistics are relatively developed. The only uncontrollable factor is policy." Wang Liang analyzed to Times Finance.

After working on TikTok for nearly half a year, Wang Liang has achieved a brilliant "achievement". Last month, the sales of his small shop exceeded 200,000 US dollars. "There is still a lot of profit space. As long as we select the products well, orders will come naturally." Wang Liang is excited. "Some products can achieve a profit margin of more than 50%. Now is a new round of bonus period. If I don't open a store, I may not even get a share of the profits when the market really starts to take off."

In 2020, TikTok first tried to launch short video content and live streaming sales in the North American market with a "semi-closed-loop store". The traffic monetization craze has infected a large number of e-commerce people.

"When you have the chance to get on a rocket, don't worry about whether there is a seat for you or not, just find a way to get on." Louis, a 20-year-old cross-border e-commerce practitioner, often says this. In his view, the platform's support for live streaming is also a "moon landing plan", and merchants must reserve seats in advance.

First come, first served. Louis experienced a period of rapid growth when he could gain tens of thousands of followers with just one short video. As long as he moved the popular videos on Douyin to TikTok, or made some minor edits, he could get millions of views and then achieve sales conversion for his products.

Last September, TikTok launched TikTok Shop in North America, completing the closed loop of the entire e-commerce chain and adding fuel to commercialization.

Louis clearly remembers that the launch of TikTok Shop set off a huge explosion in major cross-border e-commerce groups. Top sellers wanted to grab traffic as soon as possible, and each of them operated dozens or even hundreds of stores. A flood of training courses and information stores filled major social media platforms.

The market is frenzy, and data is soaring. At the end of 2023, TikTok's North American business's daily GMV reached 14 million US dollars, a 50-fold increase in half a year. During the "Black Friday" and "Cyber ​​Monday" events, the daily GMV can rise to 30 million US dollars.

Louis, who owns nearly 10 stores, quickly reaped the first wave of dividends: average sales per store stabilized at $70,000, with a profit margin of about 50%, and monthly sales exceeding $500,000 many times.

02 Promote top traffic, lower threshold, and fight for e-commerce peak season with live broadcast

According to multiple media reports, one of TikTok's e-commerce tasks is to increase the GMV in the U.S. by 10 times by the beginning of 2024. Some media reported that TikTok's e-commerce target for the U.S. market is $17.5 billion for the whole year.

Nearly halfway through 2024, the performance is not satisfactory. According to data from data analysis website Tabcut, from January to May 2024, TikTok's fully closed-loop GMV in the US was less than US$2 billion.

TikTok’s breakthrough is that celebrities are selling goods through live streaming. The logic is not difficult to understand - the platform is accelerating the promotion of top anchors to the forefront, on the one hand to attract a group of loyal fans, and on the other hand to increase the overall sales of the platform.

To this end, TikTok has taken a multi-pronged approach.

The platform first lowered the threshold for live streaming sales, and the basic condition for live streaming by experts was reduced from 10,000 fans to 1,000. At the same time, high subsidies were used to encourage anchors to extend their online time. For example, if a merchant's output during self-broadcasting is greater than US$100, and the average daily live broadcast time in the month is more than 4 hours, he or she can receive a subsidy of US$50 per hour.

The platform is still attracting more merchants to join. In the early days, merchants who wanted to enter TikTok Shop needed to provide proof that the annual GMV of a single store in the United States exceeded 2 million US dollars. After the policy adjustment, merchants can move in as long as they have operating experience on any platform or independent website of Amazon, eBay, Walmart in the United States and meet the relevant requirements.

TikTok has adopted a shrinking strategy in its globalization process, focusing on the U.S. market. According to a report by Phoenix.com Technology, TikTok originally planned to launch a shopping platform in markets such as Spain, Germany, Italy, France and Ireland as early as July this year, but the plan has now been shelved.

In early June, Louis attended the seller conference held by TikTok in Shenzhen. The conference sent two signals to the outside world: one is to make the platform's product categories more complete and refined; the other is to increase the promotion of the live broadcast room.

Louis has been working on TikTok in the US for more than three years. Recently, the platform has launched a number of actions that have reassured buyers. He believes that the crisis of the platform is gradually being resolved, and the focus of merchants is to invest in the e-commerce peak season in the second half of the year. "Merchants who stay and advance and retreat with the platform have basically reaped the benefits." He told Times Finance.

The leading domestic MCN agencies are also eager to try. The overseas teams of Jiao Ge Pengyou and Yaowang Technology successively operated two live broadcasts, with sales of US$1.04 million and nearly US$700,000 respectively. Oriental Selection and Three Sheep teams have also put overseas plans on the agenda.

Louis clearly felt that the traffic in the live broadcast room has started to increase recently, and the number of viewers has increased by 50% compared to usual. In his opinion, the current influx of influencers and businesses into the live broadcast army will result in the platform accumulating more and more user data and accurate user tags, and more and more effective traffic will be tilted towards live broadcast.

"TikTok's traffic has always been large, but the traffic that the platform can provide is still very general, and there is no precise e-commerce traffic path, resulting in a low conversion rate in the live broadcast room. If we increase support for the live broadcast room according to the current thinking, there will definitely be a significant improvement in the later period." Louis believes that the "Black Friday" and "Cyber ​​Monday" in the second half of this year are important time nodes, and are also a key battle for whether live broadcast e-commerce can fully explode.

Some merchants have also cooled down from the craze of the top live broadcast rooms. They believe that the sales performance of the top anchors is not of practical significance. Compared with the sales records of tens of millions or even hundreds of millions in China, the sales performance in the US is not worth spending too much energy on.

"There are corresponding operators behind several top anchors, and the platform is also generous in pushing traffic on a large scale. Small and medium-sized businesses are better off waiting for a while and not investing all their efforts." A small and medium-sized seller told Times Finance. However, she also saw the importance that the US team attaches to merchants. Recently, TikTok's local operations team has strengthened its contact with small and medium-sized merchants.

According to Fastmoss data monitoring, among the top 10 live streaming sales influencers in the US on TikTok, more than half of them have sales data of less than 100,000 US dollars, which means that the popularity of live streaming sales has not yet really ushered in the golden period of explosion.

Meiqi, a livestreamer in the U.S., told Times Finance that it is normal for a livestream to only have sales of a few thousand dollars. "Local consumers have not yet widely accepted the form of livestreaming, and we will definitely need to use low-priced goods for multiple rounds of market education in the future."

Louis compared the momentum of Douyin e-commerce with the performance of TikTok. He believes that the successful case in China can be fully replicated in the North American market. "The gap between the two still needs a super sales expert to fill it."