TikTok pauses e-commerce expansion to Ireland and Europe

TikTok has put on hold plans to launch its fast-growing e-commerce business in major European markets, focusing instead on growth in the U.S., where it is battling divestment or ban laws.

Social media app ByteDance has suspended the rollout of its shopping platform in Spain, Germany, Italy, France and Ireland, which was supposed to take place in July, according to people familiar with the matter. It also derailed plans to bring the Store feature to Mexico and Brazil, one of the people said.

It is unclear if or when ByteDance will decide to reopen the process, the people added, asking not to be identified discussing private information.

The move, which may surprise many sellers in the region, reflects ByteDance’s goal to establish a stronger presence in the U.S. to prove its value to domestic merchants and consumers. ByteDance executives want to focus on its most lucrative market – with 170 million monthly users – to thwart a potential U.S. ban that has discouraged some sellers from signing up on the new platform, the people said.

TikTok Shop — which combines addictive video content with impulse purchases in a visual way — is the app’s fastest-growing feature. The combination of eye-catching videos, popular influencers and full-scale commerce helps you stand out from rivals like Instagram and YouTube and paves the way for you to conquer Amazon.com.

The TikTok template is Douyin by ByteDance, today one of China’s largest e-commerce platforms. Using this model, TikTok Shop found success in Southeast Asia before debuting in the US last year.

A TikTok spokesperson declined to comment on the suspended rollout plans and said the company is “demand-driven.” “We have seen the positive impact of TikTok Shop and are excited to continue experimenting with these new commerce opportunities,” the spokesperson said.

It has set a goal of increasing U.S. goods volumes tenfold to as much as $17.5 billion (16.1 billion euros) this year. Importantly, management also recognizes that full European expansion may require regulatory scrutiny similar to the U.S., the people said.

Things didn’t always go smoothly. The launch of TikTok Shop in the UK as early as 2021 has sparked mixed reviews after Chinese exporters flooded the market with cheap goods. Since then, TikTok has become more reliant on local A-list brands for later entry into the market.

USA

In the US, the greater and direct threat is Washington. In May, ByteDance filed a legal challenge over a measure signed by President Joe Biden that will block TikTok if its Chinese owner does not get rid of the app by Jan. 19 – an ultimatum aimed at allaying perceived national security concerns.

ByteDance argues that a divestment is “commercially, technologically or legally unfeasible.”

In recent weeks, TikTok has increased subsidies and other incentives to increase the burden on its U.S. e-commerce business. It lowered the threshold for creators wanting to join the affiliate program to 1,000 followers from 5,000. Affiliates can post videos advertising products sold on the TikTok store and earn commissions on sales generated.

Meanwhile, TikTok is under an EU investigation into whether a lighter version of its app in France and Spain poses a risk of fueling addictions. TikTok Lite promises to pay users cash through a points system as long as they scroll through content, which is a common marketing tactic in China.

Bloomberg