TikTok, a subsidiary of ByteDance Ltd, aims to more than quadruple the size of its e-commerce business globally, bringing its merchandise sales this year to $20 billion, based on the rapid growth in the Southeast region. Asia, according to people familiar with the matter.

The people, who requested anonymity due to discussing internal data, indicated that this increase is rapid compared to the total value of goods sold over the past year, which amounted to $ 4.4 billion, which is the total value of goods sold through offers on the “TikTok Shop” site. . TikTok is betting on markets like Indonesia, where influencers sell products from jeans to lipstick in live videos.

US market
People confirmed that TikTok is also increasing its sales in the US and Europe, although these markets represent a small share of the $20 billion target. The world’s largest start-up by value is trying to capture a larger slice of the $17 trillion online commerce business as its advertising business, the main driver of revenue generation, wanes when there is a recession.

TikTok’s efforts to expand e-commerce in the United States during this period may seem illogical, given the threats of US political officials to permanently ban the application due to national security concerns. Nevertheless, building profitable relationships with American merchants and brands may help TikTok win allies as much as it counters criticism in Washington and in the courtrooms.

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The Chinese-owned company intends to export its business model to the US and its 150 million users there. It proposed a range of measures to address US national security concerns, including isolating US users’ data and allowing partners such as Oracle to review its technologies. However, the state of Montana imposed a ban on downloading the app starting in 2024, and lawmakers have introduced similar bills for a nationwide ban.

A TikTok spokesperson declined to comment on the company’s financial statements.

Huge development
Founded by Zhang Yimin and Liang Rubo more than 10 years ago, ByteDance has developed into a leading Internet company worth more than $200 billion, thanks to the proliferation of short video platforms TikTok and Douyin. Although shopping through live broadcasts has not spread in the United States and Europe, despite the attempts of “Instagram” and others, TikTok relies in its expectations on the success that its Chinese counterpart, Douyin, enjoyed locally.

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TikTok Shop allows users to purchase products while browsing endless streams of short videos and live broadcasts on the prominent social media app, with the hope that consumers will use it as an alternative to Amazon.com or C-branded Shopee. (Sea). This coordination – mixing entertainment with impulse buying – has already helped Douyin wrest a huge share of Chinese consumer spending from Alibaba Group Holding and JD.com, especially after it pushed back the country’s lockdown rules during the coronavirus pandemic. people to spend more time on online platforms.

During 2021, TikTok began providing a similar service to markets including Indonesia, Vietnam, and the United Kingdom.

Revenues
TikTok Shop continues to be a major part of ByteDance’s $80 billion revenue. By comparison, the total online merchandise retail volume of C, the largest internet company in Southeast Asia, grew 18% to $73.5 billion last year.

But if it achieves its aggressive aim, it could help show that streaming commerce can overtake niche audiences and potentially start to grow in share at the expense of traditional online shopping outside of Asia.

The total volume of retail merchandise sold on TikTok Shop in Indonesia alone exceeded $2.5 billion, and exceeded $1 billion during the first quarter of 2023 alone, according to e-commerce research firm Cube Asia. Meanwhile, TikTok has slashed its ad sales target by nearly $2 billion for 2022, reflecting a decline in its core business.