TikTok reportedly has plans to expand its e-commerce efforts in the United States by introducing a new program that would allow Chinese companies to sell their products in the country, with TikTok handling all of the logistics.
Key details: Sources who wished to remain anonymous revealed the new “full-service model” program to The Wall Street Journal, which published their report on Tuesday.
According to sources allegedly familiar with the plan, TikTok will launch its new e-commerce program in the U.S. in August as a way to replicate the success of Shein and PDD Holdings’ Temu, two other Chinese companies that have found great success in the market.
With the new program, TikTok will reportedly handle certain roles for businesses in China hoping to sell their products in the U.S., such as marketing, logistics, transactions and after-sale services. The company will also store and ship those products, much like Amazon’s “Sold by Amazon.”
Dealing with inventories: As for the potential problem of excess inventory, sources told The Wall Street Journal that TikTok has plans to recruit professional buyers, some of whom had already been poached from Shein and Temu, to pick products from the merchants and negotiate prices with them.
TikTok will also only pay Chinese businesses after finding a buyer in the U.S. Unpopular products will be returned to China to prevent them from being stuck in the company’s inventory.
Their priorities: TikTok launched TikTok Shop in the U.S. in November 2022, allowing local small to medium vendors to sell their products to app users in their respective regions. With the full-service model, local vendors would still be prioritized over overseas businesses, the anonymous sources claimed.
Problems looming: Besides practical dilemmas such as inventory management, TikTok might also face added pressure from the U.S. government if its plan works well in the market, The Wall Street Journal reported.