TikTok e-commerce and cross-border e-commerce development trends!

In February 2021, TikTok quietly launched TikTok Shop, with its first stop in Indonesia. The UK is the second stop for TikTok's e-commerce efforts. Previously, the small shop function was only open to merchants with British company qualifications. In June, the news that British small shops were open to Chinese merchants spread in the circle.

Like Mira, there are many cross-border sellers who have high hopes for TikTok. There are about 100 people in Mira's docking group. She estimates that 60% of them are merchants, many of whom have never been involved in cross-border business. The rest are various service providers around TikTok's cross-border e-commerce .

Since TikTok started its e-commerce business, a new ecosystem has been taking shape around this emerging global social media darling, which has brought together countless players and spawned new careers and entrepreneurial directions.

But compared with Douyin’s domestic e-commerce, TikTok faces greater challenges. "The establishment of Douyin's e-commerce ecosystem is a process from 0.5 to 1, while TikTok's global development is from 0 to 1, so the difficulty is naturally different," analyzed Wei Guangli, who is also a cross-border e-commerce practitioner.

In Wei's opinion, TikTok now still needs to solve difficult problems such as merchant motivation, merchant capabilities, user habits, data labels, and system perfection, but the greater challenge lies in the supply of content and goods.

In the eyes of sellers, ROI is the only indicator they use to evaluate TikTok. But now, this is still TikTok's shortcoming, and it has also led to polarized evaluations of TikTok among sellers and advertisers: some are betting all in, while others are waiting and watching.

1. Follow ByteDance to go global

Since November 2020, Wang Long (pseudonym) has been busy expanding his e-commerce business. Before this, he had no experience in selling goods overseas. Following TikTok, he plans to take a gamble.

On Douyin, Wang Long worked as a live broadcaster for half a year. In the live broadcast room, he introduced Guizhou's local specialties to the outside world. The idea of ​​starting a business came from friends around me, some of whom made money by selling products on Douyin. However, when he entered the market, the domestic market had already become a red ocean. Having missed the bonus period of Douyin, he accidentally discovered that TikTok, the overseas version of Douyin, seemed to still be a blue ocean.

At first, Wang Long just moved domestic content to TikTok to create an account. After that, he used e-commerce website building tools to build a simple independent website. This was the beginning of Wang Long’s cross-border e-commerce journey. "By this month, the company's operations have stabilized and the entire network has been opened up," he revealed to Zhixiang.com.

He set up his company in Guangzhou. Relying on the strong local supply chain, Wang Long found beauty products, luggage, etc. to help them expand their overseas markets. Wang Long almost caught up with TikTok's overseas expansion.

In June 2020, ByteDance quietly made major adjustments to its internal organizational structure and formally established a first-level business department clearly named "e-commerce." Since then, TikTok's e-commerce business has been steadily advancing. In September, TikTok reached a cooperation with Shopify and Teespring, allowing some accounts to open purchase links. On December 18 of the same year, TikTok US and Walmart cooperated to launch the first live streaming sales event, with 10 TikTok influencers showcasing local American brands. Next, TikTok also reached cooperation with several platforms such as Shopee and JD.com to jointly test and cultivate the Southeast Asian market.

Wei Guangli introduced that there are players in all aspects surrounding TikTok: service providers can be subdivided into content and celebrity service directions, agency operations and broadcasting, and training institutions; from the technical side, it can be further subdivided into data directions, editing tools, group control tools, and marketing management/delivery tools; and some service providers have found opportunities from the supply chain end. Many entrepreneurs have received large amounts of financing.

Feng Junying, business director of Titanium Technology, said that customers' awareness of TikTok varies greatly. Some people are more accepting of TikTok, but others are taking a wait-and-see approach.

According to his analysis, one of the reasons may be that different customers have different levels of familiarity with media platforms. Secondly, Facebook users may have a more even age distribution, but TikTok may be younger. "In our opinion, newer products, such as smart home products or other products targeting young people, will be more popular on TikTok."

Placement and traffic generation are the indispensable means for cross-border e-commerce players to reach consumers. Unlike sellers on platforms such as Amazon, independent website sellers lack the platform’s own traffic and can only rely on off-site traffic to reach users.

So far, Wang Long has owned four independent websites focusing on different areas, opened an account on TikTok for Business, and started testing advertising on TikTok. But so far, the results have not been ideal. "In the first two days, I spent about $4.26 to attract 1,000 people. The click-through rate is good, but the conversion rate is very low, basically no conversion."

In comparison, Facebook advertising, although expensive, is more mature and precise. When looking for talent for Facebook advertising, Wang Long once met a job seeker who asked to work from home but could guarantee ROI. Now, Wang Long has found a partner with experience in Facebook advertising and website building, but on the TikTok side, he can only explore slowly by himself. In fact, there are already specialized positions in the market dedicated to TikTok Ads delivery. A few months ago, when Wang Long browsed recruitment websites, the position that companies were generally recruiting was just TikTok operations.

“It’s impossible to hire people to solve this problem. Newly emerging platforms have to explore on their own and spend their own money to run data on them to see what needs to be adjusted,” said Wang Long.

TikTok store seller backstage/provided by the interviewee

As June began, news gradually emerged that TikTok's UK store would be open to Chinese merchants.

Mira found that there were many cross-border sellers who had the same idea as her. However, Mira has other plans for the development of the shop. Recently, she and her colleagues have been manually "recruiting people" on TikTok, looking for internet celebrities to collaborate with.

In the early days, they would probably watch thousands of videos on TikTok every day, and then review 10% to 20% of the bloggers, and then try to establish cooperation with them. TikTok stores can host 5 IPs. She borrowed the popular Drop Shipping method. After binding their accounts with the stores, they can directly display the products in the stores, or create content based on samples and then put them on the shared cart.

2. 1992 mobile phones

In 2020, ByteDance began to focus on its advertising business overseas and officially launched the official marketing website "TikTok for Business" to integrate media resources. In 2021, overseas promotion and marketing resources will be officially added to Bytedance, and overseas product resources (TikTok, BuzzVideo, TopBuzz) will be opened to meet advertisers' overseas promotion needs.

In Feng Junying's opinion, as the purchase volume of Facebook and Google has become relatively saturated, sellers also need new sources of traffic, and TikTok is a media that is very worth trying. To some extent, TikTok meets their needs.

Wang Long once noticed a product called Last Mouse Lost. "The topic has been hot on TikTok for more than half a month, and a large number of Chinese seller accounts have emerged in that period, with the number of followers increasing by tens of thousands in just one or two days."

The case of Rat Extermination Pioneer made Wang Long feel that there seemed to be endless traffic hidden in TikTok.

However, the independent website of maternal and infant products in Guangzhou told Zhixiang.com that it has not yet started to advertise on TikTok, and the main problem is the low input-output ratio.

ROI (return on investment) is always the most important issue for sellers.

From the perspective of seller Mira (pseudonym), this is not an effective path for sellers at present. "At this stage, if you convert through advertising or effective traffic from TikTok, it may not be able to achieve ROI."

However, Mira is still actively exploring feasible directions on TikTok. Since the launch of TikTok Indonesia store, Mira has been included in the whitelist very early. But after a round of testing, Mira found that the effect of video and live streaming in Indonesia was not ideal. "It may be that our average order value is relatively high, so the effect is not particularly good."

The payment link is also one of TikTok's shortcomings in developing e-commerce in the Indonesian market. "If you use online payment in the Indonesian market, the effect is really not very good." However, a few days ago, Mira received a notice that TikTok will support COD payment in the Indonesian market. "We can take a look and see if the conversion rate will be higher."

A person close to ByteDance's commercialization team told Zhixiang.com that they recently learned that ByteDance's user growth team has been providing subsidies in Indonesia to stimulate users' consumption habits, and judging from recent data, there has been a breakthrough. Data monitored by the Lingmao data platform also show that many small shop sellers in Indonesia have accumulated sales of thousands or even tens of thousands.

TikTok store sales ranking in Indonesia in the past month / Civet Data

JD.com and TikTok have also started cooperation in the Indonesian market. JD.com and a local Indonesian company jointly established the cross-border e-commerce platform JD.ID (JD.com Indonesia) and opened JD.ID's TikTok corporate account in 2020. By attaching a link on the account homepage, it directs traffic to JD.com Indonesia. The corporate account can also achieve purchase conversions by hanging a shopping cart in the live broadcast room.

JD.ID's TikTok account status/Civet Data

According to Lingmao data, JD.com Indonesia is selling 351 different products on TikTok. Among them, the best-selling realme C12 mobile phone has reached 1,992 orders since June 24. Calculated at about US$130 per mobile phone, it has contributed about US$260,000 in turnover to JD.com Indonesia.

However, for small sellers, they are more confident in the British market. "Judging from the shipment volume on the logistics side, the UK is now in a state of overstocking and the demand is quite large," said Mira.

After Indonesia, the UK is TikTok's second stop in its e-commerce business, and it is the first to open the small store function to merchants with British company qualifications. Compared with TikTok stores, the path for TIkTok to divert traffic to its independent site is too long. Through stores, TikTok users can shop while staying in the app.

Products displayed by JD Indonesia in the live broadcast preview/TikTok

3. Starting Point

In the cross-border e-commerce industry, TikTok is also known as the starting point of global video e-commerce.

Both Wang Long and Mira admit that they have failed to catch up with the bonus period of platforms such as Amazon and Facebook. Therefore, they are more proactive in embracing new platforms and new opportunities that are before them.

Sellers who have deep roots in platforms such as Amazon and AliExpress have different considerations. Li Lan (pseudonym), an AliExpress seller in Yiwu, is also considering opening her own TikTok account, hoping to expand her existing customer base through TikTok. At the beginning of this year, Xiaoer from Alibaba worked with her to set growth targets for 2021. The new goal brought her pressure. Li Lan understood that it could not be achieved by relying on the traffic within AliExpress, and she had to find new sources of traffic.

Sellers who were originally constantly improving their listing rankings and competing for traffic on Amazon now have new plans. After experiencing the wave of Amazon account bans this year, they have put multi-platform operations on the agenda. Many people choose independent sites that they can control in their own hands. However, the operation of an independent website requires traffic diversion, and ultimately it still needs to start from the content side.

The aforementioned industry insiders believe that Tiktok e-commerce has more content-side operations than general platform e-commerce. After the content-side ecosystem is improved, sellers like Amazon can better exert their original energy. But now, the supply of content and products is still TikTok's shortcoming, and supply limits demand. To some extent, this is also Mira's idea of ​​seeking KOL cooperation. In addition to traffic, they can also bring long-term accumulation of content.

However, the new e-commerce model quickly attracted latecomers to follow suit. For example, live streaming e-commerce, which has gained popularity in China, has also gained popularity overseas. Not only TikTok is exploring the live streaming e-commerce business, but internet giants such as Facebook, Amazon, and YouTube have also entered the market. Alibaba's AliExpress and Lazada also have their own live streaming sections.

Facebook is also investing in the operation of e-commerce products. At the end of May 2020, with the announcement of the launch of Facebook Shop, merchants can list products and conduct transactions directly on Facebook and Instagram platforms.

Last year, Mira tested Instagram's e-commerce, but she was disappointed to find that Instagram's e-commerce function was not perfect. For example, the product function still remained at the community logic, with a few commercial products added in. Unlike TikTok, which has opened up a business model, the gameplay is also slightly insufficient. In the live broadcast room of the live e-commerce, the anchor cannot @users to interact and can only send them private messages manually.

But Instagram also has its advantages. Mira said, "The content created by their audience is very exquisite, and I really appreciate this kind of aesthetic."

However, TikTok is taking a path from 0 to 1. Change has slowly been happening. Wei Guangli observed that after gradual evolution, the TikTok system has become more and more perfect, the shopping cart experience and openness have been improved, the backend management and foreground traffic and some paid functions have been strengthened, and functions such as Dou+ and live broadcast room streaming will be launched soon. ByteDance is also actively inviting global and cross-border sellers, and has various policy supports for sellers, MCNs and service providers.

Even in the US market, where TikTok remains cautious, its e-commerce penetration rate is slowly increasing. On May 18 this year, data from the third-party data platform App Annie showed that the usage rate of PayPal's US users for TikTok increased from 26% in March to 38%.

However, for Wang Long, no changes have taken place at the data level, and the daily order volume of several independent sites is still fluctuating around double digits. Now, he has a small goal, hoping that each independent site can complete 200 orders every day. This number means a net profit of 100,000 yuan per month. This Monday, he was one step closer to this small goal. After connecting with the investment manager of TikTok's UK store, he also obtained an invitation code and opened a cross-border store. "Now all I need is a UK phone card."

Others may choose to continue to wait and see, saying, "It's still early."

Author: Xie Xiaodan

Source: Zhixiang.com