TikTok bets on sales app to grow in the West – 05/24/2023 – Market

TikTok bets on sales app to grow in the West – 05/24/2023 – Market

TikTok has restructured its e-commerce unit in an effort to refocus on markets such as the UK and US as the Chinese-owned group struggles to export its live streaming shopping model outside of its country. source.

The company’s employees in Brazil, who were working on the launch of TikTok Shop, the social media group’s sales app, in the country are being relocated to markets where the service has already been introduced, such as the United Kingdom, the United States and the Southeast Asia, according to people familiar with the restructuring.

Those who were working to bring the service to Spain are being moved to London amid a broader reshuffle of executive roles at the top of the company’s European business, these people said.

The pause in European expansion is echoed by a slowdown in the full launch of the US seller registry, according to people familiar with the operation. TikTok said it had not finalized any plans or release dates for the feature outside existing markets.

TikTok parent company ByteDance, based in Beijing, launched the TikTok Shop in the UK in 2021, its first market outside Asia. The service allows brands and influencers to install links in videos to buy products or live stream to sell products that can be purchased with the app.

While the social media e-commerce model has been hugely successful in Asia, the TikTok Shop has struggled elsewhere, particularly with its failure to gain full traction with western consumers and content creators.

In an effort to capture markets outside of China, TikTok has halted its international expansion plans to refocus on countries where its e-commerce service has already launched. The Financial Times previously reported that country expansions initially planned for last year have been delayed multiple times.

TikTok’s change in strategy led to the restructuring of its e-commerce operations in Europe in mid-April, according to people briefed on the change. All staff working in Spain were told they could not stay in the country and would need to move to London, where they would be offered two tickets home a month, as well as six months’ rent payment on their new housing, the sources added. .

Joe Jiao, former Director of E-Commerce Spain, was recently promoted to lead Small Business E-Commerce in the UK. He has been working for ByteDance since 2017, according to his LinkedIn profile.

These changes represent the latest of several changes undertaken at TikTok’s London office since the Financial Times revealed a culture clash within the e-commerce team, leading to high staff turnover and complaints of a toxic work environment. Joshua Ma, who ran the TikTok Shop in Europe, stepped down after it was revealed that he told staff he “didn’t believe” in maternity leave but was still with the company.

His interim replacement, Patrick Nommensen, has had his attributes scaled back in recent months to focus on top UK accounts and brands, according to two people familiar with the role.

TikTok said serving core accounts and small businesses required different approaches, so it made sense to have dedicated leaders in both areas as the product grew. Nommensen continued to oversee general operations in the UK, the company added.

E-commerce employees in London were recently told they must be in the office five days a week on a mandatory basis from September, reflecting the company’s emphasis on design, while other departments have more flexible working situations.

TikTok said its policy was to work from the office three days a week, with a two-day minimum required, but leaders had “the power to decide” alternative rules for specific teams.

ByteDance hopes to turn social commerce into a huge money maker in Western markets, as the model has proven profitable on TikTok’s sister app, Douyin, which has sold more than 10 billion products. ByteDance’s earnings before interest, taxes, depreciation and amortization increased 79% to about $25 billion in 2022, according to two investors briefed on the results.

In particular, live shopping, where users can buy products from sellers during a live stream, which is an extremely popular format in Asia, seems not to be resonating with Western consumers.

Most of the revenue earned from the TikTok Shop in the UK is derived from recorded videos containing links to certain products, rather than live streams selling items, according to several people familiar with the matter.

Two of the people estimate the feature generates £20m in sales per quarter in the UK. TikTok said the amount was higher, without specifying how much.

Full access to US sellers, where they can sign up without manual assistance from a TikTok employee, was supposed to start earlier this year, according to three people familiar with the plans. The schedule was pushed back to June at the earliest because TikTok failed to get enough local small US businesses on board, these people added.

TikTok Chief Executive Shou Zi Chew’s testimony before the US Congress in March, as well as discussions by lawmakers about banning the app, also played a role in the slowdown, they said.

TikTok said the US launch had not been delayed and that it was “excited” for the continued expansion of its trial in the country, inviting more sellers to join the TikTok Shop.

The company added that it had not finalized any plans or launch dates for the TikTok Shop outside the UK, US and Southeast Asia, “while it continues to assess opportunities for further international expansion.”

Additional reporting by Hannah Murphy in San Francisco

translation of Paulo Migliacci

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