TikTok’s plan to open a retail store is bonkers. Here’s why


By Elizabeth Segran

Move over Shein. There’s a new Chinese company trying to take over the world of U.S. retail. It’s TikTok.

According to Semafor, TikTok is going to open an online retail store in the U.S. version of the app as soon as next month. TikTok, which is owned by the Chinese company ByteDance, plans to buy inventory, handle warehousing and logistics, and manage customer service. This new platform will be different from the current TikTok shop, which allows brands to sell their products on the social media app for a fee—and has not been popular with American consumers. But TikTok has reason to believe that running its own e-commerce store could be successful. Douyin—the Chinese version of TikTok also owned by ByteDance—has a similar shop, which has already surpassed sales at Alibaba’s Tmall.

TikTok is currently hiring people on its career website to run this new feature. There’s a job listing for a position in Los Angeles to manage what will be called the “TikTok Shop Shopping Center,” where customers can discover promotions and purchase from TikTok merchants, as well as manage their orders.

TikTok’s decision to become an e-commerce company is hugely ambitious. For years, companies have been trying to blend social media with shopping, in a concept known as “social commerce.” The idea is to create ways for consumers to shop while they’re spending time scrolling through social media. But none of them have been particularly success. Instagram created features that allows users to shop directly from a brand’s photo or video. Snap has a similar feature in the works.

What’s different about TikTok’s upcoming shop is that TikTok will have control over the inventory, pricing, and shopping experience. It will be able to use its data to identify what products are resonating with TikTokers and study user behavior to figure out exactly how to get someone to click “buy.” And since TikTok users already spend close to 56 minutes a day on the platform, the company will have many opportunities to sell them products. All of this could give TikTok a leg up over Amazon.

And if TikTok’s e-commerce operations do take off and it manages to scale, this could have other worrisome implications. Shein, the Chinese fast-fashion label, has managed to quickly penetrate the U.S. market, but the company has also been accused of alleged human rights violations, including using forced labor. (Shein denies these allegations.) Shein has also flooded the market with cheap, disposable products that are bad for the environment.

Those familiar with TikTok’s initiative told Semafor that products available in the store will include all kinds of consumer goods, including kitchen gadgets and toys. Most be will be manufactured in China. If TikTok uses a supply chain similar to Shein’s, it would be bad for both workers and the planet.

TikTok’s plan to open a retail store is bonkers. Here’s why

Of course, TikTok’s success is far from guaranteed. It is very difficult to launch a successful e-commerce business, and TikTok currently has no experience in the American e-commerce market. It is expensive to set up a supply chain, including shipping and supply chain operations. And it is risky to buy inventory since TikTok will have to bear losses for items that don’t sell.

It’s a wild experiment, for sure. But if it does work, it could disrupt online retail as we know it.

Fast Company