TikTok abandons the expansion of live broadcast e-commerce in Europe and the United States, not only 996

In 2021, Douyin e-commerce will sell more than 10 billion items, using data to declare that live-streaming e-commerce is the future of shopping.

But its footsteps stalled in Europe and the United States.

The British "Financial Times" reported that TikTok will abandon the expansion of the live broadcast e-commerce business "TikTok Shop" in Europe and the United States.

“TikTok Shop” was launched in the UK in April last year. One of its core functions is to bring goods through live broadcasts, as we know it – merchants and anchors broadcast live on TikTok, users click on the shopping cart icon to buy, and TikTok takes a commission from it.

As originally planned, TikTok will launch the TikTok Shop in Germany, France, Italy and Spain in the first half of this year and expand it to the United States later in 2022.

But the plan was aborted because business in the UK fell short of expectations. TikTok said it is currently only focusing on operating the TikTok Shop in the UK, ignoring the rest of Europe for the time being.

Employee turnover is sluggish, Britain's TikTok is difficult to become Douyin

Why is the TikTok Shop hitting a wall in the UK?

On the surface, TikTok's UK staff said the company had set "unrealistic goals."

TikTok expects total monthly live sales of up to £400,000, but the average seller makes less than £5,000 for a single livestream, and there are even many livestreams with zero sales.

The lead of the crisis may have already been buried.

▲ Picture from: yahoo

Last month, the TikTok UK team set off a wave of departures . One of the main reasons was that TikTok’s radical entrepreneurial spirit was “unacceptable” in the UK.

Members of the TikTok e-commerce team in London mentioned that working hours are often more than 12 hours a day, and working into the early hours and during holidays is seen as a role model.

Adding fuel to the fire, a TikTok European head of e-commerce angered London employees at a dinner party – as a "capitalist" he "doesn't believe" the company should offer maternity leave.

But the current predicament can not help but lead to reverie: Is it just the work culture that is not acclimatized? Will TikTok's live e-commerce model also work?

▲ Picture from: Unsplash

Some are similar to the “lowest price on the entire network” promoted by domestic anchors. The live broadcast strategy of TikTok Shop is to directly source goods from cheap manufacturers in the UK and China and sell low-priced products. But low price does not mean high cost performance.

One of the hits is the £14 'Dyson dupe', positioned like Dyson's Airwrap hair styler, which has a suggested retail price of £450. Dyson came out and stated that it does not recognize this "inferior copycat product".

▲ Picture from: Bloomberg/Getty Images

Many anchors with goods are also dissatisfied with the "fast fashion" style of TikTok Shop. A former TikTok Shop anchor changed careers because of his meager income. The T-shirts he once brought were about £1, and the jackets were about £7. "The quality is poor and cheap, I don't know what the profit is."

Well-known brands such as L'Oreal, Lookfantastic, Charlotte Tilbury and others also sell products on the TikTok Shop.

TikTok’s way of treating big names is similar to the idea of ​​“the lowest price on the entire network”. It encourages brands to provide flash sales and deep discounts, and even personally subsidizes brands.

But these brands are dissatisfied with the low level of discounts. They want to reach TikTok's huge young user base, but they don't want to lower their prices too much, and some brands have terminated their contracts as a result.

In addition to the product itself, inventory and shipping are also an issue. Platforms such as Amazon have achieved one-day and next-day delivery of goods in the UK, but TikTok’s logistics still takes a week or even a dozen days , and package loss and damage of goods also occur from time to time.

▲ Picture from: amazon

TikTok is improving this aspect and is preparing to launch a warehousing program called "Aquaman" in the UK recently. This plan is similar to Amazon's FBA overseas warehouse model, which will put some products with stable sales into the UK local warehouse in advance to shorten the cross-border logistics performance time.

In addition, as a person in the "people and goods field", the working mode of British anchors is very different from that in China.

They generally broadcast live twice a week , for two to six hours each time, while some domestic mid-waist anchors broadcast at least three to four times a week, from 3:00 pm to 12:00 pm each time.

An interesting point is that these anchors often see themselves as creators (creators), and TikTok also calls them that, which invisibly weakens the anchor’s sales attributes.

TikTok said it was "redefining the culture of shopping," both for small brands looking to increase revenue and big brands looking to attract new users.

The employees are pessimistic that the live e-commerce market in the UK has not yet emerged, and "consumer awareness and acceptance are still very low and at an early stage."

At the same time, they accused the upper echelons of TikTok of not understanding the British market and culture. A current TikTok employee noted:

It's arrogance and ignorance to try to export a model from Douyin, but don't want to localize the experience.

Effort is necessary, time is also necessary

TikTok's live broadcast e-commerce is not without effort.

It has tried various ways to attract more merchants to join.

For UK retailers newly signed up to the TikTok Shop, TikTokreduced the platform’s 5% commission to 1.8% in the first three months.

TikTok's cash rewards are not stingy. In January and February this year, in the "Seller Championship" event, the highest-ranked merchants won £10,000, the second and third won £5,000 each, and the next 10 received £1,000.

In addition, merchants can earn vouchers each month, provided they are online more than 5 times per month for at least 2 hours each time.

In an interview with Business Insider, Tech Buzz China founder Rui Ma noted that the subsidies are "a standard feature of Chinese companies," stemming from a general "operational-heavy" mentality.

Then again, since April last year, TikTok Shop has only been operating in the UK for more than a year. Of course, it is not as mature as the ecological environment of Douyin live broadcast, and it is too early to judge the death penalty.

A more horizontal comparison with the United Kingdom is Indonesia, which is one of the countries with the highest concentration of TikTok users . Indonesia's TikTok Shop "opened" in February 2021, two months earlier than the UK, and its performance is far better than the UK, with nearly 10,000 live broadcasts per day.

▲ Picture from: The Passage

It was not smooth sailing from the beginning. According to "The Passage", in a live broadcast of TikTok Shop in Indonesia in March 2021, the operation, goods, on-site execution, and payment process were not good enough, and even the product "image failed to load" appeared. Happening. There are many reasons, including the fact that Indonesian anchors are mainly grassroots, and products such as beauty and 3C rely on Chinese imports.

The most fundamental reason is that the live broadcast ecology has not yet taken shape.

For more than a year, TikTok has tried crazy subsidies, turned offline merchants online, and introduced Chinese sellers to Indonesia. Coupled with the fact that Chinese e-commerce teams have started businesses in Southeast Asia, TikTok Shop has achieved good results. TikTok believes that this is related to the large size of the Indonesian market, mature infrastructure and users’ online shopping habits.

In Southeast Asia, competitors such as Shopee and Lazada are also practicing the catfish effect, perfecting the overall environment.

However, the UK lacks these characteristics, and it still takes a lot of time to build logistics, supply chains, and cultivate user habits. For example, according to LatePost, at the end of 2021, only 50% of TikTok’s total UK e-commerce transactions came from localized e-commerce, and half of the goods were sent from China to the UK.

In an interview with "TMT New Observation" , Wang Shutong, founder and chairman of Dunhuang.com Group, pointed out :

Domestic live broadcast sales and social e-commerce have formed a mature ecosystem. There are MCN institutions that provide services to celebrities, and there are service providers who help merchants sell goods. There are hundreds of people behind a head anchor to supply him. Chain docking and mobile payment methods are also very mature.

TikTok’s UK and even European and American businesses cannot bypass these e-commerce infrastructures, but it will take time.

Social media and e-commerce are entering live broadcasts

Foreign live e-commerce is not as mature as in China, but it also means that this is a piece of cake that everyone covets.

One Friday before Christmas in 2020, TikTok and Walmart first tried a live delivery service, asking a group of TikTok influencers to introduce their favorite products in their own way. Viewers can click the shopping cart symbol to place an order directly within TikTok.

"TikTok may be an important way for us to reach and serve omnichannel customers and grow our third-party marketplace and advertising business," Walmart said in a statement at the time.

At present, there are two main types of live e-commerce forces in foreign countries—social platforms and e-commerce. The former includes TikTok, Facebook, Pinterest, YouTube, etc., and the latter includes Amazon, AliExpress, and Lazada.

Recently, although TikTok Shop has pressed the pause button in Europe and the United States, it has expanded its territory in Thailand, Malaysia and Vietnam.

Amazon, which launched the live broadcast business "Amazon Live" in 2019, has recently accelerated the pace of live broadcast with a clear goal – recruiting more influential Internet celebrities. Amazon will offer thousands of dollars in additional incentives if those streamers only stream on Amazon.

▲ Amazon Live.

Wayne Purboo, the executive in charge of Amazon Live, believes:

Live shopping is the future of retail, and video is the driving force behind customer purchases.

In fact, Amazon's high-profile promotion of live broadcast is precisely to save the sluggish online sales, which means a change of dynasty.

At least when it comes to supply chain and logistics, Amazon is confident. It began to build its own warehouse and logistics system in the 1990s, and it was not until 2019 that it began to provide one-day delivery services for paid members in the United States and several European countries.

▲ QVC

Foreign media often refer to live e-commerce as "QVC-style", which means "direct sales on video pages." QVC is the largest TV shopping company in the United States. Live broadcast and TV shopping, of course, cannot be equated. To a certain extent, this also shows that live e-commerce is "orange living in Huaibei" for Europe and the United States, and it will inevitably develop a different appearance.

Compared with China, live e-commerce in Europe and the United States is still in its infancy. Coresight Research estimates that live e-commerce sales in the U.S. will increase from $6 billion in 2020 to $68 billion in 2026, and their share of total e-commerce will also rise from 0.8% to 5.2%.

Perhaps as Insider Intelligence analyst Andrew Lipsman put it:

Whether consumers in the West are falling behind the livestreaming curve, or simply not interested, is yet to be determined.

▲ References:
1. https://www.ft.com/content/07b75caf-b2ab-4ace-9bb8-68d42f1da823
2. https://www.ft.com/content/dc1aba86-2055-4521-8f0c-1f026c7f6864
3. https://mp.weixin.qq.com/s/Tb3ur-ZUJ9JxuTA0EpwzMA
4. https://mp.weixin.qq.com/s/gwDxjiD0C2cdmKSiqISqpw
5. https://www.businessinsider.com/tiktok-retailers-cash-prizes-shop-affiliate-trends-2022-1
6. https://mp.weixin.qq.com/s/bPMEE2Y7iCpi5nqhgJv_Aw

Li Ruoqiuhuang, to exorcise evil. Working email: [email protected]

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