Wednesday, April 24, 2024
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TikTok reshapes e-commerce unit to break into western markets

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TikTok has restructured its ecommerce business in an effort to refocus on markets such as the UK and US, as the Chinese-owned conglomerate struggles to export its livestream shopping model outside its home country.

Employees working on the launch of the social media conglomerate’s in-app marketplace TikTok Shop in Brazil are being moved to markets in the country where the service has already been launched, such as the UK, US and South-East Asia. Are. reorganization.

These people said people who had been working to bring the service to Spain are being moved to London amid a wider reshuffle of executive positions at the top of the European business.

The pause on expansion in Europe echoes a slowdown in the feature’s full rollout for sellers in the US, according to people familiar with the business. TikTok said it has not finalized any launch plans or dates for the feature outside existing markets.

The group’s owner, Beijing-based ByteDance, is set to launch a TikTok shop in the UK in 2021, its first market outside Asia. The service allows brands and influencers to link products for purchase in videos or broadcast live to sell products available for purchase within the app.

While the social media ecommerce model has been hugely successful in Asia, the TikTok shop has been beset by problems elsewhere, notably failing to gain full traction with Western consumers and content creators.

In an effort to crack markets outside China, TikTok has put its international expansion plans on hold to refocus on countries where its ecommerce service has been launched. The Financial Times previously reported that the country expansion initially planned for last year had been delayed several times.

TikTok’s change in strategy led to a reorganization of its European ecommerce operations in mid-April, according to people with knowledge of the move. These people said all staff working in Spain were told they could not stay there and would need to relocate to London, where they would be required to pay six months’ rent, along with two flights a month. will be offered.

Joe Geo, the former head of ecommerce in Spain, has recently been promoted to run ecommerce for small businesses in the UK. According to his LinkedIn profile, he has worked for ByteDance since 2017.

The moves represent the latest of many changes made to TikTok’s London office as the FT revealed a culture clash within the ecommerce team, leading to high staff turnover and complaints of a toxic work environment. Joshua Ma, who ran the TikTok shop in Europe, resigned from his role after it was revealed he told staff he “doesn’t believe” in maternity leave but is staying at the company.

His interim replacement, Patrik Nommensen, has narrowed his scope in recent months to focus on key UK accounts and brands, according to two people familiar with the role.

TikTok said servicing major accounts and small businesses requires different approaches, so it makes sense to have leaders dedicated to both segments as the product grows. It added that Nomensen continued to oversee the overall UK operations.

Ecommerce staff in London have recently been told they must be in the office five days a week on a mandatory basis from September, reflecting the company’s emphasis on projects, while other departments have more flexible working conditions.

TikTok said its policy was to work from the office three days a week, with a minimum of two days required, but that leaders had the “right to decide” alternative policies for specific teams.

ByteDance, TikTok’s parent, hopes to turn social commerce into a huge money maker in Western markets after the model proved lucrative on its sister app Douyin, which has sold more than 10bn products. ByteDance’s earnings before interest, taxes, depreciation and amortization are projected to jump 79 percent to about $25 billion in 2022, two investors briefed on the numbers said.

In particular, live shopping, where users can purchase products from vendors during a live broadcast, a format hugely popular in Asia, appears to fail to resonate with Western consumers.

According to multiple people familiar with the matter, most of the revenue made from the TikTok shop in the UK is derived from uploaded recorded videos that link certain products, rather than selling livestreams.

The facility is estimated to generate £20 million in UK sales per quarter, two people said. TikTok said the figure was higher without specifying more.

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Full access to US sellers, where they can sign up without a TikTok employee manually assisting them, was meant to start as early as this year, according to three people familiar with the plans. Failure to bring enough small local American businesses on board has pushed the deadline to June at the earliest, these people said.

He said the appearance of TikTok chief executive Shou Zi Chew before the US Congress in March, as well as lawmakers’ discussions about banning the app, also played a role in the slowdown.

TikTok said it hasn’t delayed the launch in the US, and was “excited” to continue expanding its test in the country by inviting more sellers to join the TikTok Shop.

The company said it had not finalized any launch plans or dates for the TikTok shop outside the UK, US and South-East Asia, while it “continued to evaluate opportunities for further international expansion”.

Additional reporting by Hannah Murphy in San Francisco