TikTok Shop’s Dividends And Operating Model Of U.S. E-commerce

01 Why do you want to become an American TikTok e-commerce company?

Recently, I have frequently communicated with my friends about the progress of TikTok Shop in the United States.

Listed advertising agency Lianchuang, founder of TikTok’s annual GMV of over 100 million, founder of celebrity marketing company, founder of data tools, recognized expert in TikTok’s natural flow industry, founder of JD.com’s head agency operation group, There are also official friends from TikTok for Business and TikTok Store.

On the matter of TikTok e-commerce in the United States, everyone is optimistic.

This is actually very difficult. When TikTok was fully managed, many friends told me that they were not optimistic about it.

TikTok’s US market combines four major dividends:

One is the dividend of market size.

With a population of over 300 million, the United States is the largest online e-commerce market outside of China. The scale is there. If you don't do the United States, your scale ceiling is missing a big part.

The second is the dividend of model iteration.

Many Internet models in China, including e-commerce, are at the forefront of the world.

If cross-border e-commerce is version 3.0 in the United States, it is version 1.0 in Southeast Asia, and it is version 0.5 in Africa.

When we go to Southeast Asia, we can no longer take advantage of the opportunities brought by the model upgrade.

The third is the dividend of capital.

If capital wants to invest, mainstream capital will mainly focus on mature markets in Europe and the United States.

For example, if you say that I set up a team in Cambodia to do TikTok e-commerce, mainstream capital will not consider you.

If you say I do America, right? That was completely different again.

My view on TikTok’s American store is the same as everyone else’s, and I am also optimistic about it.

The fourth is early market dividends.

We see many excellent e-commerce teams. Why did they all start in 2021 or 22?

It's simple, because official subsidies were high at that time.

The same product, the same gameplay, if you try to play it now, you won’t be able to afford it, and the cost has changed.

This is also the reason why many companies with a brand strategy have stayed put after inspecting Southeast Asia.

Because he found that there was no chance of entering the market now.

Now TikTok stores in the United States have replicated the trajectory of Southeast Asia in the past two years. Merchants are subsidized up to 50%, and there are many experts who accept pure commissions to bring goods.

TikTok’s 4 major e-commerce models:

Since TikTok opened external links to its homepage in February 2020, and has developed to the present, I have summarized 4 e-commerce models:

1. TikTok independent station delivery model

The earliest non-closed loop is the mainstream of TikTok sales in 2020. Many teams sell goods by mixing and editing videos and linking to independent stations on the account homepage.

Several early teams in the industry now all started by relying on independent TikTok stations to bring goods.

The leading distribution website in the circle: Qianfan Engine, with monthly sales reaching US$3 million at its peak at that time.

This shows how popular TikTok’s independent station was at that time.

2. The gameplay model of non-closed-loop private e-commerce

In addition to independent websites, the gameplay of non-closed-loop private e-commerce is also very mature.

Divert traffic through TikTok, add it to WhatsApp chat, and the merchant will deliver the goods after PayPal transfer.

3. TikTok foreign trade B2B model

In addition, TikTok’s foreign trade B2B also evolved from the private domain. A large number of domestic foreign trade factories began to imitate the domestic Douyin factory’s method of acquiring customers.

Traditional foreign traders have registered accounts on TikTok, posted videos of actual factory scenes, production processes, product explanations, etc., and directed traffic to their mailboxes and WhatsApp to follow orders and complete transactions.

4. TikTok e-commerce fully closed-loop model

In February 2021, Indonesia became the first region where TikTok’s e-commerce fully closed loop was opened.

The fully closed loop is TikTok traffic + TikTok store transactions, all implemented in the TikTok App.

Due to trade policy reasons, Indonesia has always adopted a local store model. Local company entities or local people apply for registration, and local stock is prepared and shipped.

As of now, TikTok’s Indonesian market is still the most important market in the entire market, with single-day sales exceeding US$15 million.

In a short period of time, multiple beauty brands with valuations exceeding one billion were born, as well as various service providers with large scales.

TikTok cross-border stores are still mainstream in Southeast Asia. The difference between cross-border stores and local stores is whether the main body of the store company is a local country or a non-local one.

Companies in Hong Kong or Mainland China apply for registration and support cross-border or local shipments. Don’t underestimate the issue of whether domestic shipments are supported.

TikTok is based on the logic of hobby e-commerce. For many novices, it is a big threshold to prepare goods overseas in advance.

Many TikTok store sellers have grown up slowly from cross-border store novices.

In May this year, TikTok e-commerce took reference from Shein and Temu and launched fully managed and self-operated. Merchants and TikTok have become a supplier relationship. Merchants ship goods and TikTok is responsible for traffic and delivery.

The leading fully managed merchant revealed to me that at present, daily orders can be stabilized at 2,000-3,000 orders, and the profit of a single product is better than Temu.

TikTok Shop USA 3 modes:

TikTok currently has three forms in the United States: local store, cross-border store and full hosting.

1. TikTok US local store

There are two types of local stores, pure local stores and Chinese Accu stores.

The application method for pure American local stores is the same as that of other regions, American individuals or pure American companies. All require local delivery.

Individuals can submit their passport or passport and add their SSN number. The company provides the US company main body and the SSN number of the additional person, and the application is the simplest.

The Chinese Accu store, as the name suggests, is an American company with Chinese shareholders and identity applications. In addition to requiring local shipments, it also requires that the annual sales of Amazon stores should not be less than 2 million US dollars.

At this stage, most domestic merchants use Chinese Accu local stores.

Recently, the market for small stores in the United States has been growing rapidly. If a good seller can increase the basic sales volume through advertising, he can open a selected alliance and use experts to bring goods and place orders, and earn tens of thousands of dollars every day.

At the same time, due to the problem of virtual warehouse delivery, Accu stores have also become the most stringent focus of risk control. It is this type of store that has been closed the most recently.

Virtual warehouse shipments hide the domestic logistics information on the express delivery track and only display the information within the United States, making it look like the goods are being shipped within the country.

In order to prevent fraud, TikTok will close the store if it finds that the time limit is incorrect.

There is also news that if the time limit exceeds 5 days, it will be included in the key investigation list.

Everyone must also understand the difficulties of TikTok. When asked in March, Zhou said that more than 2 million Americans do business and support themselves through TikTok.

Domestic merchants in the United States are the foundation of TikTok in the United States.

2. TikTok US cross-border store

Corresponding to the local store is the cross-border store, which supports domestic shipments through company license application in mainland China or Hong Kong.

Currently, under the industry access system, only top sellers of jewelry and crystals that have done well in the past are invited to enter. Currently, very few merchants are invited.

It is reported that a number of big sellers will be opened to cross-border stores in October, and the requirement is that the annual sales of independent websites exceed 5 million US dollars, or the annual sales of Amazon exceed 2 million US dollars.

There are not many companies that meet the requirements now, but I predict that TikTok will still open applications for cross-border stores on a large scale next year.

Because local stores involve corporate tax issues, you must know that many Amazon sellers are also domestic entities.

3. TikTok is fully managed in the United States

There is definitely a wave of bonuses for U.S. Fully Custody.

After opening up Saudi Arabia and the United Kingdom, the United States Fully Custody has also begun to attract investment. For the upcoming Black Friday, special events have been specially planned and traffic support has been provided to merchants.

When TikTok first launched full custody, Yiwu Chaoge was firmly optimistic about full custody in the group. He stepped in and joined the full custody business. He told me that the effect was very good.

In addition to Brother Chao, there are many friends who are like Brother Chao, and TikTok is fully managed and prosperous.

The Saudi and British markets can generate thousands of orders every day, not to mention the potential of the US market.

TikTok US e-commerce operation strategy:

Looking at TikTok's US e-commerce in general, it is mainly divided into two logics: non-closed-loop and closed-loop e-commerce.

Let’s talk about the non-closed loop first, that is, traffic is generated through TikTok, and finally directed to other places for transactions, including independent websites, Amazon, foreign trade B2B, private domains, etc.

On September 12, the official announced the closure of TikTok’s semi-closed loop, which means that the little yellow carts can no longer redirect independent sites to make transactions, but the homepage link can still be posted.

In the future, it will be more difficult to guide independent websites and Amazon because the user's jump cost will be high.

When you see a video/live broadcast, click on the little yellow car to view the product path, it is much more direct than jumping to the homepage, then clicking on the external link of the homepage, jumping to an independent website/Amazon, and then viewing the product.

Regardless of whether TikTok is in the background, so that some users cannot see external links to the homepage, in the future, this road will be crowded out by small stores.

Therefore, I do not recommend that you study the home page guide independent station.

Of course, there are still some opportunities for products that are not allowed to be sold in small stores.

TikTok's homepage to guide foreign trade B2B is still effective, and I think it will become more and more popular in the future.

Because the age group of TikTok users will gradually increase, covering more and more older users.

TikTok's content algorithm will become more and more accurate through data feed from advertising and natural flows in the past two years.

If you sell a large piece of machinery, it will definitely not be available in a small store. If the homepage has an email address, a get quota plug-in, a phone and SMS plug-in, etc., it is officially allowed to be directed to the private domain for transactions.

American closed-loop e-commerce, one is goods and the other is traffic.

I have always had a view that when doing TikTok e-commerce, the supply chain is in China and the traffic is overseas. In the long run, we will have more advantages in making goods.

Why not do traffic? Because when it comes to traffic, we have never been able to beat the locals. Now it seems that we are very good, but many people overseas don’t know how to do it yet, and there are only a few people doing it.

In 6 months or 1 year, more and more foreigners will start doing TikTok. Will there still be a chance? No more, except for MCN, which is a traffic broker.

Goods are what everyone is good at.

Let’s not talk about the specific way of playing goods. Let’s go back and look at several important events that happened in Southeast Asia and the United Kingdom in 2021 and 2022. We can judge that there are several things that cannot be done: