Written by | Wu Kunyan

Edited by | Wu Xianzhi

The platform competition in cross-border e-commerce is accelerating, and players from all sides are exploring new growth points. TikTok Shop, which has entered the U.S. market for a year, has attracted significant attention both within and outside the industry due to its status as a new force and its differentiated positioning.

In particular, a piece of data released at the TikTok Shop Cross-border E-commerce Fully Managed Black Friday Launch Conference not only confirms the uniqueness of TikTok Shop's content field in the context of platform competition but also points out the next stage of changes and opportunities in overseas markets for merchants.

It is reported that at the aforementioned conference, TikTok Shop revealed that the GMV growth rate of its content field in the U.S. region reached 557%. Simultaneously, TikTok Shop further clarified its core strategy of "Content Navigation, Empowering Goods to Sell Globally," marking a phased summary of its first year in the U.S. market.

It is worth noting that the aforementioned growth does not fully reflect TikTok Shop's potential. Over the past year, TikTok Shop in the U.S. has invested heavily in improving its internal capabilities, focusing on optimizing the infrastructure of content-driven e-commerce. This includes establishing content field operation rules, providing content operation training for merchants, improving the MCN ecosystem, and facilitating official matchmaking between merchants and influencers.

As TikTok Shop quietly completes these infrastructure improvements, it demonstrates flexibility and diversity on both the content and merchant sides, differentiating itself from other e-commerce platforms. With the continuous release of the potential for content-driven e-commerce in the U.S. market, TikTok Shop, which has shed its youthfulness, is evolving into a key battlefield for merchants seeking additional growth.

Cross-Border "New Species"

TikTok Shop stands out in the overseas e-commerce ecosystem dominated by shelf-based models.

From the perspective of the relatively more mature domestic industry, the success of content-driven e-commerce is built on a rich and diverse supply of content. The accumulation and precipitation of content supply is crucial to completing the closed loop of "seeding-conversion" in social media. This is also the root cause of TikTok Shop's emergence as the only content-driven e-commerce platform of significant scale globally.

Public data shows that TikTok has 170 million monthly active users in the U.S., accounting for almost half of the country's population. The average daily usage time of its American users reaches two hours, far exceeding that of traditional e-commerce platforms in terms of traffic activity.

Therefore, since TikTok Shop's official launch in the U.S. on September 12, 2023, overseas merchants have rapidly flocked to this platform to quickly validate their products and establish their brands. The high growth rate in the aforementioned content field is testament to this, as content e-commerce, primarily driven by short videos and live streaming, is accelerating changes in consumer habits in the U.S. market.

A survey by Morning Consult, an international information consulting firm, pointed out that up to 64% of millennials and 76% of Gen Z users are active on TikTok Shop, with 40% of Gen Z users having already made purchases on the platform, followed closely by millennials at 37%.

Over the past year, TikTok Shop has witnessed the emergence of many new multi-million-dollar brands that have captured the attention of young American consumers. For example, Chaoyang Technology, one of the first merchants to enter TikTok Shop's U.S. region, has experienced explosive growth in order sales, with order volumes in just a few months exceeding those of the past decade. "We expect sales to grow by more than 40% in 2024," the company said.

As is well known, content-driven e-commerce follows the logic of content-explosion-conversion, and the key to efficient conversion for merchants lies in managing the content field.

Supported by a robust supply side, TikTok Shop has managed to differentiate itself from traditional shelf-based e-commerce platforms. Specifically, from the perspective of the platform ecosystem, the aforementioned vast user base, the continuous emergence of influencers, and the influx of merchants together form TikTok Shop's content-driven e-commerce ecosystem.

In fact, TikTok's content field has long been proven to be an excellent venue for brand marketing and seeding even before its e-commerce business took off. The vast amount of user-generated content leads consumption trends, and the influencer ecosystem is more dynamic than traffic distribution.

For example, the popular hashtag #TikTokMadeMeBuyIt, which has accumulated 75.8 billion views over four years on the platform, exemplifies this. In November 2020, creator Hannah Schlenker posted a video of herself improvising a dance in the kitchen, which led to a 2,000-fold increase in Google searches for the fitness leggings brand Aerie she was wearing. This, in turn, propelled Aerie's parent company, American Eagle, to become a leading fast-fashion retailer in the U.S.

Xu, the head of TikTok Shop operations at Chaoyang Technology, also noted that TikTok Shop's e-commerce traffic experiences bursts, saying, "As soon as a video goes viral, it immediately triggers a surge in traffic."

Building upon short videos, live streaming, with its added interactive dimension, further demonstrates the marketing power of TikTok's content field. For instance, the birth of TikTok Shop's first million-dollar live stream was a milestone achieved by U.S. beauty influencer Stormi Steele in just six hours of broadcasting.

More importantly, compared to the viral effect triggered by short videos, live streaming's strong interactivity and attention to detail are more conducive to driving purchasing decisions, converting non-standard and high-priced products, and even fostering the birth of new brands.

In 2022, Chen Yan, from China's apparel hub of Wenzhou, embarked on her entrepreneurial journey by selling sportswear products from her husband's factory. By the end of last year, she became one of the first merchants to join TikTok Shop's U.S. site. During the 2024 Spring Festival, one of the sweat-inducing suits sold in Chen's store unexpectedly sold out. Even as she continually expanded her factory's production capacity, she never hit the sales ceiling.

As more and more influencers promoted her products, and as the SKU of products sold in Chen's store continued to expand, the next step was to build and establish her own sports and outdoor apparel brand.

With the continuous emergence of new cross-border brands like this and the discovery of a second growth curve for established brands like Chaoyang Technology through TikTok Shop, it is evident that the shift from white-label products to branded products on the supply side is an irreversible trend.

Content-driven e-commerce platforms are an excellent soil for cross-border merchants to establish their brands, as content, as a new dimension beyond the traditional shelf, inherently addresses the most valuable aspect of the e-commerce chain: conversion. Currently, TikTok Shop, the only content-driven e-commerce platform of significant scale, represents a "new species" of cross-border e-commerce that differs from traditional platforms.

Hard Work on Internal Capabilities

The strong conversion power of content-driven e-commerce aligns perfectly with promotional events. This could be an intrinsic reason why TikTok Shop chose to enter the U.S. market during its preparations for Black Friday last year. However, this does not mean that it intends to replicate the old path of other cross-border e-commerce platforms by blindly pursuing growth rates.

It is essential to understand that the supply side of content-driven e-commerce encompasses various dimensions: the content side demands the accumulation of high-quality content to drive product explosions and breakthroughs; as previously mentioned, the merchant side requires the accumulation of experience in managing the content field, particularly in account creation and investment, efficient collaboration with influencers, and even brand building through self-produced content.

This is why we can observe that over the past year, TikTok Shop has taken various measures tailored to its unique positioning in content-driven e-commerce, including platform governance, MCN development, and logistics system construction. This suggests that its current high growth rate is not the result of a hasty and extensive pursuit of growth but rather a steadily rising curve achieved through prudent efforts.

On the merchant side, we can see that TikTok Shop has frequently introduced adaptations and iterations tailored to domestic merchants over the past few months. For example, cross-border self-operated merchants who previously needed to achieve an annual GMV of $2 million and ensure local shipping to join TikTok Shop now face lower thresholds.

The lowering of thresholds for self-operated stores suggests that the platform intends to accelerate the entry of such merchants. Consequently, we can discern an important signal released by TikTok Shop: the self-operation model is likely to be one of its next strategic focuses.

When it comes to managing the content field, one of the most pressing pain points for cross-border merchants entering the U.S. market is localization. This year, TikTok Shop has undertaken numerous specialized adaptations to optimize rules for cross-border merchants to establish themselves in the U.S. content field, making it more suitable for domestic merchants.

As long as a cross-border merchant is certified by the platform, the thresholds for account operation, represented by account creation and investment, are lower than before. Platform certification itself serves as an identity verification system for Chinese merchants. All these efforts are essentially helping merchants accumulate knowledge and expertise to enter the U.S. market, fostering a stable influx of merchants.

Furthermore, TikTok Shop offers more direct solutions to challenges such as anchors, culture, and language that cross-border merchants are likely to encounter during the localization process: efficient collaboration with U.S. influencers.

One of the key differences between content-driven e-commerce and traditional shelf-based models lies in the diversity of traffic sources. Within the platform alone, there are four types of traffic: self-produced short videos, self-broadcasting, purchased influencer short videos, and influencer live streams. Given the undeniable cultural and geographical differences in self-operated models, the cost of collaborating with influencers is often lower than that of producing content in-house, which is vastly different from the domestic content-driven e-commerce ecosystem.

At a more fundamental level, the supply of overseas e-commerce content is far from being oversupplied, as it is domestically. As such, influencer traffic can effectively integrate branding and sales.

From the platform's perspective, facilitating collaboration between merchants and influencers has naturally become a necessity for TikTok Shop to strengthen its platform ecosystem. It is reported that since the third quarter of this year, TikTok Shop has successively launched official matchmaking activities to promote direct connections between merchants and influencers. For example, an offline meetup in Los Angeles in August attracted over 150 influencers, directly facilitating connections between over 50 merchant brands and influencers.

On the other hand, TikTok Shop has also rolled up its sleeves and directly entered the fray, launching over 50 officially operated PGC accounts to cater to the cold-start investment needs of newly joined merchants. As TikTok Shop's content ecosystem gradually matures, leading domestic MCN agencies such as Wuyou, Yaowang, and Taiyang Chuanhe have spontaneously ventured overseas to provide services such as influencer live streaming and store operation for merchants flocking to the platform.

It is worth noting that a "hidden asset" shared by all merchants is the link between brand exposure and product sales that TikTok Shop has gradually established through short video-driven sales over the past year.

Data from overseas consulting firm Earnest Analytics shows that 81.3% of TikTok Shop's sales in February this year came from returning customers. This intuitively demonstrates the platform's consumer loyalty, and repeat purchases are also helping the platform refine user labels and prepare for a more advanced content-driven e-commerce ecosystem.

As the Black Friday peak season approaches, TikTok Shop has further strengthened its logistics infrastructure.

TikTok Shop's FBT (TikTok Fulfillment) warehouse service covers five major regions in the U.S. (New England, Atlantic Coast, South, Midwest, and West), ensuring a three-day delivery network for Black Friday shoppers. Meanwhile, the GS logistics service operates with two warehouses in parallel, fully utilizing storage capacity to handle inventory peaks and pre-positioning personnel and vehicles to ensure peak shipping capabilities during Black Friday.

Creating a U.S. Model

TikTok Shop's steady progress over the past year and recent initiatives demonstrate its determination and resilience in establishing a foothold in the U.S. market.

As one of the most dynamic regions in the global market, the U.S. e-commerce market has always been a hotly contested battleground for platform competition. Even in 2024, when the e-commerce landscape is relatively mature, Digital Commerce 360 data shows that the U.S. e-commerce market set a new record high in the first quarter, with e-commerce sales accounting for 22.2% of total sales in the first quarter of 2024, an 8.5% year-on-year increase.

Moreover, as the birthplace of social media, the U.S. is naturally an excellent ground for the vigorous growth of content-driven e-commerce. Just recently, during the U.S.'s back-to-school season in August, TikTok Shop showcased the explosive power of content-driven e-commerce through promotional events.

According to TikTok Shop, during the promotional period, the number of newly published short videos increased by 11% month-on-month, and the GMV of the content field surged by 118%, becoming the primary driver of incremental growth during the promotion. For example, domestic renowned brand Pop Mart achieved a single-session GMV of $280,000 during its super live stream on August 9, significantly raising the cross-border brand live stream GMV record it had just set during the mid-year promotion by 188%.

The frequent breaking of GMV records and the continuous outbursts in the content field are but initial demonstrations of TikTok Shop's unique content-driven e-commerce potential in the U.S. market. Content-driven consumption decisions have a long history in the U.S., which is the birthplace of home shopping TV, with nearly half a century of history. Live streaming, in essence, is a "translation" of American consumers' TV shopping habits.

On the other hand, the U.S. social network and culture are more diverse, with consumers' preferences exhibiting pluralism, fragmentation, and tribalism. Influencers in the U.S. also wield stronger influence. Compared to other regions, U.S. influencers are better positioned to lead global consumption trends and have greater seeding and sales driving capabilities.

Especially since this year, as TikTok Shop's product categories have continued to expand, many merchants have found their TikTok Shop stores becoming their top 1 to top 3 GMV channels. The unique content potential in the U.S. market is beginning to provide explosive opportunities for more non-standard brands and less popular product categories.

Meoky, which specializes in kitchenware and joined TikTok Shop last year, is a typical example. As a lesser-known brand in the TikTok ecosystem, its initial sales were not impressive. However, no one anticipated that the brand would experience an explosion in sales during the 2023 Spring Festival.

According to Zheng Haoyong, the head of Meoky's TikTok Shop channel, a user who purchased the brand's 40-ounce car cup found it satisfactory and spontaneously helped promote and sell the product. Such "unintended" sales explosions and rapid market penetration and brand recognition may be the charm of content-driven e-commerce and the largest consumer market in the U.S.

As early as November last year, TikTok Shop US launched just two months ago and welcomed more than 5 million consumers during Black Friday. With the growth of the platform, new members of the "Ten Million Club" and "Hundred Million Club" have continued to emerge. Today, TikTok Shop's content e-commerce ecosystem and platform capabilities are becoming more mature, ready to accelerate growth together with merchants.

The upcoming Black Friday promises to reshape the cross-border e-commerce landscape, with TikTok Shop walking on two legs of content and shelves. Undeniably, it is on the eve of a full-scale explosion.