"Many platforms sell shoes with similar designs to ours, but with inferior materials and craftsmanship. Consumers only see the lower prices, forcing us to compete on price," said a representative from Reebok, a company that originated in Jinjiang, known as the 'Shoe Capital.' To escape this low-price trap, Reebok decided to expand globally a few years ago.

In August 2023, Reebok joined TikTok Shop's fully managed service and quickly penetrated the US market with its unique 'dopamine' colored knitted shoes. Its average order value reached $12-16, positioning it as a mid-to-high-end option within its product category. Within just six months, Reebok's GMV experienced exponential growth, surging from an average daily sales of less than $2,000 in January 2024 to $52,000 by August.

"It's hard to believe that TikTok Shop has already accounted for half of our online sales in such a short time," said Li Hanxiao, head of Reebok's TikTok Shop channel products. He recalled that during the initial stages of their partnership, a single short video collaboration with an influencer generated $10,000 in sales in a single day, and a collaboration with another influencer who had fewer than 10,000 followers resulted in a GMV of $160,000.

(TikTok influencer promoting Reebok products through short videos)

This demonstrated the explosive sales potential of content-driven e-commerce. Currently, Reebok's monthly sales peak at 120,000 pairs, surpassing the combined sales of other similar products. Notably, nearly 90% of these sales are driven by short videos, with content-driven GMV accounting for 60% of the total.

Reebok's story is just a microcosm of TikTok Shop's fully managed merchants.

In China, numerous merchants with mature supply chains struggle with market saturation and limited profit margins in the domestic market. By leveraging TikTok Shop's fully managed service, these merchants have taken their first steps into global markets, leveraging content-driven e-commerce to achieve record sales and generate more profitable margins.

I. Rejecting Price Wars, Pursuing Higher Average Order Values

The rapid development of the fully managed model over the past two years has been a crucial period for merchants to accelerate their global expansion plans.

Most merchants find that competing globally is less intense than in the domestic market. "European and American customers are generally less price-sensitive, although some may still be, but we're far from reaching a stage of true low-price competition," said one merchant.

However, consumers' lack of sensitivity doesn't mean that cross-border e-commerce platforms aren't prone to low-price competition. Even overseas, most shelf-based e-commerce platforms prioritize price as their core competitive advantage, leading to thin margins for fully managed merchants.

In a sense, cross-border e-commerce is undergoing a rapid transformation. While overseas markets still offer ample opportunities, competition has intensified. On the one hand, merchants who initially relied on low prices to gain traction are realizing that this is not a sustainable strategy and are seeking to normalize prices. On the other hand, overseas consumers are more willing to pay for unique and high-quality products, enabling merchants to escape the 'low-price spiral' and rely on solid demand.

Jiachengcheng, a company specializing in walkie-talkies, has been in the cross-border e-commerce space since 2007 but has recently faced intense homogenization competition.

"Too many similar products in the market have led to fierce price competition, forcing us to invest heavily in advertising, yet conversion rates remain low, failing to deliver the expected customer growth," said a representative from Jiachengcheng. For this 17-year veteran in cross-border e-commerce, this has become a significant bottleneck.

MAANGE faces similar challenges, including not just homogenization but also rising operational costs.

Initially focused on supplying cross-border merchants through 1688, MAANGE later ventured into direct sales and achieved top rankings in the cosmetic brush category on a major cross-border e-commerce platform during its heyday. However, recent years have seen escalating operational costs and an influx of imitation products, squeezing profits.

As larger merchants grapple with increasing competition, smaller and medium-sized merchants are also feeling the pinch. They argue that popular categories on shelf-based e-commerce platforms are dominated by leading merchants, necessitating a search for new growth opportunities in the increasingly crowded cross-border e-commerce landscape.

"Many categories are already monopolized, with intense competition among merchants, turning the market into a red ocean," said He Penghui, founder of Yiwu Yongge Trading Co., Ltd., who has been involved in cross-border e-commerce for five years but has recently felt increasing pressure from rising logistics, warehousing, and advertising costs, leading to diminishing returns on investment.

All these factors ultimately point to a trend of low-price competition among overseas shelf-based e-commerce platforms, with diminishing profits as a result. According to Cross-border E-commerce Data, 59% of sellers reported declining profits in 2023.

The era of pursuing thin margins and high volumes is becoming a thing of the past. Merchants urgently need a new blue ocean market to escape low-price competition and increase profit margins by selling higher-priced products.

Higher average order values require products that are appealing, making consumers feel intrigued, worthy of trying, and demanding a different marketing approach that leverages engaging content to attract and inspire purchases.

Like Reebok, which differentiates itself from other platforms by offering colorful 'dopamine' knitted shoes on TikTok Shop, commanding higher prices; Jiachengcheng introduces more functional walkie-talkie products on TikTok Shop, using short videos to grab consumers' attention and drive conversions; MAANGE continuously upgrades its products on TikTok Shop, with average order values rising from $6 to over $20, sustaining sales growth despite price increases.

(Reebok's knitted shoes)

As cross-border e-commerce becomes increasingly competitive, a group of merchants has found success in selling higher-priced products through content-driven e-commerce.

II. Content Fuels Sales: A Single Grassroots Short Video Drives 2,000 Orders

Fully managed merchants have experienced the power of content in igniting sales and realized TikTok's immense potential: A single viral short video can generate massive traffic in a short time, attracting high-intent buyers interested in the product, thereby revitalizing and boosting sales for an entire store.

A fragrance brand once experienced a surge in sales after a beauty influencer reviewed its products in a short video, selling over 2,000 bottles of perfume in a single day. The brand's marketing manager shared that these influencers can be incredibly valuable. "When they find your content and products appealing, they'll spontaneously promote them, generating hundreds of sales each month from unaffiliated influencers," they said.

This is the magic of content-driven e-commerce.

Regardless of location, consumers worldwide rely on authentic user experiences and emotional resonance when making purchasing decisions, making this a crucial aspect of the shopping journey.

In the US, TikTok has revolutionized how Generation Z discovers products. A recent HerCampus study found that 74% of Gen Z users leverage TikTok for product searches, with over half preferring TikTok over traditional search engines like Google.

TikTok has also transformed consumer behavior. A doctoral student at the University of Michigan studying the impact of advertising and social media on young people found that "when advertising messages are combined with enjoyable, beneficial, and engaging content, they elicit emotional responses from consumers, often occurring unconsciously." This emotional connection significantly reduces friction in the purchase decision-making process.

As a result, following influencers and live streamers to discover and buy products has become a global trend. Over the past year, TikTok Shop's content-driven GMV has surged by 557%.

He Penghui, founder of Yiwu Yongge Trading Co., Ltd., capitalized on the benefits of content-driven e-commerce, achieving rapid growth. In October last year, He began selling wearable blankets on TikTok Shop, with an average order value of $20-30. By participating in the platform's new product cold start program, he received traffic, subsidies, and resource support.

(Yiwu Yongge's wearable blankets)

After initial sales momentum, Yiwu Yongge's wearable blankets were selected by a domestic MCN agency through a product selection event facilitated by TikTok Shop's merchant recruiters. With platform traffic support during Black Friday, the first live stream resulted in a mini-explosion of sales. Subsequent short videos and live streams by more influencers and MCN agencies further fueled continuous sales growth.

Looking ahead, Yiwu Yongge plans to deepen its presence on TikTok Shop, focusing on short video content creation and establishing a live studio in the US. The reason is the sense of control offered by content-driven e-commerce.

He Penghui closely monitors daily sales and conversion data. "If I see a decline in sales for a particular link, I'll ramp up short videos or live streaming resources to immediately boost sales. Once sales stabilize, I'll ease off. If they decline again, I'll ramp up again," he said, adding that this approach gives him a sense of security that was previously lacking when sales declined on other platforms.

In pursuit of this 'sense of control,' some fully managed merchants have even begun producing their short videos and actively engaging with influencers.

In the past, MAANGE relied on TikTok Shop's merchant recruiters to operate and promote its products, typically igniting sales for a product within two months. Recognizing the explosive power of content, MAANGE decided in May this year to independently engage domestic MCN agencies, produce short videos, and actively invest in advertising to accelerate product launches. As a result, product launches have become significantly faster, often resulting in immediate sales explosions, with peak days generating thousands of orders.

(MAANGE cosmetic brushes)

Shelf-based e-commerce users have a clear purpose and follow a straightforward consumption decision path: 'need - search - purchase.' Whether a product sells depends heavily on pricing and platform traffic, leaving limited options for merchants when sales decline.

In contrast, content-driven e-commerce users first become interested in the content before developing a purchasing desire, following a 'content - engagement - purchase' decision path. This approach enables TikTok Shop to cover the entire user lifecycle from discovery to marketing to conversion, giving merchants more agency to reactivate product links during traffic declines by collaborating with influencers, releasing short videos, and hosting live streams to boost sales.

III. Creating New Growth Opportunities and Ending the Guesswork

Over the past two years, cross-border e-commerce platforms have leveraged the fully managed model to connect factories directly with overseas consumers, capturing merchants from industrial clusters.

In February this year, TikTok Shop's cross-border e-commerce arm officially launched the 'Industrial Cluster 100' program, aiming to engage with over 100 industrial clusters in 2024 and help merchants create over 10,000 global best-sellers. To date, the program has already reached over 80 industrial clusters and continues to expand.

Most fully managed merchants from industrial clusters lack insight into overseas markets and consumer preferences, making it challenging to accurately and timely capture overseas demand.

Even seasoned sellers face an adjustment and adaptation period when entering a new market.

The fragrance brand mentioned earlier entered the UK and US markets through the fully managed model, bringing popular products from other markets. However, they discovered that UK and US consumers preferred high-end products with sophisticated fragrances. Fortunately, many users communicated their preferences directly with live streamers and influencers, enabling the brand to develop new products tailored to the UK and US markets, ultimately leading to sales explosions.

"UK and US influencers use fragrances frequently and are knowledgeable about perfumes, understanding what scents their fellow countrymen prefer. They've provided us with many great ideas," said the brand's marketing manager. The brand aims to expand globally alongside TikTok Shop, recognizing that understanding each country's and ethnicity's fragrance preferences would be challenging without direct communication with influencers. Currently, the brand has established a production process involving influencer feedback, sampling, testing, and product launches.

Jiachengcheng draws inspiration for new product development from short video users. Its founder believes that traditional shelf-based e-commerce platforms limit direct customer engagement to product reviews, whereas short videos facilitate more intuitive communication about functional requirements and pain points. Jiachengcheng upgrades its software based on TikTok Shop user needs.

Furthermore, TikTok Shop provides merchants with data insights and guidance to sell products aligned with consumer trends. For example, MAANGE's path to success was shaped by merchant recruiters' advice on combining 'best-selling + best-selling' products.

"Merchant recruiters tell us which products and price ranges sell well, and we use that information to create new combinations," said Wu Xuying from MAANGE. For instance, combining makeup brushes with powder puffs created a new best-seller with a higher average order value, selling tens of thousands of units per month.

(MAANGE cosmetic brushes)

Moreover, managing the exponential increase in production demand during sales surges is a significant challenge for cross-border merchants.

To better prepare for sales surges, Lingfeng, a women's apparel merchant that has created million-dollar best-sellers, expanded its outsourcing factories and upgraded factory management under TikTok Shop's guidance, establishing a reasonable replenishment schedule. This enabled Lingfeng to quickly adjust its replenishment strategy, ensuring sufficient product supply and effectively meeting high market demand.

As a fully managed merchant on TikTok Shop, merchants benefit from the platform's data analysis and direct feedback from influencers and consumers, enabling them to capture market trends promptly. Meanwhile, content continuously propels more products to stand out, continuously creating engaging shopping scenarios for users. With these two factors, merchants can achieve short-term growth spurts and sustain long-term operations.

"The content-driven e-commerce offered by TikTok Shop is still in its blue ocean stage, helping merchants quickly establish consumer awareness and achieve breakthroughs through influencer promotions and live streaming," said many merchants since joining TikTok Shop.

Foreign media has tracked and analyzed the sales of a vitamin D3+K2 supplement brand for nearly a year, and they found that after the brand's product video went viral on TikTok this year, in addition to driving a surge in sales on TikTok Shop, Amazon's sales were 4-5 times higher than last year's sales every month, and the overall market share also increased to the first place.

Therefore, it is not difficult to understand why many businesses are gradually shifting their operational focus to TikTok and using TikTok Shop as the center to cover other cross-border e-commerce platforms. They believe that this is the best time to enter and develop TikTok Shop.