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AmextaFinance > News > TikTok reshapes ecommerce unit in bid to crack western markets
News

TikTok reshapes ecommerce unit in bid to crack western markets

News Room
Last updated: 2023/05/23 at 2:26 AM
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TikTok has restructured its ecommerce business in an effort to refocus on markets such as the UK and the US, as the Chinese-owned group struggles to export its livestream shopping model outside its home country.

Staff in Brazil working on launching TikTok Shop, the social media group’s in-app marketplace, in that country are being relocated to markets where the service has already been introduced such as the UK, US and south-east Asia, according to people familiar with the restructuring.

Those who had been working on bringing the service to Spain are being moved to London amid a broader reshuffle of executive positions at the top of the European business, these people said.

A pause on expansion in Europe is echoed by a slowdown of a full rollout of the feature to sellers in the US, according to people familiar with the business. TikTok said it had not finalised any launch plans or dates for the feature outside of existing markets.

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

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

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

TikTok’s change of strategy led to the restructuring of its European ecommerce operations in mid-April, according to those with knowledge of the move. All staff working in Spain were told they could not remain there and would need to relocate to London, where they would be offered two flights home a month, as well as six months of rent payments in their new homes, these people added.

Joe Jiao, former head of ecommerce in Spain, has recently been promoted to running ecommerce in the UK for small businesses. He has worked for ByteDance since 2017, according to his LinkedIn profile.

These moves represent the latest of several changes undergone at TikTok’s London office since 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 TikTok Shop in Europe, stepped down from his role after it was revealed he told staff that he “didn’t believe” in maternity leave but remains at the company.

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

TikTok said servicing key accounts and small businesses required different approaches, so it made sense to have dedicated leaders for both areas as the product grew. Nommensen continued to have oversight of overall UK operations, it added.

Ecommerce employees 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 the project, while other departments have more flexible working situations.

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

ByteDance, TikTok’s parent, hopes to turn social commerce into a big moneymaker in western markets, as the model has proved lucrative on its sister app Douyin, which has sold more than 10bn products. ByteDance’s earnings before interest, tax, depreciation and amortisation surged 79 per cent to about $25bn in 2022, according to two investors briefed on the numbers.

In particular, live shopping, where users can buy products from sellers during a live broadcast and which is a hugely popular format in Asia, appears to be failing to resonate with western consumers.

The majority of revenues made from TikTok Shop in the UK are derived from uploaded recorded videos that link certain products, rather than livestreams selling items, according to multiple people familiar with the matter.

Two of the people said the feature was estimated to generate £20mn a quarter in sales in the UK. TikTok said the figure was higher without specifying further.

Full access to US sellers, where they can sign up without a TikTok employee manually assisting them, was meant to start at the beginning of this year, according to three people familiar with the plans. Timelines have been pushed back until June at the earliest due to failing to get enough small local US businesses on board, these people added.

The appearance of TikTok’s chief executive Shou Zi Chew before the US Congress in March, as well as discussions by lawmakers over whether to ban the app, have also played a role in the slowdown, they said.

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

The company added that it had not finalised any launch plans or dates for TikTok Shop outside of the UK, US and south-east Asia “while continuing to evaluate opportunities for further international expansion”.

Additional reporting by Hannah Murphy in San Francisco

Read the full article here

News Room May 23, 2023 May 23, 2023
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