TikTok has put plans to expand its fast-growing e-commerce business in key European markets on hold, focusing instead on growth in the United States, where it is battling divestment and anti-divestment laws.
ByteDance's social media app has put on hold plans to roll out its shopping platform in Spain, Germany, Italy, France and Ireland as early as July, the people said. The company has also frozen plans to bring its Shops feature to Mexico and Brazil, one of the people said.
It's unclear whether or when ByteDance might restart the process, the people added, asking not to be identified discussing private information.
The move may come as a surprise to many retailers in the region, but it reflects ByteDance's aim to establish itself in the U.S. and prove its value to local retailers and consumers. ByteDance executives want to focus on its most lucrative market, with 170 million monthly users, and head off a possible U.S. ban that has made some retailers hesitant to sign up to new platforms, the people said.
TikTok Shops, which combines addictive video content with impulse shopping through visual fashion, is the app's fastest growing feature. The combination of eye-catching videos, popular influencers and authentic commerce helps differentiate it from rivals like Instagram and YouTube, and paves the way for it to take on Amazon.com.
TikTok's template is ByteDance's Douyin, currently one of the largest e-commerce platforms in China. Using that model, TikTok Shop found success in Southeast Asia before debuting in the US last year.
A TikTok spokesperson declined to comment on the paused rollout plans, saying the company is “responding to demand.” “We've seen the positive impact of TikTok Shops and are excited to continue experimenting with this new commerce opportunity,” the spokesperson said.
The company aims to grow its U.S. volume tenfold to $17.5 billion (16.1 billion euros) this year. Importantly, management recognizes that any major expansion into Europe could draw the same regulatory scrutiny as in the U.S., the people said.
It hasn't been all smooth sailing: TikTok Shop launched in the UK earlier this year to mixed reviews as Chinese exporters flooded the market with cheap goods, and TikTok has since relied on top local brands to help it enter the market.
In the United States, the bigger immediate threat comes from Washington: ByteDance sued in May over a bill signed by President Joe Biden that would have banned TikTok if its Chinese owners didn't sell it by Jan. 19, an ultimatum to address national security concerns.
ByteDance argues that a sale is “commercially, technically and legally not feasible.”
TikTok has in recent weeks ramped up subsidies and other incentives to jumpstart its U.S. e-commerce business, lowering the bar for creators who want to join its affiliate program from 5,000 to 1,000 followers. Affiliates can post videos promoting products sold in TikTok shops and receive commissions on sales.
Meanwhile, TikTok is facing EU investigations in France and Spain over whether a lighter version of the app could foster addiction. TikTok Lite promises to pay users cash through a points system for as long as they keep scrolling through content, a common marketing tactic in China.
