Buyers tighten their wallets, Temu, Shein pressing, Tiktok North America’s “Black Friday” backlash

“The approach of Double Eleven and Black Friday has brought e-commerce platforms into a fierce battle. Domestically, platforms and anchors are in a war of words over pricing power; overseas, e-commerce platforms are in a price war over users who have yet to form a loyalty.

As the world’s second largest e-commerce market in the United States, it is the place where overseas e-commerce platforms must fight. Amazon occupies nearly 40% of the U.S. e-commerce market, SHEIN, Temu, such as emerging e-commerce platforms are growing rapidly, Black Friday is an important breakthrough.

Temu, for example, last year during the Black Friday, Temu launched the first single 70% off, spike activities, free shipping returns within 90 days, and other activities, many times on the Apple App Store downloads topped the list. 36 Krypton previously reported that this year’s third quarter, Temu’s sales have exceeded 5 billion U.S. dollars, the United States contributes to the majority of the results, with a sales share of 60%.

This year, the number of companies that want to get a share of the U.S. e-commerce market has increased by one. In mid-September, TikTok officially launched its e-commerce service, TikTok Shop, in the U.S. TikTok e-commerce has said that 200,000 merchants have been stationed in the U.S. during the testing phase.

Undoubtedly, with TikTok entering the U.S. e-commerce market, e-commerce platforms during the Black Friday competition will be particularly fierce.

On the other hand, unlike the domestic “Double Eleven” to online consumption, for U.S. consumers, the traditional brick-and-mortar stores accounted for the majority of the entire holiday shopping season. Last year, the National Retail Federation (NRF) predicted that 67% of Black Friday consumers will choose to go to the physical store to buy.

For e-commerce platforms, the competition is not only other e-commerce platforms, but also millions of physical retail stores in the United States.

All parties involved will spare no expense for this “Black Friday”, but under high inflation, the cake is getting smaller. TikTok, which has just entered the U.S. market, will face a more difficult situation.


High inflation affects consumer confidence

High inflation is still plaguing the average U.S. consumer, potentially casting a haze over the Black Friday shopping spree.

Data show that the United States in October, the University of Michigan consumer confidence index preliminary value of September fell sharply by 5.1 percentage points, the largest one-month drop since June 2022.

Consumer concern about fuel and grocery costs increased again, with about 49% of consumers saying that high prices are eroding their standard of living, a percentage that was significantly higher than September’s 39% and comparable to July 2022’s record high.

In addition, the U.S. job market maintains a cooling trend. the resident labor force participation rate and unemployment rate in September remained high for the year, pointing to a recovery in the supply side of labor force employment. at the same time, year-on-year hourly wage growth in September fell back to 4.2% from the previous value of 4.3%, and the decline in wage growth will constrain the willingness to consume by U.S. residents. the escalation of the Israeli-Palestinian conflict since October and the international oil price upward once again triggered inflationary concerns that weighed on consumer sentiment.

Record high inflation is likely to change the direction of consumer shopping, from last year’s U.S. Black Friday changes may also be able to peep into this year’s Black Friday may be the new trend.

Adobe Analytics, a well-known data analytics platform, found that despite concerns about the economic situation last year, shopping season sales on Black Friday ‘22 (Black Friday) reached a record-breaking $9.12 billion, slightly higher than the average of $8.975 billion in sales in the previous two years. However, part of the increase in sales was also based on inflation, with people paying more amounts but buying fewer items than they otherwise would have.

Black Friday discounts have also gotten bigger over the last year.Salesforce Inc. found that the average discount on Black Friday in 2022 will be more than 30 percent, up from 28 percent in 2021 and close to 33 percent in 2019.

McKinsey tracked U.S. consumers in the first half of this year and found that consumers are looking to downgrade their spending. 80% of respondents said they are changing their shopping behavior and downgrading their spending by looking for affordable alternatives. The most common way to do this is to change the quantities and sizes of purchases, or to buy in smaller quantities than they were previously willing to stock up on wholesale goods. The same is true for high-income consumers; while the ability to spend power capacity has not changed, the mindset of consumption has changed compared to 2021, with fears of inflation causing this group of consumers to abandon expensive brands in favor of affordable alternatives, but the total amount of consumption is still higher than it was before the epidemic.

The data on all fronts means that Black Friday in the US in 2023 may have to offer lower prices, more items, and a more involutional playing field for e-commerce platforms.

TikTok chose to enter the e-commerce market at this time, it is difficult to say that the timing is appropriate, but there is definitely a sense of urgency that has to be.


Lost Indonesia to grasp the United States

Throughout the history of the development of byte jumping, this is an extremely good at commercial realization of the Internet company, most of its APP will be operated for two years after the road to self-blood commercialization of cash.

TikTok is the exception. According to data from TheInformation, ByteDance (parent company of Jitterbit) has revenues of more than $80 billion in 2022, and as a comparison, Sensor Tower reports data showing that TikTok’s global revenue in 2022 will be about $3.5 billion. Among them, advertising is the most important source of revenue for TikTok.

In addition to advertising revenue, reward and e-commerce are the other two paths to cash for TikTok, with the e-commerce business, which has the most potential for realizing cash, developing particularly stuttering globally.

TikTok has undoubtedly become one of the world’s head social media, but there is a large gap between commercialization revenue and competitors. At the same time, as both domestic and overseas Internet markets have faced bottlenecks in recent years due to the industry’s slowing growth rate, they have also initiated a number of cost-cutting and efficiency-enhancing tactics. This makes the importance of TikTok’s own commercialization strategy and self-breeding ability become very tight.

In Indonesia, where TikTok had high hopes, TikTok suffered another blow. from September 27, the social media platform in Indonesia prohibited direct commodity transactions. tikTok had to shut down its e-commerce business in Indonesia.

The Southeast Asian market is the most mature market for TikTok’s e-commerce business, with the Indonesian market being the most important.

Tichoo data show that in the first half of 22 TikTok Shop GMV 91% or more is contributed by the Indonesian region, while the UK region GMV accounted for less than 7%, the e-commerce business of other countries in Southeast Asia by the 22 years to open up one after another, so each country in 2022 GMV accounted for less than 1%.

It has no choice but to accept the policy requirement to shut down its Indonesian e-commerce business, but it is impossible for TikTok not to be anxious. The U.S. e-commerce market has become its new bet, and Black Friday sales will be particularly important. According to reports, in order to attract merchants to participate in the October 27 to November 30 Black Friday, TikTok Shop will provide sellers with discount subsidies of up to 50%.

At the same time as the closure of the Indonesian TikTok e-commerce, TikTok also announced that the TikTok U.S. Shop will be open to Chinese merchants, inviting domestic merchants with experience in Amazon operations and annual sales of not less than 2 million U.S. dollars to move in.

TikTok’s U.S. e-commerce business is known to have recruited employees with supply chain and logistics experience, including executives from Amazon and eBay. Its U.S. team has grown to more than 300 people.TikTok is spending heavily on building out its logistics operations in an attempt to attract third-party sellers by offering a larger share of sales than Amazon.

Tik Tok’s current share of North American e-commerce is still small, and they will have to come up with a sincere enough policy to change the landscape. Since TikTok opened its e-commerce service in September, TikTok e-commerce is currently selling about $7 million worth of products, such as combs, teeth whitening tools, and fall-themed sweatshirts emblazoned with leaves and pumpkins on a daily basis in the U.S., and is aiming to reach $10 million in daily sales by the end of the year, according to foreign media reports. Last year, Amazon’s global online store sales - a measure of Amazon’s direct product sales - averaged about $603 million per day.

It is worth noting that the social type of e-commerce model is not well penetrated in Europe and the United States. According to Coresight Research, 74% of Chinese consumers have placed an order in a live stream in 2022, while in the US, another 78% have not been in a live shopping room.

There are foreign media reports that some TikTok insiders believe that TikTok Shop U.K. is considered a failure.TikTok is now trying to revitalize the U.K.-based business with new features and more reliable vendors.

In the social media space, TikTok has created a one-of-a-kind growth miracle, then in the e-commerce space, it faces hyperinflationary market conditions, tense geopolitics, and intense peer-to-peer battles.Whether or not TikTok will be able to replicate Black Friday’s miracle sales growth, as Temu has done, is still unknown.