Business

TikTok’s $17.5 Billion plan to take on Amazon in ecommerce

By Jake Beardslee · January 4, 2024

TikTok is aggressively expanding into ecommerce in a bid to challenge Amazon on its home turf. According to Bloomberg, the popular short-form video app aims to grow its U.S. shopping business to as much as $17.5 billion in 2024, a massive tenfold increase.

Internal discussions at TikTok’s parent company ByteDance have centered around this ambitious 2024 target for TikTok Shop, the platform’s integrated shopping feature that allows users to buy products directly within the app. While the goal could change depending on TikTok Shop’s performance, it signals TikTok’s serious intent to take on behemoths like Amazon in U.S. online retail.

TikTok, which surpassed 1 billion global monthly active users last year, has quickly evolved beyond just an advertising platform. Ecommerce represents the company’s next big frontier for revenue growth by leveraging its vast user base and addictive short videos to drive product discovery and sales.

The app already has a thriving ecommerce business in China, but international expansion has been slower. The U.S. is seen as a key market for TikTok to crack ecommerce at scale and reduce reliance on ads. To accelerate growth, TikTok has been courting sellers, recruiting U.S. engineers, and even poaching staff from Amazon.

However, competing with Amazon on its home turf will be an enormous challenge. Amazon currently captures nearly 40% of U.S. online sales and its Prime membership model has created strong user loyalty. While TikTok has tremendous reach among young consumers, converting entertainment-focused users into buyers will require major changes.

Nonetheless, TikTok’s push into social commerce taps into booming consumer demand, especially among younger demographics, for a more interactive, video-based shopping experience. With TikTok now setting its sights on taking a chunk of Amazon’s market share, the battle for the future of ecommerce just got more intense.