TikTok and Amazon Bet on China’s Ecommerce Model. It’s a Dud
The pandemic sent the livestream sales industry into overdrive. The Chinese government’s strict “zero Covid” policies hit the brick-and-mortar retail industry hard. Stuck at home, sales assistants and business owners started to sell online, joined by celebrities, athletes, even government officials. Asset management company CINDA Securities estimates that the livestreaming market was worth 2.84 trillion yuan ($42.3 billion) by the end of 2022.
Livestreaming wasn’t just something that ecommerce companies did—social media companies saw it as a way to monetize their platforms. Among them was Douyin, the Chinese version of TikTok, which began cooperating with Taobao in March 2018 to test a shopping cart function for celebrity accounts with more than 1 million followers. By December, the function was rolled out to all authenticated accounts with more than 8,000 followers.
After TikTok took off in Western countries, the company tried to export the livestreaming sales model too. The company launched TikTok Shop in the UK in August 2021, allowing merchants, brands, and creators to display and sell products directly on TikTok.
Jiang was among the first batch of influencers invited by TikTok to test out the TikTok Shop function. She was able to find multiple brands that were interested in the UK market. She invited her friends to be influencers while she handled the administrative part. They livestreamed nonstop for a month, broadcasting around three hours per day.
The results weren’t encouraging. One of the products she was selling was sportswear, on behalf of a Chinese brand that wanted to target young women aged from 20 to 30, “but a lot of the audience our session attracted were 50- to 60-year-old men, wanting to see influencers trying tight sportswear,” she says. “I don’t think they have figured out the algorithm to bring the right demographic to your streaming.”
TikTok didn’t respond to a request for comment.
In July 2022, the Financial Times reported that TikTok had abandoned its plans to expand TikTok Shop to Europe and the US. Four months later, however, the company began to test its shopping function in the US, offering brands a built-in payment system that means customers can buy products without leaving the platform. In July 2022, YouTube announced it would expand its live shopping partnership with the ecommerce platform Shopify.
“For years, everyone has watched the China live-selling business absolutely explode,” Michelle Goad, operating partner of investment firm TCG says. “I believe the platforms felt the feature had been de-risked enough through watching some of these startups consistently grow to finally put their hats in the ring.”
Meta also experimented with live shopping on Facebook and Instagram, but it has since quietly shelved livestream ecommerce functions on both services.
Amazon launched its Amazon Live platform in 2019. In 2021 and 2022, the company ran livestreaming events for its Prime Day sales events, featuring cameos from celebrities, including comedian Kevin Hart and Australian model Miranda Kerr. The company says it’s happy with the platform’s growth.
“I believe video shopping is the future of retail. It’s still early for us, but we’re inspired by the excitement we’ve seen from creators, brands, and customers,” Wayne Purboo, vice president of Amazon Shoppable Video, said in an emailed statement. Purbook said that streams on Prime Day in 2022 clocked more than 100 million views, with the top stream peaking at 57,000 concurrent viewers.
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