TikTok’s Shop marketplace, the video app’s biggest bet for new revenue growth, has gone live to some users in the United States. So far it’s a showcase for cheap stuff from China.
According to an early version of the Bloomberg review, the social media app’s “Shop” option, which is prominently displayed between the “For You” and “Following” feeds, where users can watch videos, presents a never-ending stream of “Recommended” random The product scroll, from the $2.99 Nike jersey knockoff that popped up is a $6.99 “Naughty Dwarf” figurine sitting on a toilet. Many of the items, including budget planners and waist-training vests, said they were shipped from China, where TikTok’s parent company, ByteDance Ltd., is based. Handing over user data to Chinese sellers could reignite concerns among U.S. regulators.
According to Bloomberg, TikTok Shop will compete with Amazon this year with a goal of selling $20 billion in merchandise. The effort is being discussed internally as a “community commerce” effort, meaning it aims to leverage the app’s potential to bring people together through their niche interests, according to a person familiar with the matter. But early versions of the experience showed no evidence of the hyper-personalization algorithms TikTok is known for in its video streams, the key to TikTok’s success in grabbing users’ attention.
Instead, Shop faces the same free marketplace problem as Amazon. The categories and subcategories of products are filled with an overwhelming selection: the home and kitchen section showcases a 37-cent mini car trash can next to a $16 four-foot computer desk and an $8.43 three-piece polyester set Satin sheet set. Misspelling brand names and unbelievable prices on many items raise red flags for potential counterfeit sales.
TikTok did not immediately respond to a request for comment.
Marketplace Highlights Prices – Prices are very low and listed in large print. Coupons and free shipping offers are highlighted in red and green, respectively. TikTok creates a sense of urgency by listing the number of sales for that product next to it, along with a countdown clock showing the time, minutes, and seconds remaining for the sale.
No brands are listed until you click on a product. Most product names seem to be a better fit for search engines and algorithms than human shoppers. For example, one of the listings advertises “Women’s 3-Pack High Waist Workout Shorts Hip Lifting Tummy Control Pleasant Butt Smile Yoga Shorts”.
The section that stands out the most is “Today’s Deals”. The No. 1 promotional product seen by Bloomberg was a snail mucin-based facial serum that recently went viral on the app: Advanced Snail 96 Mucin Power Serum from the COSRX brand. The seller, FIFTHLINYOUNG-4, advertises the serum for $7.99, down from $39, but neither figure matches the $25 price the COSRX brand offers on its website. The TikTok seller also stated that the product was made in China, while the COSRX product stated on the packaging that it was made in Korea.
“Honey, yes this is genuine,” the seller said in a message on TikTok. “The new store offers discounts during the event.” The seller did not answer questions about why the product said it was made in China. CORSX did not immediately respond to a request for comment.
Snail mucin is also the only skin care product listed on FIFTHLINYOUNG-4. Other items in the store include drones that sell for $88 down from $999, a listing featuring photos of the internet’s most popular Stanley tumblers without listing the brand name in the title or description, and A LED teeth whitening kit with photo. Does not match a brand name in the listing.
In June, a person familiar with the company’s U.S. store strategy said the company was focusing on U.S. sellers. That strategy appears to have changed. A quick search revealed that some Chinese brands on the TikTok Shop had been removed by Amazon for faking customer reviews. Guangdong SACA Precision Manufacturing was removed from the shelves by the e-commerce giant in June 2021. Products from its brands Taotronics and VAVA are currently available for purchase on TikTok. The same is true for the popular headphone brand Mpow, whose parent company Shenzhen Qianhai Patozun Network Technology Co., Ltd. was also removed from Amazon.
In the terms that users can click before checking out, TikTok stated, “We make no representations, warranties or warranties, express or implied, as to the accuracy, completeness or up-to-dateness of any content on TikTok Shop. We cannot view or control the content available on or through such sites or resources, and you acknowledge and agree that we are not responsible for any such content.”
When a user checks out from the Shop tab, they can make simultaneous purchases from multiple sellers in the same checkout. According to Bloomberg, TikTok is processing payments through its app, which means the company will also collect other information about users, including bank card details, billing addresses and shipping addresses.
That could ultimately lead to additional regulatory scrutiny for the company. TikTok has come under pressure from federal, state and local governments over its data privacy practices. The app’s Chinese ownership has raised national security concerns about whether Americans could be tracked or influenced on the app. The company said it was working to segregate sensitive data from U.S. users so that only employees in the U.S. can access it.
Lawmakers were particularly sensitive to whether the app collected user location data. Ahead of Shop’s launch, the company said it had updated its app to no longer collect exact or approximate GPS data, only approximate location information.
But Shop appears to have opened up some user data to sellers. In TikTok’s buyer policy, the company says, “Sellers are the independent controllers of the data they collect about you through the TikTok Shop, and TikTok is not responsible for their compliance with applicable laws.”