Breakthrough! TikTok's North American E-commerce Impact Reaches $17.5 Billion! Three Sheep and Dongfang Zhenxuan Make Their Mark

By Miao Yue

Editor: He Yang

[Ebrun Original] "One day on TikTok is equivalent to one year on Amazon!"

Jason was one of the first sellers to join the TikTok Shop North American e-commerce platform. In just a few months, his company achieved sales of 200-300 million US dollars on TikTok, with its subsidiary store Sweet Furniture firmly securing the top position in the furniture category.

He expressed his excitement to Ebrun Power about the "thrill" of doing business on TikTok at this stage: He had prepared 100 days' worth of inventory, only to sell out in three days on TikTok.

There are many sellers like Jason who have reaped the first wave of benefits from the TikTok Shop in North America. Since the full opening of the U.S. site in September last year, the TikTok Shop has become a new hot spot for cross-border sellers. "All kinds of official groups are full, and everyone is queuing for inquiries and settlements. It feels like doing Amazon in 2020," said clothing seller Steven.

Although TikTok e-commerce has gradually been launched on multiple country sites since 2021, it seems that sellers have not shown such unprecedented enthusiasm and interest until now. At large-scale industry forums and summits with TikTok as the theme, sellers crowded the venue, studying TikTok's latest development trends and practical methodologies in corridors and aisles.

Dyson, the oversea's head of the intelligent beauty device brand AMIRO, explained the reasons why many domestic consumer brands are flocking to TikTok: Firstly, the continuous internal consumption and weakness in the domestic market have forced everyone to accelerate their overseas expansion plans. Secondly, after TikTok Shop updated its user database in September last year, a large amount of brand product sales test data proved to be ideal, establishing a clear path to monetization. Thirdly, with the platform setting a target of 50 billion U.S. dollars in GMV by 2024, with North America expanding to 175 billion U.S. dollars, it will undoubtedly unleash even greater dividends. Merchants who take advantage of this trend will reap the rewards.

It's not just sellers; various institutions and service providers are also turning their attention to TikTok.

For example, the domestic leading live streaming agency Three Sheep, after several months of exploration, made a successful foray in January this year into becoming the top spot in TikTok Singapore's live streaming e-commerce and building a fan base of 2 million, and is now opening up new sites; Dongfang Zhenxuan was also reported to have posted multiple TikTok-related positions on recruitment websites in preparation for the coming "battle."

The influx of entrepreneurs believe that if they miss this wave, the cost of entry in the future will be higher—expensive advertising costs, influencer promotion costs, commission rates, more intense competition in product selection and content creativity, as well as higher entry barriers, and more complicated supply chain and resource matching.

However, the cyclical nature of platform development means that entering too early may become an experiment and "leeks", while entering too late may mean missing the crucial dividend period. Therefore, mastering the timing and rhythm is key in this "beach landing" battle.

01

The Curvy Rise of TikTok's E-commerce in North America

TikTok's North American e-commerce business has gone through roughly four stages over the past three years:

The first stage, in 2020, TikTok initially attempted short video content-driven sales and live streaming sales through the "semi-closed-loop small store" model (i.e., driving traffic through TikTok and completing orders on an independent Shopify site);

The second stage, from early 2023 to mid-yeat, TikTok Shop introduced the "full hosting" mode for cross-border business, gradually launching the "local store" model, and closed the small yellow car feature of the "semi-closed-loop store" and no longer supported external link traffic;

The third stage, since September 2023, TikTok Shop opened the North American "ACCU store model" (for U.S.-registered companies with over 25% of Chinese nationals, U.S. stocking, and a single category's GMV on Amazon U.S. site exceeds $2 million) , this move immediately ignited the supply side;

The fourth stage, in 2024, TikTok set a goal of achieving 500 billion U.S. dollars in e-commerce GMV, with plans to expand the North American market tenfold from the previous year, while continuing to expand into Europe, South America, the Middle East, and other markets, becoming a strategic overseas channel for more merchants.

Jason has witnessed TikTok's explosion since September 2013. "The first batch of cross-border sellers we joined had their own warehouses and overseas stocking. From inviting merchants starting in June to the first wave of promotions in October, the entire market was suddenly energized. Sales skyrocketed, and the scale of leading sellers increased by 5-10 times. During 'Black Five', daily GMV reached an amazing $33 million, and we contributed millions of dollars in sales ourselves."

Although they had long known about the great potential of the U.S. market, the achievement of TikTok Shop's performance by the end of 2023 was still described as "not easy" by a senior TikTok player. "From the 'uncertainty' haze before and after TikTok CEO Zhang Yiming attended the U.S. House of Representatives hearing in March, to the full operation of the e-commerce business in the second half of the year, the challenges in the process were immense," he said.

According to his recollection, many players in the TikTok e-commerce ecosystem were still hesitant in the first half of the year due to the "compliance" storm. Some seized favorable positions while anxiously waiting for TikTok to pass the difficulties as soon as possible, while others chose to temporarily withdraw because they "couldn't see the situation clearly" and waited for further development.

"The second half of the year was completely different!" the player exclaimed. "The progress of the platform's e-commerce business in North America is obvious to all, and the energy accumulated by sellers has been unleashed. In just a few months, various models (such as full hosting, local stores, cross-border stores) and various paths (short videos, live streaming, malls) have quickly taken off."

Finally, the drum of TikTok e-commerce resounded in the North American market. With the strong promotion of the platform, the ratio of product sales short videos that North American users can brush on a daily basis has significantly increased, sparking a "carnival" on the seller's side. Many sellers found that "as long as they put products on the shelves, they can generate orders."

"Some sellers have even adopted the American small store group model, purchasing multiple stores, quickly stocking products through tools, setting prices, not filming videos, not live streaming, and not looking for influencers, relying solely on natural traffic to generate a certain number of orders," said Jiawei, the founder of TikTok e-commerce operation service provider Tk Growth.

By November and December, the market's excitement reached its peak. Many newcomers asserted, "2024 will definitely be the year of TikTok's e-commerce breakout in North America." In 2023, with a GMV of approximately 13.6 billion U.S. dollars on TikTok Shop globally, North America's share was still only a single-digit percentage.

02

From Amazon to TikTok, From Domestic to Overseas

How to quickly gain a foothold?

Jason started out on Amazon and extended to TikTok content e-commerce. He believes that ample inventory and a quick response supply chain are the keys to success.

They were reminded that inventory was key before the peak sales period of "Black Five" in 2023. As orders surged, they realized that the supposedly sufficient inventory was far from enough. Secondly, efficient warehousing and distribution are also crucial.

Jason pointed out that his company has established its own warehouses in California, New Jersey, Atlanta, and Texas in the United States. On the one hand, the "large-item" nature of the furniture category he manages requires a deeper and heavier focus on warehousing and distribution capabilities; on the other hand, he also believes that, regardless of the platform, and not just for the furniture category, local delivery will be a very important competitive advantage. Today, this has become the cornerstone of their rapid advancement from Amazon to TikTok without encountering "situational obstacles".

To support sales growth, Jason also plans to double the warehouse area in 2024.

The secret of operations lies in cooperation with influencers. In the early days, Jason's team also attempted to "build accounts" on their own, but with little success. Later, the strategy changed, and through software tools such as FastMoss, they efficiently connected with a large number of influencers—these influencers provided a large quantity and quality of material, which directly determined the degree of increase in sales.

"We had no idea that as long as we could connect with influencers and get 300 pieces of material from them, the probability of success was high," Jason revealed. "Now we have over 10,000 influencers promoting our products, with over 2,500 short video materials, maintaining a daily update frequency of over 100-200 new influencers and over 500 new short video materials. This has made our sales relatively stable, and what needs to be managed is inventory and distribution."

After entering overseas, domestic live streaming players each have their own strategies and tactics.E-commerce

Huang He, the founder of Friend Making, stated that the advantage of domestic live streaming agencies in layout TikTok lies in the systematic accumulation, including accumulated aspects like anchor training, supply chain management, and explosive product management. "We excel in managing category accounts, running a series of live streaming rooms in the background that quietly operate GMV. This standardized working mode can be quickly replicated to achieve scaled expansion."

According to Ebrun, the overseas development strategy of Friend Making has gone through several stages: initially, by deeply cooperating with the marketing departments of leading brands in the industry, it rapidly entered the market; then, it began to venture into short video distribution and live streaming promotion and other fields.

Furthermore, according to Friend Making's overseas business head Hao Xijie, their main focus currently is on marketing, helping sellers with product sales, and aiding businesses in solving TikTok platform's live streaming, short video, and store operation related issues. Among them, influencer marketing accounts for the highest proportion, reaching 70%; followed by CPS distribution and operation services.

In addition, Friend Making is also actively laying out overseas e-commerce training services, including training for domestic merchants going global and overseas local merchants. Among them, TikTok's e-commerce live streaming training is of utmost importance.

Unlike Friend Making, Three Sheep pays more attention to cooperating with well-known local influencers. They utilize their own supply chain products and local KOL resources to empower brands and rapidly expand their influence in the local area.

Meanwhile, Worry-free Media has set its sights on "Entertainment Live Streaming" and plans to promote this business model globally. Its founder Lei Binyi once stated at the FastMoss conference: "There is still a great amount of room for entertainment live streaming globally, especially in regions such as the Middle East and the United States. We will actively cooperate with local influencers and MCN institutions to jointly create entertainment live streaming content with local characteristics."

At the same time, Worry-free Media has also seen the potential of commercial models such as influencer advertising and tipping in overseas markets, and plans to achieve profitability through these methods.

03

Sellers: Seize the opportunity or wait for a while?

There is no doubt that in 2024, TikTok Shop in North America will further expand.

According to the latest "TikTok E-commerce In-depth Report" by CMB Securities, there is a great flow dividend for businesses on TikTok at the moment, and the platform's sales categories and SKUs are still in a high-speed expansion phase, with great potential for improvement in category richness. It is expected that local sellers with local spot/warehousing capabilities and Amazon FBA brand sellers will be the first to benefit from stronger fulfillment capabilities and brand effects.

Does this mean that now is a good time for sellers to bet on TikTok?

Based on his experience, Jason gave an affirmative answer: "We achieved sales volume of 20-30 million U.S. dollars in the last two to three months, large volume and high profit." In his view, "by following the market trends, the opportunity to achieve tenfold performance growth is possible."

However, another top North American seller of TikTok, Will, advises sellers not to be too aggressive, based on the development history of the market.

He pointed out that TikTok's e-commerce began to increase its commercial investment from June last year, enabling some early entrants to gain a leading position based on certain precipitation and content advantages. It is expected that in the second quarter of this year, the platform will make bigger efforts, and as a result, sellers can make corresponding adjustments according to the market situation to achieve better performance.

Jiawei believes that 2024 may be the final window of opportunity for TikTok sellers.

In his opinion, the market will tend to be standardized this year, the flow strategy will gradually be explored and solidified, and resources will be basically divided. In the future, new sellers are unlikely to enjoy the dividends brought by the imperfect market. "There won't be cheap traffic anymore," and it will enter a new stage of extreme supply chain and resource competition. Therefore, for those sellers who are still waiting, now may be a good time to enter.

Sellers who are still watching have their "concerns". For example, the main consumer group in the current stage of TikTok is under 35 years old, and the majority of the product's unit price does not exceed $60. The concern is that their product pricing and target audience are quite different. Of course, some sellers have been stopped at the TikTok gate because they do not meet the requirements for opening a store.

It can be seen that while the North American market for TikTok Shop is hot, the platform's access thresholds are constantly increasing.

For example, in terms of qualification, some store types of sellers need to hold US green card residency or have a sales record of 2 million US dollars on Amazon. Stricter still, sellers also need to submit a series of proof documents such as tax records, utility bills, and warehouse lease contracts in the United States.

Aside from the strict requirements during the review stage, TikTok Shop has also set strict rules for product sales and shipments, such as: once a product is sold out due to high sales, the link must be removed immediately to avoid the situation of being unable to ship; failure to ship within 72 hours after the user places an order will result in a deduction of points for the store; to ensure the store's activity, it is best to start selling immediately after opening the online store, if the store is idle for more than two months, it will be closed...

In addition, starting from April this year, TikTok Shop will increase the commission for most products from the previous 2% of each transaction to 6%, and further increase to 8% in July. Many sellers believe that this "signifies the end of the first wave of dividends for TikTok Shop in North America".

As requested by the interviewees, Will and Steven are pseudonyms.