TikTok, the short video app owned by ByteDance, is ready to step into the ring and take on retail giants like Amazon, Shein, Sea Group’s Shopee, and Alibaba’s Lazada with its foray into live streaming ecommerce.
However, this new endeavour arrives at a precarious time for the company, as it faces scrutiny and raised eyebrows over data privacy concerns in the United States and Europe. In order to establish itself as a bona fide ecommerce platform, TikTok must gain the trust of regulators and ensure the safety of user data, according to GlobalData, a prominent data and analytics company.
Pinky Hiranandani, Principal Analyst at GlobalData, emphasises the paramount importance of security and trust in ecommerce transactions.
“TikTok must implement strong security measures to protect user data from unauthorised access, including end-to-end encryption of sensitive data and complying with the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) in the US. Also, the upcoming Digital Services Act in the EU requires platforms like TikTok to limit disinformation and better protect children online,” he explained.
TikTok Shop, the company’s ecommerce platform that enables users to explore and purchase products directly from TikTok videos, has already gained popularity in the Southeast Asian market due to its substantial and engaged user base.
In 2022 alone, TikTok Shop successfully expanded its presence to Malaysia, Singapore, Indonesia, the Philippines, Vietnam, and Thailand. While the focus remains on markets like Indonesia, TikTok has ambitious plans to extend its ecommerce venture to the United States and the United Kingdom. However, the company has encountered obstacles in the form of bans on government devices imposed by lawmakers in the US and Europe, including the UK, Denmark, and Belgium.
Notably, in a groundbreaking move, the state of Montana completely prohibited the use of the TikTok app in May 2023. Although such bans may not entirely prevent TikTok or any other social media platform from accessing users’ personal data, the implementation of a comprehensive federal data privacy law in the United States would certainly be beneficial.
Hiranandani further notes that the competition in the ecommerce arena, particularly in the United States, is fierce, given the colossal scale and wide-ranging influence of domestic giants like Amazon and Walmart.
“TikTok aims to build on its massive user base and partnerships with brands and influencers to drive ecommerce sales. It is attempting to mimic Amazon by producing in-house products and building a sales pipeline, as well as charging vendors a commission to showcase products on TikTok Shop. However, the Chinese company will require significant investment in its platform and infrastructure to compete with its rivals,” he said.
