David Bridges
What an unexpected development this is!
According to a recent report by Axios, TikTok is actively “exploring the expansion of its local services sector in the U.S.”, as indicated by new job vacancies listed across various regions.
In the words of Axios:
“TikTok is on the lookout for talent based in Seattle, Los Angeles, and New York to assess opportunities that connect local merchants and service providers with TikTok creators and users, according to nearly two dozen job listings posted online. Several of these listings specify that TikTok aims to onboard lifestyle creators across diverse topics such as food and travel, to enhance local services adoption and create monetization opportunities.”
As TikTok amplifies its in-app shopping initiatives, it is now setting its sights on new avenues to generate revenue within the app, with a focus on local services, as revealed by these job postings.
This strategic move is hardly surprising, considering the Chinese version of TikTok, known as Douyin, already offers similar functionalities, facilitating seamless connections to a wide variety of services directly within the app.
On Douyin, third-party developers can integrate “Mini Programs”, which are essentially compact, user-friendly versions of their applications within the larger Douyin ecosystem.
This feature has significantly expanded the in-app marketplace, with Mini Programs available for tasks such as ordering food, booking rides, purchasing tickets, and much more, all conveniently within the Douyin app. This consolidation allows users to conduct a wide array of daily transactions within a single platform, which is a major attraction for Chinese consumers and could similarly create more opportunities for TikTok.
Indeed, it makes logical sense for TikTok to pursue this route as a strategy to enhance its in-stream shopping initiatives.
The platform is witnessing consistent growth in in-app spending, yet it has not yet approached the adoption levels that Douyin enjoys in its home market.
However, an increasing number of users are expressing interest in shopping directly within the app, and if TikTok can effectively leverage this behavior, it could unlock substantial opportunities for growth.
For context, Douyin’s gross merchandise volume (GMV) for 2024 is projected to reach 3.5 trillion yuan, equivalent to approximately $490 billion.
In contrast, TikTok’s GMV for 2024 is estimated to be around $30 billion. While this figure is commendable and demonstrates significant in-app sales activity, the potential for expansion is exponentially larger if TikTok can replicate the success seen in its Chinese counterpart.
This is precisely why TikTok is eager to encourage users to make purchases through the app, particularly since the U.S. represents TikTok’s largest market for spending. Consequently, its efforts to avoid a potential ban in this region are also critical to this expansion strategy, alongside its initiatives to enhance eCommerce functionalities in other markets.
Venturing into local services marks another facet of the broader strategy for TikTok, and given its remarkable achievements in China, this move is a logical progression for the platform.
So, anticipate seeing links to popular services like Uber, DoorDash, and others emerging in your TikTok feed, encouraging you to place orders for delivery right away.
Maya Kensington
