How can TikTok compete in the e-commerce market?

Gaining the trust of regulators and ensuring data safety will be vital for TikTok.

ByteDance-owned social media platform TikTok could compete with leading e-commerce businesses such as Shoppee, Lazada, Amazon, and Shein but it has to build regulatory trust and protect users' data, according to a report by GlobalData.

GlobalData said TikTok’s rise as a marketplace came amidst the data privacy concerns on the platform in the US and Europe.

“Security and trust are vital for e-commerce transactions. TikTok must implement strong security measures to protect user data from unauthorized 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,” Pinky Hiranandani, Principal Analyst at GlobalData.

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“The upcoming Digital Services Act in the EU requires platforms like TikTok to limit disinformation and better protect children online,” she added.

TikTok which expanded to Malaysia, Singapore, Indonesia, the Philippines, Vietnam, and Thailand in 2022, has been facing challenges in the US and Eurpo with lawmakers banning the platform on government devices.

Hiranandani also noted that competition in the e-commerce industry particularly in the US would be intense because of retail giants such as 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,” she said. 

However, the Chinese company will require significant investment in its platform and infrastructure to compete with its rivals,” she added.