The news: TikTok is doubling down on social commerce by hiring staff for its own US fulfillment centers, per an Axios report based on job postings on LinkedIn.
Why TikTok wants to open fulfillment centers: By offering warehousing, delivery, and returns, TikTok aims to remove barriers that may be standing in the way of retailers selling on its platform.
Will the model work? TikTok parent Bytedance has a strong track record of ecommerce success with Douyin, TikTok’s sister app, in China; over 10 billion items were sold on the platform in the fiscal year that ended April 2022 and gross merchandise value increased 320% year-over-year (YoY) in the same period, the company said.
The big takeaway: TikTok is making a risky bet on logistics. While the lure of control and unlocking a new revenue stream is enticing, building out an ecommerce supply chain is a capital-intensive, challenging endeavor for even the most sophisticated companies.
Go further: Read our new Social Commerce Forecast 2022.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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