Project S – Bytedance’s secret project: Selling products made by TikTok itself, plotting to overthrow Shein, Amazon

The Financial Times reports that TikTok is expanding its online retail offerings by selling products through its viral video app. This comes as parent company TikTok is looking to challenge rivals like Shein and Amazon.

In recent weeks, users in the UK have started seeing a new shopping feature in the TikTok app called “Trendy Beat”, which partially offers items that have proven popular on video. , such as an earwax or brushing pet hair off clothing.

All advertised items are shipped from China, sold by a Singapore-registered company owned by TikTok’s Beijing-based parent company ByteDance.

This model, similar to how Amazon creates and promotes its own best-selling series, represents a major shift from TikTok’s existing shopping marketplace. The app now allows other vendors to sell items through the TikTok Shop, which will then receive a small commission.

In contrast, with the new model ByteDance will take all proceeds from sales through the Trendy Beat feature on TikTok.

TikTok says it’s currently testing the feature. “We are always exploring new ways to enhance the community experience, and we are in the early stages of testing new shopping features,” the company said.

ByteDance is looking for a new revenue stream that can prove its $300 billion valuation right – making it the world’s most valuable private startup, ahead of its IPO scheduled to take place in June. next two years.

According to six people familiar with internal discussions, TikTok’s attempt to start selling its own products is called “Project S.” These people add that ByteDance is building an online retail unit to challenge groups like fast fashion brand Shein and Pinduoduo’s sister app Temu, a website that sells cheap and popular products. enabled on social networks.

Project S is led by Bob Kang, ByteDance’s e-commerce director, who recently traveled from Shanghai to London to coordinate efforts at TikTok’s office there. TikTok said Mr Kang is in the UK for some reason and will report directly to the app’s chief executive Shou Zi Chew.

According to a source familiar with the matter, Project S uses TikTok’s knowledge of the items going viral on the app, allowing ByteDance to acquire or manufacture the items themselves. The company will then heavily advertise Trendy Beat products against rival sellers on TikTok.s

TikTok said the brand used a network of suppliers to produce items for its Trendy Beat product.

Two employees said that to promote the e-commerce business, ByteDance even “fished” a lot of employees from Shein.

“Bob Kang is obsessed with Temu and how they replicate success, and he thinks TikTok can do this too by getting involved in the sourcing and selling process,” said another person familiar with the campaign. strategy in the UK market said.

In fact, ByteDance has been pushing to expand TikTok’s e-commerce offerings to replicate the success with Douyin, its sister app in China, which has sold more than 10 billion products annually. ByteDance generated $85 billion in revenue by 2022, most of which came from its China business.

As for the TikTok Shop, the feature has been successful in Southeast Asian markets, including Indonesia and Vietnam, but is still struggling to gain traction in the UK, which launched more than two years ago.

TikTok underwent a significant restructuring last month in an effort to focus e-commerce on existing markets, such as the UK, rather than embarking on a broader international expansion in other Western markets.

Even so, previous attempts to imitate Shien and Temu’s model failed. Two ByteDance shopping apps — Dmonstudio, Fanno and If Yooou — have been closed or abandoned.

“ByteDance realized that they wanted to build a self-owned brand within the TikTok app instead of creating a standalone app like Shein and Temu,” an employee revealed.

Trendy Beat’s shopping site is affiliated with a company called Seitu, which is registered at an address in Singapore. Three people familiar with Project S said Seitu is owned by ByteDance, and TikTok confirms it is a subsidiary.

According to public records, Seitu is also connected to If Yooou, a retail business owned by ByteDance. Lim Wilfred Halim, TikTok’s head of global e-commerce fraud and security in Singapore, has been named as Seitu’s director.

Source: Financial Times