Since launching in 2016, TikTok has amassed over 800 million monthly active users (MAUs) in 2023, with some estimates of over 1 billion. To put this into perspective, Twitter and Reddit combined have approximate 880 million MAUs, with Reddit having an estimated 430 million and Twitter having an estimated 450 million.
ByteDance, best known as the Chinese parent company of TikTok, is one of the most highly valued private tech companies globally. The company is valued at approximately $220 billion, having raised $9.5 billion of disclosed capital with investors like Sequoia, KKR, and Tiger Global. The Chinese tech conglomerate owns TikTok and its Chinese sister app Douyin, among others. TikTok and Douyin are nearly identical apps, with the primary difference being that Douyin is available in Chinese markets, whereas TikTok is available outside of Chinese markets. What many don’t realize is that TikTok and Douyin quietly compete in another market outside of social media against some of the biggest household names in the US, including Etsy, eBay, Poshmark, OfferUp, Walmart, and even Amazon.
ByteDance is now using TikTok and Douyin to break into ecommerce against established online marketplaces. In 2021, ByteDance enabled Chinese brands to open stores on Douyin to compete against Chinese marketplaces like Alibaba. In 2022, ByteDance rolled out a similar feature on TikTok to compete with Western ecommerce marketplaces, enabling users to open stores on their accounts and sell or shop directly within the app; these shops are embedded directly in user profiles. In TikTok Shop’s first year, it generated $4.4 billion in gross merchandise value (GMV). TikTok’s GMV in 2022 was on pace to be over double the GMV of Poshmark. But TikTok aims to nearly quintuple this value in 2023, targeting $20 billion GMV. If successful, TikTok would be nearly double Etsy’s 2022 GMV of $11.8 billion.
While TikTok is already on the stage with household names in US marketplaces, its revenue pales in comparison to Douyin’s. In 2022, Douyin generated approximately $201 billion GMV. If Douyin were based in the United States, that would make it the second-largest online US marketplace, only behind Amazon at $367 billion. To put that into perspective, Douyin, known for short video content, produces higher GMV than eBay ($74 billion), Walmart ($33 billion), and OfferUp ($32 billion) combined.
But how are short-form video apps racking up billions in ecommerce sales? First, ByteDance capitalized on the established user bases of TikTok and Douyin, giving brands access to the apps’ billions of active users. Second, TikTok and Douyin use algorithms to personalize content for individual users, meaning users will likely encounter stores relevant to their preferences. Third, since TikTok and Douyin are primarily content platforms, user engagement on these apps is higher than traditional ecommerce marketplaces. Overall, TikTok and Douyin present unique and interactive in-app shopping experiences that traditional marketplaces lack, and this new experience is especially appealing to younger generations.
Sources: Statista, Contrary Research
