Though it’s early in the “what happened” analysis phase, the collapse of livestream shopping on TikTok in Western markets says a lot about how consumers want to shop on their devices, and feelings on a fast-fashion trend some see as out of touch with environmental concerns.
News hit on Tuesday (July 5) that the China-based short-form video platform is dropping its expansion of livestream shopping in Europe and the U.S. as its U.K. operation suffers from lackluster sales, a stream of creator complaints, hostile workplace allegations and more.
This is happening at a time when live stream shopping is emerging as the next, best frontier for social selling, as popular influencers curate items and outfits for their followings. Instagram launched live stream shopping in 2020, with Amazon Live and YouTube also in on the action.
TikTok’s headwinds are a bit more complicated than other players as parent ByteDance is partly owned by the Chinese government and has thus been under heavy scrutiny among U.S. lawmakers and regulators worried about data privacy issues — and even national security.
In June, Federal Communications Commission (FCC) Commissioner Brendan Carr sent a letter to Apple CEO Tim Cook and Alphabet/Google CEO Sundar Pinchai noting that TikTok was downloaded almost 19 million times in Q1 2022 from both app stores.
Carr wrote: “It is clear that TikTok poses an unacceptable national security risk due to its extensive data harvesting being combined with Beijing’s apparently unchecked access to that sensitive data,” calling the video app “out of compliance with the policies that both of your companies require every app to adhere to as a condition of remaining available on your app stores,” and requesting its removal. The app is still available on both app stores.
Should either or both decide not to remove it, Carr wants to know why by Friday (July 8). What happens after that deadline is unclear, but in the near term it’s adding fuel to the TikTok fire.
See also: TikTok Drops Livestream Shopping Plans in US, Europe
Livestream Growing Pains
Unraveling the story in a series of investigative articles on TikTok’s U.K. operation — a base from which it meant to test and shape the concept for western audiences after its stunning success in Asia — the Financial Times reported, “The model has proved lucrative for TikTok parent ByteDance, which has seen sales on Chinese sister app Douyin more than triple year on year, selling more than 10bn products.”
Replicating that success outside of Asian markets is proving difficult, however, as FT and other outlets reported influencers becoming increasingly concerned with the quality of merchandise, in some cases the authenticity of items, creator pay and hours, and HR issues that ended with the ouster of Joshua Ma, a ByteDance executive tasked with running TikTok Shop in Europe.
Livestream shopping is the digital descendant of QVC and HSN TV-based selling where watching the show became part of the experience. That’s still core to its appeal.
In a recent PYMNTS interview, Paul Fredrich, senior vice president of product at relationship marketing platform Ordergroove said, “Nowadays, the product is not the product anymore. The experience provided by and around the product is the product,” adding “we believe that the solution … is consumers and merchants, brands and merchants [moving] together more closely and having more of a relationship. This means sharing data, using it to personalize experience, using it to communicate proactively.”
It’s the data sharing aspect of personalization that’s getting TikTok jammed up, however, which leaves open questions around live stream shopping and data security, at least for some.
See also: Leading Online Retailers Make Customer Experience Part of the Product
Fast-Fashion Critics Sound Off, Too
As TikTok’s internal issues become public, there’s also a groundswell of criticism over fast-fashion apps and the environmental impact of eCommerce sellers specializing in this area.
The New York Times reported in June that fast-fashion giant Shein is feeling the heat too — with a TikTok twist — as popular “Shein haul” videos appearing on TikTok are becoming the target of a growing number of influencers critical of fast fashion’s environmental impacts.
NYT said that “even as the company continues to grow in popularity, a counter-trend is emerging: young people resisting Shein and speaking out against fast fashion. In high-school and college newspapers, in cafeterias, at protests and on social-media platforms, an anti-Shein, pro-sustainability sentiment is fomenting. Much of the online outrage centers around the barrage of new merchandise that feeds haul-video behavior.”
See also: TikTok Sees Exodus of Influencers From UK Shopping Service
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