TikTok Shop Cross border E-commerce Policy: Lowering Entry Threshold in Southeast Asia and the United States

With the rapid development of the global e-commerce market, TikTok Shop, the e-commerce platform under the short video social platform TikTok, is increasingly becoming the focus of attention for global merchants.

Recently, TikTok Shop has launched new cross-border e-commerce policies in Southeast Asia and the US markets, further lowering the entry threshold for merchants. This series of new policies not only provides more opportunities for global merchants, but also brings new challenges.

TikTok Shop Southeast Asia Market: Lowering the Threshold to Attract More Merchants

Recently, TikTok Shop announced the lowering of the threshold for cross-border entry in Southeast Asia. According to the latest policy, business licenses are now open for merchants without e-commerce experience, and individual business licenses are open for those with cross-border and domestic e-commerce platform experience.

This means that even companies without e-commerce experience can enter without barriers by holding a business license, while individual businesses with cross-border or domestic e-commerce platform experience can also directly join this rapidly developing platform.

The background of this policy adjustment is the rapid development of TikTok Shop in the Southeast Asian market. According to The Information, since the opening of cross-border entry in Southeast Asia in the first half of 2022, TikTok Shop’s annual GMV monthly compound growth rate has been nearly 90%, reaching $4.4 billion in transaction volume in 2022. In 2023, this figure exceeded $13 billion, with the Indonesian market surpassing $4 billion, the Thai market around $3.5 billion, GMV increased 31 times year-on-year.

However, despite the rapid development, the number of merchants on TikTok Shop in Southeast Asia is still relatively small, and there is still much room for improvement in the richness of products on the platform.

According to a report by China Merchants Securities, by the end of 2023, TikTok Shop had 150,000 merchants on the Indonesia site, 107,700 merchants on the Vietnam site, 85,600 merchants on the Thailand site, and the number of merchants in the Philippines and Malaysia both reached 50,000 to 60,000. This still lags behind other Southeast Asian e-commerce platforms, such as Lazada, which had already surpassed the milestone of 1 million monthly active sellers in March 2022.

By lowering the entry threshold, TikTok Shop hopes to attract more merchants to join, thereby enriching the variety of products on the platform and meeting the diverse needs of consumers. This policy adjustment undoubtedly provides a new channel for merchants to enter the Southeast Asian e-commerce market.

TikTok Shop US Market: Expanding Self-Operation Model, Lowering the Threshold

At the same time, TikTok Shop has also launched new cross-border self-operation entry standards in the US market, further relaxing the entry threshold.

According to official information, in the first quarter of 2024, the number of active cross-border merchants on TikTok Shop US increased by more than 40% quarter-on-quarter. To welcome more quality merchants to the platform, TikTok Shop released the “100 Million Yuan Club” special policy, aiming to help more cross-border self-operated merchants achieve GMV breakthroughs in the US region as soon as possible.

This recruitment mainly targets merchants whose store entities are mainland China or Hong Kong, China, and who have US local warehousing and logistics capabilities. Merchants only need to have operational experience on any of the US Amazon, eBay, Walmart platforms or independent sites and meet relevant requirements to join.

It is worth noting that TikTok Shop does not require any GMV from Amazon merchants this time, whereas previous entry requirements required merchants to provide proof that a single store’s annual GMV in the US exceeded $2 million.

Specifically, the new TikTok Shop policy mainly opens to the following five types of merchants:

1. Amazon self-operation model (SC) merchants: Store rating must reach 4, operating duration at least 3 months, and account health score at least 250.

2. Amazon supply model (VC) merchants: Supply record in the past 6 months is sufficient.

3. eBay/Walmart merchants: Single store sales (GMV) in the past 12 months greater than $500,000, operating duration over 3 months, and store positive rating or score must meet specified standards.

4. Walmart supply model merchants: Supply record in the past 6 months qualifies.

5. Independent site merchants: Must have US market DTC independent site operation experience, Trustpilot rating above 3.8, and total overseas social media followers reaching 10,000.

By lowering the threshold, TikTok Shop hopes to attract more experienced merchants in the US market to join, thereby enhancing the platform’s competitiveness and product diversity.

Opportunities and Challenges Coexist

The policy adjustments of TikTok Shop in Southeast Asia and the US markets undoubtedly provide huge business opportunities for merchants. By lowering the entry threshold, more small and medium-sized enterprises and individual merchants have the chance to enter these fast-growing markets, leverage TikTok’s massive traffic and user base, and achieve leapfrog business development.

However, opportunities and challenges coexist. First, as the number of merchants increases, competition on the platform will become more intense. Merchants need to find their own differentiated positioning in the fierce market competition and win consumers’ favor through high-quality products and services.

Secondly, cross-border e-commerce involves multiple aspects such as logistics, payment, and after-sales service. Merchants need to have certain operational capabilities and resource integration abilities to establish themselves and develop in the cross-border e-commerce market.

Finally, with the rapid expansion of TikTok Shop, the pressure on platform management and services will also increase. How to maintain platform norms and order, and protect the rights and interests of merchants and consumers, will be an important challenge TikTok Shop faces.