What's going on?
New details emerged over the weekend of TikTok-owner ByteDance’s plans to expand its ecommerce business, in an effort to sweeten the deal ahead of its potential initial public offering.
What does this mean?
The runaway success of social media star TikTok and Chinese twin Douyin has helped make ByteDance one of the world’s most valuable private companies. But viral videos aren’t the extent of its ambitions: the company wants to use them to sell stuff too. So while ByteDance’s Chinese apps already hosted $26 billion worth of shopping and lifestyle spending last year, it’s currently hiring thousands of extra staff in a bid to turn that into $185 billion by 2022 (tweet this).
ByteDance is hoping that its addictive algorithms will allow it to make more money serving up ads and in-app purchases to Douyin’s 600 million daily users. And the company’s even more excited about the international potential: pilot TikTok partnerships with Walmart and Shopify are likely to be only the start.
Why should I care?
The bigger picture: Chinese ecommerce is a big opportunity.
The world’s biggest retail market is increasingly moving online: 52% of sales in mainland China are expected to be completed virtually this year, compared to 28% in the UK and just 15% in the US. And there’s plenty of room for growth too: the majority of the Chinese population are still yet to make their first online purchase.
For markets: Everyone’s on tenterhooks.
ByteDance’s reported $250 billion valuation would make it worth more than Coca-Cola, and public investors everywhere are anxious to get their hands on the company’s stock. But it’s unclear whether ByteDance would be able to list shares in either New York or Hong Kong while appeasing authorities in both Washington and Beijing. That might be why the firm is keeping its plans for its stock market debut private for the time being…