According to the foreign media Business Insider, TikTok has updated its FAQ page in official website. The official has confirmed that TikTok’s semi-closed-loop model will be officially closed on September 12th, and will fully promote its TikTok closed-loop store next.
The direct impact of this move is that after the semi-closed-loop mode goes offline, the entry threshold of TikTok merchants in the United States may be raised to more than one million.
The so-called semi-closed-loop mode refers to binding TikTok with merchant online stores through plug-ins with third-party platforms (such as Shopify). In this mode, users can click to buy through the shopping cart or homepage window below TikTok video, and then jump to an independent online store to complete the order. The closed e-commerce model covers the whole process of advertising, commodity display, buyer’s purchase and settlement, all of which are completed in the same platform.
In the semi-closed-loop mode, the platform can’t track the information such as capital flow and logistics of merchants, which makes some merchants take advantage of it, and there may be problems such as false delivery and wrong goods. In the end, consumer complaints and bad reviews may affect the reputation of the platform, and the platform will become the ultimate victim.
However, after the semi-closed loop mode is closed, the platform can independently manage all aspects of e-commerce business. This not only helps to improve management efficiency, but also ensures that business activities are completed in the same ecosystem, thus reducing the risk of potential problems.
In order to make this transition, TikTok has taken a number of preparatory measures. For example, in the United States, we should strengthen the layout of storage and logistics facilities, adjust the way of payment collection to improve stability, and use labels and trends to cultivate American consumers’ interest in shopping. Therefore, it has become a general trend for TikTok to close the semi-closed mode and fully promote the development of closed ecology.
These preparatory measures highlight the importance that TikTok attaches to its own store TikTok Shop. According to reports, TikTok has set this year’s goal to quadruple the scale of e-commerce business and increase the sales of goods GMV to 20 billion US dollars.
For most semi-closed-loop businesses, this is undoubtedly a very serious situation. It is reported that as early as a few months ago, TikTok began to gradually stop approving the creation of semi-closed accounts. Some merchants said: “It is obvious that the traffic is decreasing, and the platform is starting to eliminate those merchants who only focus on obtaining traffic and fail to contribute substantial value to the platform.”
However, for TikTok Shop’s businesses in the American market, there will be more opportunities in advertising in the future. TikTok’s full closed-loop mode has actually been experienced in Tik Tok. In the domestic market, the vast majority of businesses have regarded advertising as the main choice. With TikTok stopping the introduction of off-site traffic and accumulating mature algorithms and labeling systems in the American market, merchants will be more comfortable in the field of advertising, thus obtaining a better return on investment (ROI). According to the data monitoring of GoodsFox, the advertising scale of TikTok e-commerce field (including TTS and semi-closed businesses) has reached a certain scale and is showing a rapid growth trend. As of January this year, the overall advertising volume has increased by 248.54%. More and more businesses are beginning to pay attention to advertising, which is supported by the data.
Post time: Aug-31-2023