TikTok Creating Fulfillment Network in U.S., Globally

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TikTok is looking to create a global logistics infrastructure, including in the U.S., to fulfill merchant orders on its TikTok Shops ecommerce platform, creating a good deal of industry buzz based on its rapid growth as a dominant social media and advertising platform, as first reported by Axios.

A search of open positions including the term “fulfillment” on TikTok’s LinkedIn page turns up 62 results worldwide on Thursday, with a mix of operations titles (logistics, fulfillment, supply chain) and ecommerce roles (procurement specialists, merchant development, seller governance and vendor program managers).

Cities where the postings are located include 36 in the U.S., from Seattle to Austin to Los Angeles, San Francisco and Mountain View, CA and Washington, D.C. International locales are concentrated in Asia, including Jakarta, Singapore, Kuala Lumpur, Bangkok, Ho Chi Minh City, Madrid, São Paulo, London and Manila.

Based on the listing titles, Seattle, Los Angeles and Mountain View seem to be where facilities will be located here initially, as well as in London, Bangkok, Madrid and São Paulo.

TikTok is a beast, with more than 1 billion users of its short-form video platform worldwide, and an estimated $4 billion in ad revenue last year, expected to double by 2024, according to Statista; about a quarter of that is coming from ecommerce sales. So, moving into fulfillment of online orders is a natural extension as the Chinese giant looks to grow into a major ecommerce force in the U.S., Europe and Asia.

The job listings seem to indicate that unlike Amazon, which has been building out its logistics and transportation assets for years, TikTok will hand off those pieces of the supply chain to partners, while handling fulfillment itself from a network it is creating.

The timing of this is very interesting, as poor economic conditions and a pullback in ecommerce spend have led to softening demand for warehouse space. This notably includes Amazon, which has closed, canceled or delayed 80 delivery stations, fulfillment centers and other facilities, up from 66 in September, according to data from MWPVL International. That should make acquisition somewhat easier for TikTok to lease or buy its way into a network here.

Neil Saunders, a managing director at consultancy Global Data, said while TikTok has been a major driver of influence and ecommerce sales, raking in billions, its lack of logistics capabilities will be a steep hill to climb but deep pockets will assist in the endeavor.

“Building this out with warehouses and other facilities would enable TikTok to offer an end-to-end solution,” Saunders said. “It will provide both an additional revenue stream and improve the quality of the shopping experience for consumers. It would be especially beneficial for overseas brands as they should ship in bulk to TikTok warehouses rather than having the complexity of shipping internationally to individual customers.”

While the fulfillment and logistics play will involve major capital and competition with established players like Amazon, TikTok’s massive audience and customer base means more than enough demand to justify and enable the strategic move, Saunders said.

“Provided TikTok maintains its popularity, it could pose a threat to incumbents and prove to be a highly disruptive force,” he said. “However, that threat is quite a long way off and other than being interested in the development I don’t think Amazon will be losing any sleep over it just yet.”

Juozas Kaziukenas, founder and CEO of Marketplace Pulse, was a bit more skeptical. He felt TikTok’s move to operate warehouses was premature, given how little ecommerce volume is happening natively on the platform vs. its ads driving sales on retailers’ websites.

“If TikTok is really going to own and run warehouses, that means massive capex for years to come, all while ecommerce there is only starting to take off,” Kaziukenas said. “There are less capital intensive and faster ways to solve fulfillment, for example, by partnering with existing 3PLs, and only eventually launching owned fulfillment.”

He added fulfillment isn’t the bottleneck preventing TikTok from being a bigger ecommerce player “and thus I’d expect those other areas to be solved first.”