TikTok plans to construct U.S. fulfillment centers

Yahoo Finance producer Kelsey Barberio explains how TikTok is planning to compete with Amazon through building its own fulfillment centers throughout the U.S.

Video Transcript

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- Well, TikTok is doubling down on e-commerce. The popular social media app looking to expand its footprints in this space by building fulfillment centers in the US. Yahoo Finance's Kelsey Barberio joins us now with the details. All right, what do we need to know about this?

KELSEY BARBERIO: So it looks like, yeah, they're trying to compete with Amazon. What's going on? So honestly, it looks like, according to reporting from Axios, we've got them filling out job-- or they've got jobs listed. I'm so sorry, I am a little nervous to be here with you guys.

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KELSEY BARBERIO: Thank you. No, so Axios did some reporting that it looks like there are job listings up on LinkedIn for about a dozen different jobs for fulfillment centers that are going to be international. So it looks like they're going to be getting into the e-commerce business a bit. And now TikTok has a lot of-- they've got a lot of people shopping on their platform as it is. They've got about 23.7 million people that are looking to make at least one purchase likely this year. That's according to "Insider," I believe. But no, so we've got-- yeah, there's a ton of people. There's so much opportunity there.

And they're really trying to get into that, and take some of that market share from companies like Amazon who have got Amazon Storefront, which is really popular on TikTok, and LIKEtoKNOW.it rewardStyle.

- Yeah, interesting here. And, you know, at the same time, like, there's all these things that TikTok is, sort of, getting into that we know about, right? Or that are reported upon. And one of them is that there would be some, sort of, QVC-like shopping feature. I mean, I know live shopping is, kind of, this big and growing thing, but it seems like it hasn't totally reached critical mass yet. Is there already a lot of live shopping on TikTok happening?

KELSEY BARBERIO: I wouldn't say the QVC style that it sounds like they're trying to get into. I know that Facebook did something similar to this before. And now it looks like they're trying to make a partnership with TalkShopLive. There's nothing official there yet, but that could be something that's pretty big for them. I do know that they were testing this also in the UK and in Asia, and it wasn't very successful. I think that one of the big problems there is that a lot of people that are purchasing things from creators like the authenticity factor of it. They like feeling like it's just a creator going about their regular life making videos about the things that they enjoy.

And so I think if you, kind of, take away that natural element of it, there might be a problem. So I know they had issues getting creators on board in those other markets, so it'll be curious to see how that happens here.

- I mean, I always set up a ring light and a camera when I'm doing my plant dad duties in the household.

- Of course.

- Of course, it's authentic, right? I mean, but this is a big deal because TikTok reportedly-- they went through a round of layoffs in July. What does this new, kind of, e-commerce push really tell us about the future of the company here?

KELSEY BARBERIO: Yeah, like you said, they went-- you know, they started off with about 1,500 employees here in the US in 2020, which was pretty strong. They've been going, you know, at a pretty great clip ever since then. But then as of July, they did, you know, pull back and say that they were going to halt a little bit of their hiring. But I think that's just following suit with what other tech companies are doing at this point. They're looking at the economy and they're not really sure what's going to happen.

But I do think that a lot of their revenue right now is coming from ad dollars. And so I think that they're trying to find a way to diversify the way that they're making their money. And they see so many people-- like, millions of dollars are being spent through these affiliate networks like Stylink and rewardStyle, and they just-- they want to get a little piece of that.

- Right, it's all about making this advertising, kind of, element really attractive for the marketers out there, especially knowing that they're looking for conversions. That's why all of these platforms are trying to make it more shoppable. We'll see what that looks like within TikTok. Would you buy anything on TikTok?

KELSEY BARBERIO: Oh I buy things all the time.

- Have you bought anything on-- you have. OK.

KELSEY BARBERIO: Oh yes.

- All right, well, apparently I'm behind the curve here. Thanks so much for joining us here in studio. Yahoo Finance's own Kelsey Barberio.