The competition in cross-border e-commerce is intensifying, with major platforms actively seeking new growth opportunities. Recent reports indicate that TikTok Shop, the e-commerce arm of the short-video giant, is preparing a significant strategic shift toward a "full-turnkey" operation model, potentially reshaping the competitive landscape of the industry.
TikTok Shop's "Project S" Signals Full-Turnkey Approach
According to sources familiar with the matter, TikTok's e-commerce division is developing a project codenamed "S" (short for Store), which would introduce a semi-self-operated full-turnkey model. Under this arrangement, merchants would focus solely on product supply while the platform handles all operational aspects including traffic acquisition and product management. This model aims to streamline sales processes and improve operational efficiency.
TikTok Shop is expected to fully launch its store function in the U.S. market this year, though rollout timelines for other regions including Brazil, Spain, Italy, Australia, New Zealand, France, and the Middle East remain undetermined.
The proposed model would require merchants to ship goods to TikTok's domestic consolidation warehouses (with Guangzhou likely serving as the initial hub). The company has yet to finalize whether the "S" project will adopt direct procurement or consignment sales approaches.
Internal restructuring at TikTok reflects the initiative's priority, with numerous employees from the cross-border business unit reassigned to support the project while others continue developing local seller markets abroad. The e-commerce division has undergone four organizational adjustments in the past two months.
Full-Turnkey Models Gain Industry Traction
The evolution from Amazon's marketplace to independent stores and now full-turnkey operations demonstrates the dynamic nature of cross-border e-commerce. This operational model has emerged as a strategic differentiator during intense platform competition, representing both market demands and industry evolution.
Digital transformation of industrial clusters has made full-turnkey operations increasingly standard among e-commerce platforms. Major players including SHEIN, Temu, Lazada, and Shopee have all embraced this approach, which reduces merchant operational costs while allowing greater focus on product development and supply chain management.
Temu, the cross-border platform owned by Pinduoduo, achieved remarkable success with its supplier-centric model, rapidly capturing U.S. market share. Data shows Temu's Q1 2023 downloads surged 57% to 19 million, topping app download charts while demonstrating strong performance across GMV, user growth, repurchase rates, and conversion metrics.
Following Temu's validation of the model, Alibaba's AliExpress and Lazada implemented similar full-turnkey services. These platforms share the core premise: merchants manage product supply while platforms handle all subsequent operations.
AliExpress reported 50% year-over-year order growth and 45% user base expansion in March, attributing these records to the new model. One merchant reported selling 200 inventory units within five days of utilizing AliExpress' full-turnkey warehouse, with store traffic increasing 37% post-implementation.
Lazada launched its version in April following a $353 million capital injection from Alibaba, while Shopee is reportedly developing its full-turnkey program, having already solicited product submissions from Philippine merchants under a proposed "PH VMI" model where pricing would be jointly determined.
Opportunities and Challenges of Full-Turnkey Models
The rise of full-turnkey operations represents a mutual selection between platforms and merchants. For platforms, it tests merchandise quality and supply chain capabilities while demonstrating commitment to quality standards. For merchants, it offers operational efficiency gains and cost reductions.
TikTok insiders suggest the semi-self-operated model could enhance quality control, logistics, and user experience to elevate its e-commerce business. However, implementation challenges include heightened demands on product selection, operational capabilities, and inventory risk management—particularly if the "S" team adopts direct procurement.
Two merchant types appear best positioned for success on TikTok's evolving platform: source factories and traders with robust supply chain advantages offering competitive products and pricing, and sellers capable of localized overseas operations through registered foreign entities with expertise in content production and regional market strategies.
As TikTok Shop finalizes its U.S. market expansion plans—having denied reports of delays—the platform's integration of its massive global traffic with full-turnkey e-commerce could unlock significant potential, presenting new opportunities in the cross-border commerce sector.