TikTok has announced another round of layoffs in its US ecommerce division, TikTok Shop. This is the third set of job cuts since April.

A spokesperson for TikTok confirmed that the layoffs were part of an operational review to align with strategic priorities. The company did not specify the number of employees impacted.

The ecommerce unit has undergone major changes after failing to meet internal sales targets over the past year.

Previous layoffs occurred in April and May, with some US-based staff near Seattle replaced by managers connected to its parent company, ByteDance, in China.

Despite these changes, TikTok Shop remains the fastest-growing segment of the platform. It expanded into five European countries, including Germany and Spain, last year.

However, TikTok’s future in the US is uncertain due to ongoing national security concerns.

A 2024 US law requires ByteDance to sell TikTok to avoid a potential ban in the country.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ TikTok Shop’s regional performance shows stark contrasts

TikTok’s ecommerce efforts have experienced dramatically different outcomes across regions, explaining the current restructuring of its US operations.

In Southeast Asia, TikTok Shop has found substantial traction, with 70% of its global e-commerce gross merchandise value coming from Indonesia in 2021 1.

The platform’s performance in Western markets has significantly underperformed against targets, with the US operations reportedly generating only US$9 billion of TikTok Shop’s US$33 billion global GMV in 2024, falling well short of the company’s ambitious US$50 billion goal 2.

These regional disparities help explain why ByteDance is replacing US-hired staff with managers connected to China, a strategic move to replicate its Asian success model where the platform has demonstrated stronger product-market fit.

The company’s struggle to transfer its e-commerce formula across markets mirrors challenges other Chinese tech companies have faced when expanding globally, particularly in adapting to different consumer behaviors and expectations.

2️⃣ Cultural and operational misalignment hampers Western expansion