Tiktok landed its e-commerce platform in Mexico and generated market debates about what would be the impact on retailers with a consolidated position in the country, such as Free market (BDR: ).
Mexico is the first country in Latin America to receive the tool that allows users to buy products without leaving the app, with functionality that combines buyable videos, live broadcasts and links to direct purchases. However, more than a possible competitor, the free market should benefit from the foray of the region’s e-commerce video platform, according to Santander in a report released to the market on Monday (10).
The bank notes that while Tiktok Shop represents a new competition for the Free Market, with risks to gross sales (GMV), strategic partnerships between the two platforms can actually reinforce the position Free Market in the region. The integration of the market paid with the launch of Tiktok Shop in Mexico is a clear example of how the video platform can collaborate with established companies, rather than trying to compete aggressively.
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This is because, in several markets, as in the United States, Tiktok has shown interest in establishing partnerships with major retailers, such as Amazon, rather than adopting a direct confrontation stance. For Santander, advanced logistics infrastructure and the consolidated free market payment platform make it an ideal partner for Tiktok in Latin America. Also in this account are collaboration in the areas of payment and logistics, two factors that could benefit both platforms, combining the popularity of Tiktok with the structure of the free market.
Tiktok Shop’s entry into Mexico is a clear attempt to expand its commercial operations in Latin America, with an initial focus on sectors such as beauty, electronics and clothing. Santander believes that the platform has adopted a cautious approach, focusing on establishing a firm base before expanding its portfolio, especially in narrower categories such as jewelry and food.
The report also points out that the collaboration between the two platforms in Mexico is already beginning to show positive results. The integration of local payment methods, such as the paid and oxxo market, according to analysts, facilitates transactions for users, suggesting that Tiktok is more concerned with operational efficiency than with a rapid expansion of their catalog.
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How the free market can get along
Santander points out that for the free market, the main advantage may be in logistics. The Tiktok Shop model, which prioritizes quick and effective deliveries, could be more efficiently served with the help of a fulfilment network (logistical process of an e-commerce ranging from merchandise separation to postage to postage ) already established. It is in this sense that the free market, with its fulfilment network, according to the bank, could expand its services to Tiktok Shop sellers, charging for storage and delivery services, which would not only increase the base of free market customers, But it would also create new sources of recipe.
Regarding payments, Santander notes that the free market is already integrated with Tiktok Shop, with the paid market being one of the payment methods available. This collaboration, according to analysts, points to an even deeper partnership in the region, allowing Tiktok to offer a more fluid payment experience to consumers.
The partnership also creates a new source of revenue for the free market. According to strategists, the paid market will be able to charge fees on each sale made in the tiktok shop, generating an additional revenue flow for the company. Collaboration will also allow the free market to access valuable data on users’ purchase behavior, which can be useful for optimizing their own services.
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In addition, Santander points out that the free market has the possibility of expanding its affiliate network, as the platform allows influencers to promote products in exchange for commissions. With the entry of Tiktok Shop in the region, the free market could integrate its products directly into influencer campaigns, gaining visibility and allowing content creators to generate new sources of revenue.
On the other hand, Santander warns: Tiktok Shop can directly affect the free market in categories such as fashion and beauty, where the presence of the video platform is strong and products are consumed quickly and visibly on social networks. Increasing competition in this sector can reduce market share of the Free marketespecially among younger and more engaged consumers, a segment in which Tiktok has stood out.
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