Is TikTok the Future of E-Commerce?
Once upon a time, only the cool kids hung out on TikTok. Then brands took notice of the huge surge in TikTok members during the height of the Covid-19 pandemic, and they got more involved sharing their own TikToks to be more culturally relevant to the TikTok universe. Soon brands began to enlist the elite cool kids – TikTok superstar creators – to work with them. After all, the cool kids could give a brand instant street cred. Now, TikTok is a place where businesses can sell stuff to TikTok users. That’s because it has rapidly developed an e-commerce capability that taps into the growing popularity of retail social commerce, which is projected to be an $80 billion market in the United States by 2025, according to eMarketer.
TikTok is Becoming a One-Stop Shop
Through recently announced relationships with Shopify and Square, TikTok makes it possible for consumers to shop directly on the app. This is done through a link on a merchant’s TikTok profile. The program is still in pilot, but businesses are signing up. They include jeweler Manly Brands and Kylie Cosmetics, the make-up and skincare brand owned by Kylie Jenner.
Through the program, a business on TikTok can tag its products in organic posts. TikTok users watching the brand’s videos can shop directly from the brand’s storefront or click on a product that is tagged in the video, in which case the shopper is directed to the brand’s online store for checkout. Anecdotally speaking, brands are reporting positive experiences even though the pilots are in the early going. For example, Kyle Jiang, founder of Gen Z-focused skin care brand Juno, told Inc. “We saw an immediate response” after joining the Shopify pilot. “Our sales on TikTok are 10 times what we've gained from Instagram and Facebook.”
Embracing social shopping is a natural move for TikTok. That’s because shopping is a natural behavior of TikTok users. In 2020, TikTok conducted a survey of users and found that the app inspired two thirds of them to shop even when they weren’t planning to do so. As of this writing, #TikTokMadeMeBuyIt had gained more than 6 billion views. Before launching a formal shopping capability, TikTok had experimented with brands such as Walmart, which conducted a shoppable livestream event in December 2020 and March 2021. For the December livestream, Walmart experienced seven times as many views as it had expected, and boosted its TikTok following by 25 percent.
But businesses setting up storefronts are looking for e-commerce sales, not just more views and followers. And TikTok is where it’s at.
Social Commerce is Exploding (and it's not just on TikTok)
TikTok’s expansion into shopping comes at a time when social commerce continues to explode. In fact, TikTok is a bit late to the game. Facebook, Instagram, Pinterest, and Snapchat are among the social commerce apps that have incorporated social shopping. But TikTok has arguably more loyalty among Gen Z and Millennial audiences than all those apps (with the exception of Snapchat). And TikTok has more than 1 billion monthly active users compared to 500 million for Snapchat.
The rise of social shopping on TikTok also speaks volumes about how businesses and people are creating connections with each other:
- Short, snackable video.
- Playful and fun tone.
- Authentic content that people find entertaining and engaging as opposed to overt sales plays.
- Content that taps into trends, which improves cultural relevance.
In addition, TikTok is emerging as an important app for businesses and people to connect with each other in other ways that might surprise you, such as recruitment. Whether your brand should be active on TikTok depends on factors such as how relevant the audience is to you and your ability to create content that will resonate with TikTok Nation. In any case, it’s important to understand how the worlds of social media content and commerce are converging – and how to create content that connects.
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