There is no doubt that TikTok has been the biggest app of the last five years. Its growth has skyrocketed and it has become the main global app where youth culture thrives.
It has also changed the world of social media and digital marketing. Next, could it change the world of e-commerce?
Let’s take a look.
Recent Happenings at TikTok
A number of recent posts on LinkedIn Jobs suggest that TikTok is looking to expand into the warehouse and logistics business with US locations.
They are looking to build ‘global fulfilment centers’ in Los Angeles and Seattle. According to one of their job posts:
“The ecommerce industry has seen tremendous growth in recent years and has become a hotly contested space amongst leading Internet companies, and its future growth cannot be underestimated. With millions of loyal users globally, we believe TikTok is an ideal platform to deliver a brand new and better e-commerce experience to our users.”
So, what exactly will TokTok provide for merchants?
The Future of TikTok?
Many have found this move interesting, as TikTok already generates impressive revenue only from advertising. Currently, it could be said that it generates the most revenue and pays creators the least of almost any monetized social platform.
It seems they are looking to expand by offering merchants:
- Warehousing
- Delivery
- Return Services
- Customs Clearing
- Supply Chain Systems
Some wonder if TikTok will one day compete with Amazon in the world of e-commerce. However, it is simply too soon to tell.
TikTok Has Been Moving Toward E-Commerce Integration in the West For Some Time
In August of 2021, TikTok began a public partnership with Shopify. This empowered Shopify merchants to directly connect their Shopify storefronts with their TikTok accounts.
This was initially meant to help retailers promote their brands. They could also sell products through organic discovery and shopping tabs on the platform.
Tiktok has also tried to implement live shopping features in the west, with little success so far.
However, TikTok is owned by the Chinese company Bytedance, and live shopping has been wildly popular for years throughout Asia.
While reports over the summer indicated that TikTok had abandoned its plans to bring live shopping to the US and Europe, it appears that the company may be getting involved again.
This Fall, The Financial Times reported that TikTok was working on a potential partnership with TalkShopLive to launch its live shopping platform.
This is a truly fascinating move. TikTok could not only profit from advertising products but from their distribution and sale as well.
Will TikTok Challenge Amazon?
At present, TikTok has more than a billion monthly active users. It is also the world’s sixth most-used social platform.
Many speculate that if TikTok successfully pursues this, it could pose a real threat to Amazon’s dominance in e-commerce.
However, at least currently, it does not look like the company is trying to replicate exactly what Amazon does. One major thing that Amazon does that other companies do not is having its own methods of transporting goods outside of any national mail system.
In the US, they can deliver things much faster than most other methods of mail. In countries without a national mail system, or ones that don’t function very well, Amazon may be the only non-expensive reliable method of receiving deliveries.
Based on the job postings, it doesn’t look like TikTok is working to replicate this model at this time. They imply that TikTok would work with outside vendors to handle shipping, consolidation, and transportation.
Here is an example of the types of roles TikTok is looking for:
One position, a logistics solutions manager for a global fulfillment center, is looking for a Seattle-based employee to plan and design fulfillment centers and e-commerce logistics solutions that include the transportation of goods, order prediction and inventory management.
As they posted quite a few job openings, we can look at those and take a solid guess at what the company is trying to build in the US.
What Other Kinds of Positions is TikTok Looking to Fill?
These job listings were initially reported by Axios. According to them, another Seattle-based role is essentially looking for someone to help build a new fulfillment service center from the ground up.
The center, the posting says, “is a global team responsible for developing and growing our logistics solution” and will include product fulfillment by TikTok Shop to its sellers by “providing warehousing, delivery, and customer service returns.”
Other roles posted are seeking to create a team that is responsible for a global logistics and warehousing network.
While, as of yet, the posts do not imply that they are looking to compete with Amazon directly with their own transportation units, they do imply that TikTok might be seeking to implement a free return program.
According to Axios:
“Building out its own e-commerce supply chain could give TikTok more control and boost profits in the U.S. and around the world.”
The State of Social Commerce
Currently shopping on social media sites is a market worth about $37 Billion in the US.
Currently, the leader is Meta, owner of Instagram, Facebook, and Whatsapp. Alphabet-owned YouTube has also partnered with Shopify to enable content creators on the platform to connect their profiles to their Shopify stores.
TikTok says that the company focus is “providing merchants with a range of product features and delivery options” in places where it already has e-commerce programs. This includes South East Asia and the UK.
However, as TikTok has been wildly influential on consumer purchasing decisions in the US, it makes sense that eventually similar features would be seen in America. For example, The Guardian reports:
Communities such as #BookTok, a corner of TikTok devoted to literature and reading, has been credited with driving a surge in the sales of print romance books this year. To accommodate more purchases on its app, TikTok said last summer it would partner with the Canadian e-commerce company Shopify to allow users to buy items directly on the app.
Final Thoughts on TikTok Moving Into E-Commerce
Ultimately, it makes a lot of sense for TikTok to move in this direction. The site has become a major generator of youth culture and a huge influence on what purchases people make.
If consumers find products on their site, why would TikTok not want to directly deliver them to those products and profit off of the sale in more ways than one?
While, as of yet, they don’t seem to have plans to directly replace Amazon’s entire business model, they could definitely pose a threat to Amazon’s dominance in e-commerce.
This could be especially true amongst younger demographics who may not have Amazon accounts yet, but already spend a lot of time on TikTok.
What do you think? Comment below.
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