- TikTok launched its e-commerce platform, TikTok Shop, on September 13, 2023.
- The social app’s shopping business will be driven by FOMO and trends, fueled by its avid community of creators.
- Jasmine Enberg is a social media columnist for CMO Insider, covering the companies, creators, and internet culture. Enberg is a principal analyst at Insider Intelligence
TikTok is building an Amazon-like flywheel to be the next US digital juggernaut.
It has already mastered media, and its ad business will grow faster than Amazon, Google, and Meta between now and 2025, at a rate of over 22%, per Insider Intelligence. Even so, TikTok’s $6 billion in estimated 2023 US ad revenues aren’t enough to position it among the digital heavyweights.
It must speed up its wheel. TikTok has to crack the US e-commerce market, and it’s going head-to-head with Amazon to do so.
After months of testing, TikTok this month launched TikTok Shop, an in-app commerce solution including shoppable short and live videos, checkout, TikTok Shop ads, fulfillment, and a marketplace accessible through a separate Shop tab.
But TikTok won’t be Amazon. It doesn’t need to be to succeed.
Media provides TikTok’s momentum
To get any flywheel turning, it requires an enormous amount of force. For TikTok, that force is its For You page, which serves a seemingly endless amount of content served algorithmically to users. Fueling that supply are creators, who have made TikTok the zeitgeist and a bonafide entertainment platform.
The app’s main competitors in media — Meta and YouTube — have copied TikTok’s tech. But neither Reels nor Shorts can replicate the culture: A scroll through Instagram will surface many repurposed TikToks or content inspired by a TikTok trend.
TikTok creators continue churning out original content, a feat at a time when engagement on social apps is shifting away from public posting to more private conversations in DMs and group chats.
Advertising keeps the wheel spinning, commerce accelerates it
But just because TikTok builds a shop, doesn’t mean buyers and sellers will come. No social app has been able to conquer US e-commerce, and the 200,000 TikTok Shop merchants represent a tiny fraction of TikTok’s reported 5 million US business accounts.
The marketplace, full of deeply discounted and copycat goods, is a jarring departure from the personalized, entertaining experience the rest of the app has to offer.
TikTok does have several things working in its favor: It caters to a young audience, whose shopping habits and retailer loyalties are still forming. It has a roadmap and deep resources in parent company ByteDance, which can afford the $500 million loss TikTok Shop is expected to face this year.
Creators will make the difference
What TikTok really needs to succeed is the same fuel that got it to scale in the first place: creators. Its Shop affiliate program, through which participating creators earn a commission from sales, has already garnered over 100,000 creator sign ups.
Amazon can’t compete on the creator front. Its recent offer to pay creators $25 a video to boost its “Inspire” feed was met with a collective LOL. It’s not because the tech isn’t good, but because Amazon isn’t intended to inspire — regardless of what its TikTok-like feed is called.
Amazon is about convenience and reliability. It’s where consumers go when they already have a product in mind or need to replenish their supply of toilet paper. Its flywheel is powered by Amazon Prime, and advertising to boost those products is now growing faster than its ecommerce revenues.
TikTok’s commerce business will be driven by trends and FOMO, packaged up and delivered to users by creators. It’s where people will go to be inspired, discover new products, and buy the things they want, rather than what they need. TikTok’s sponsored content tools and its new ad formats will facilitate that behavior.
It will be a distinctly different shopping experience, even if the marketplace looks like an Amazon dupe
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