Tune in to TikTok on a Saturday and you will likely find Cyndi Bray washing her sheets. The founder of Wad-Free, who appeared on Shark Tank in 2021, has been increasingly using the social platform to sell her products that promise to prevent tangled laundry.
“I’ve been giving new meaning to the phrase ‘airing my dirty laundry,’” Bray said.
In a recent interview, Shark Tank personality and Wad-Free investor Kevin O’Leary said TikTok has sent a “shockwave through the Shark Tank community.” The key to TikTok’s success: Its engagement algorithm.
“They know exactly who wants to see what and when,” O’Leary said. “The elements of understanding what time of day it is and what you want to see at that time of day makes it a very powerful platform.”
Although TikTok is known to skew towards Gen Z, Bray says her typical shoppers, who range from moms to senior citizens, are still finding her live feed. “I have found no better way to reach out and interact with them,” Bray said.
In fact, O’Leary said all his portfolio companies that are using TikTok’s livestreaming functionality for product promotion are seeing a strong return on investment, including Wad-Free.
TikTok aims to turn fans into customers
TikTok has been slowly adding commerce features to its popular short-form video hosting service owned by ByteDance in China. TikTok’s marketplace, TikTok Shop, has been successful in Southeast Asian markets like Indonesia and Vietnam, but has struggled to gain traction in Western markets.
The effort to ramp up its commerce business and potentially cash in on lucrative market comes as the U.S. continues to weigh a ban on TikTok ahead of the elections. Since China requires its companies to share national security-related data with the government, some argue that TikTok’s popularity is a threat to U.S. national security.
In November, TikTok invited hundreds of U.S. merchants to join its shopping service, but adoption was sluggish for months. Data from Apptopia shows that downloads and daily usage of TikTok’s Seller app in the U.S. has been rising steadily since May 30, with daily active users doubling in the last month. O’Leary said TikTok has been waving fees for two to three months to make the platform more attractive to sellers.
More recently TikTok has been pitching itself as a cost-free marketplace for Chinese manufacturers and suppliers that want to sell into the U.S. market. The promise of free listings, shipping and warehousing promises to shake up the market for cheap Chinese goods now dominated by Chinese-owned rivals Temu and Shein.
All of this is part of TikTok’s effort to build a consumer base as it looks to expand. In late June, TikTok announced it will launch its first online retail store in the U.S. version of the social app. TikTok will buy inventory, manage warehousing and logistics and handle customer service in a similar manner to Amazon’s
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Livestreaming and shoppable videos will likely be at the core of its commerce strategy.
“TikTok will likely be a driver and beneficiary of the livestreaming movement,” said Michael Zakkour, founder of 5 New Digital, a retail consultancy that has worked with clients on livestreaming strategies.
A modern-day QVC shopping experience
Livestreaming combines elements of streaming, social media, and influencer status into a real-time virtual experience. This nascent shopping channel made inroads during the pandemic due to its ability to create an emotional connection like in-person shopping with potential to further disrupt retail.
Shopping via livestreaming is a modern twist on the home shopping concept popularized by QVC and HSN. There are a couple big differences between the two channels, though. With livestreaming, shoppers interact directly with the associate or influencer demonstrating the product and begin the purchase process within the stream.
Consumers like the enhanced engagement, the additional product information and, of course, the deep discounts. Brands appreciate they can maintain better control over their image, market positioning and narrative as they bring their products and services to market. Zakkour adds that his clients have seen a conversion rate on livestreaming that is 3 to 10 times higher than the website with return rates that are usually 10% of what they experience from the website.
While still an emerging shopping channel in the U.S., livestreaming has already become mainstream in China. The concept was making inroads in China before the pandemic but usage skyrocketed when in-person engagements were restricted. Alibaba’s Taobao Live is the undisputed leader of commerce livestreams with more than 300 million tuning in during last year’s 11.11 Global Shopping Festival.
How China points towards the future of shopping
As of March, 75% of digital consumers in China purchased a product or service using livestreaming in the last month, according to Euromonitor International’s Voice of the Consumer: Digital Survey. Unlike other countries where tech-forward trends are driven by younger cohorts, more than half of the population across all age groups shop in this manner.
Livestreaming has not seen the same uptake in the U.S., though. Only 28% of digital consumers in the U.S. have used the channel to purchase a product or service, according to the same Euromonitor survey. In contrast to global consumers, the U.S. over indexes in terms of consumers shopping for household essentials like Wad-Free on livestreaming which indicates specific categories may drive uptake in the U.S.
Despite livestreaming’s slow start, it has potential as an emerging shopping channel. This narrative whereby next-gen retail trends become mainstream in China before significant uptake in the West has replayed itself over and over. Prior to livestreaming, trends like mobile payments, social commerce and QR codes followed much the same trajectory.
Zakkour, who has been working in livestreaming since it began in China in 2016, believes we’re about to reach an inflection point in the U.S.
“We’re seeing an evolution from e-commerce to immersive commerce,” Zakkour said in an interview. “All of these tools and technologies take it from flat and boring buying into a 3D immersive shopping experience. If we look at the bedrock of immersive commerce, it is video. Livestreaming commerce is one type of video that makes the buying experience more immersive.”
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