TikTok, It’s In Stock!: TikTok hops onto the online shopping bandwagon

December 19, 2021

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3 min read

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What's going on here?

Popular social media app TikTok ventures into e-commerce by launching a “livestream shopping” event.

What does this mean?

On the 8th and 9th of December 2021, TikTok users saw the platform launch its first ever live shopping experience – OnTrend. Hosted by Rylan Clark-Neal, the event saw brands such as Charlotte Tilbury and L’Oreal Paris display their products on sale. TikTok chose to leverage its content and partnerships with influencers and companies such as Guinness World Records to mark its entry into e-commerce.

Earlier ventures by TikTok include a collaboration with Shopify which allowed British and American users to directly purchase goods from the app. However, livestream events such as OnTrend allow for the entire online shopping process to take place within TikTok – from product discovery to payment and reviews. TikTok’s venture marks a shift towards this more experimental format of shopping, where consumers can watch live streamed content and engage with the creator through chat and reaction functions, while simultaneously being presented with the option to make an instant purchase.

What's the big picture effect?

Platforms such as TikTok have risen in popularity over the pandemic, and served as a marketing hub for multiple companies. With hashtags such as #TikTokMadeMeBuyIt racking up 7 billion posts, the app’s ability to influence purchasing decisions is no secret – 25% of users either research a product or make a purchase after viewing TikTok videos. Furthermore, just recently, NPD Group noted that blush sales went up 29% in the US following the TikTok trend of “underpainting”. As such, TikTok’s decision to tap into the e-commerce market is reflective of a general shift towards experimental commerce in the West. This shift has also been echoed by Meta, which has already established e-commerce platforms on both Facebook and Instagram, where users can engage in livestream shopping events and purchase products directly from the social media pages of their favourite brands. Should such ventures be successful, companies may also see major antitrust lawsuits owing to their power over consumers’ purchasing behaviour.

The impact of this gradual change within e-commerce is yet to be seen. However, experts such as Eric Dahan have voiced optimism about the impact of such shifts on smaller businesses. According to Dahan, businesses will benefit largely from acquainting themselves with TikTok. This could potentially reduce marketing costs due to the simplicity associated with content on the application, and allow small businesses to leverage the app’s algorithm to increase their sales. On the contrary, social media networks’ expansion into the e-commerce industry has not yet resulted in a substantial loss for retailers such as Amazon, whose monopoly remains relatively unthreatened in the West. On the contrary, in China, e-commerce has already been revolutionized by livestream shopping. According to McKinsey Digital, 66% of Chinese consumers reported making a purchase through livestream shopping in 2020.

While the ease of access and navigation definitely make livestream shopping seem like an attractive option, consumers are still wary of the reliability of these platforms. For instance, Chinese platform Douyin has often been criticized for poor consumer protection policies following false promotions and failed returns. Social media giants will have to focus extensively on measures to build consumer trust in their platforms, and businesses will need to be quick to adapt to the needs of advertising their product via livestream.

Report written by Megha Vinesh

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