If it sounds familiar, it’s probably because Amazon announced something similar not too long ago. Amazon Spark started as an in-app feature in 2017. Members of the Prime service can post photos of products with reviews, and anyone who scrolls can like the photos or tap the Shopping Her Bag icon to view the product listings. . Spark was a less popular in-app feature, later morphed into Shop-by Interest, where shoppers can select categories of interest and interact with other customers.
The success of TikTok made it imperative to launch Inspire. But, as Amazon’s last foray into social commerce showed, even adding another feature to the app didn’t stop companies like TikTok, Inditex SA’s Zara and Urban Outfitters Inc. from actually using it. It does not fix obvious weaknesses exposed by retailers that offer easy-to-use sites and apps. Shopping on Amazon feels like paying for gas online. Its flat, two-tone site lacks the aesthetics or organization that make browsing easy or interesting. Designed as a place for users to log in, complete purchases, and sign out with specific intent. More than 60% of his shoppers show a high willingness to buy when starting his Amazon search, according to his September report from Jungle Scout, a search and marketing analytics firm. If all goes well, the goods arrive in a few days in a simple brown box.Amazon makes billions of dollars because it’s predictable, efficient, and competitively priced. . It literally transformed the retail industry around the concept of convenience. But after a rough retail disruption in 2022, thousands of job cuts, and estimated flat U.S. Prime membership growth, the U.S.’s largest online retailer is poised to become a leading delivery company. In an email response to a question, Oliver Messenger, director of Amazon shopping, said that it will only continue to grow and inspire other customers, influencers, and more. , which helps connect customers with “shoppable content” created by brands. About 63% of those surveyed by Jungle Scout said he started searching on Amazon in the third quarter of last year, up from 74% in his first three months of 2021. Meanwhile, TikTok’s share has risen from his 10% to his 21%. Losing its position as the first place shoppers go to discover stuff means losing dollars. The more shoppers who browse TikTok and are directed to buy directly from brands, the less they spend on Amazon. Walmart’s e-commerce business is already facing Amazon taking some market share as the pandemic and subsequent shift to essentials fuel the online shopping boom.
It makes sense that TikTok is quickly catching on with retailers and advertisers. According to Influencer Marketing Hub, about 40% of TikTok users are between the ages of 18 and 24, and another 27% are between the ages of 13 and 17, a demographic with great purchasing power and influence on trends. . According to market research firm Numerator, only about 4% of Amazon shoppers are under the age of 26. TikTok’s potential as a shopping app is beyond doubt. Its For You page is terrifyingly accurate in targeting the content users want to see, triggering highly addictive behavior. The scroller shows a less interesting video before a video that really makes you want to build stuff. Parent company ByteDance has previously entered and won e-commerce with TikTok’s Chinese sister app Douyin . China is so huge that some analysts believe it has reached saturation point. Amazon’s live-streaming shopping business, on the other hand, is not very successful (it’s buried somewhere on the site, low engagement). TikTok’s addictive surprise factor makes it better than Amazon to understand why US audiences mix entertainment and shopping.
Instagram and YouTube have popularized the use of paid influencers to pitch products to their followers, leading to epic failures like the Fyre Festival. But TikTok’s culture of authenticity stems from youth marketing fatigue and quickly drives out influencers who aren’t honest with their reviews and sponsored content. This gives shoppers more confidence in what they read and see about their products, unlike Amazon reviews that have been plagued by abuse and manipulation. It said it has zero tolerance for fake reviews, including suspensions, bans and legal action against those who do. Or it’s just entertainment created by a company that captures Gen Z’s surrealist humor.
Of course, it’s not certain that TikTok is eroding Amazon’s e-commerce dominance. Amazon has spent years developing and improving its sophisticated marketplace and delivery network. So far, TikTok has mostly worked with Shopify Inc. merchants, but recently started hiring staff in the US to build out its fulfillment and delivery network. Like any social media success, his TikTok’s place in the lives of fickle young internet users is not permanent. Diplomatic concerns over Chinese ownership and political advertising bans can undermine trust with users and discourage people from spending money on the platform.
Whether or not it succeeds as a shopping platform, TikTok exposed Amazon’s biggest weakness in online shopping. This time around, Amazon must commit to making broader changes across its retail operations. Otherwise, you will lose out to the clock app. Bloomberg Opinion Details:
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(Updated to add Amazon’s comment in 13th paragraph. For previous versions, corrected Shop-by-Interest start date and clarified that Prime membership increases are based on estimates.)
This column does not necessarily reflect the opinions of the editorial board or Bloomberg LP and its owners.
Laetitia Miranda is a Bloomberg Opinion columnist covering the consumer goods and retail industries. She previously served as her business reporter for NBC News and her retail reporter for BuzzFeed News.
More articles like this can be found at bloomberg.com/opinion.
