NOTE: This blogpost is a summary of the article published in WSJ titled: ‘Amazon Confronts a New Rival: TikTok’. The article uses exclusive Watchful insights about Amazon’s App feature tests which helped the reporters unveil a comprehensive picture of the competitive landscape.
While TikTok soared to fame as a viral video-sharing sensation, it’s now shifting gears to become a shopping destination for its 150 million U.S. users. On the other side, Amazon, the e-commerce giant, is embracing social elements within its app to attract a younger audience and is creating a network of influencers to promote products. As both companies vie for dominance, the emerging field of social e-commerce, estimated to be worth $100 billion by 2025, will witness intense competition.
TikTok’s Ascent in Social Shopping
TikTok recently launched its shopping feature in the U.S., TikTok Shop, with a daily sales goal of $10 million by the end of the year. It’s making significant investments in building its logistics infrastructure, attracting Amazon employees, and enticing third-party sellers with competitive revenue shares. Over 60% of Amazon’s retail sales come from third-party sellers, and TikTok aims to capture a slice of that market.
However, TikTok faces the challenge of building trust among consumers. Amazon’s relentless focus on customer experience, including speedy deliveries and a lenient return policy, has earned it a reputation for reliability. In contrast, TikTok is still working to establish itself as a trustworthy platform for shopping.
The Power of User Engagement
TikTok boasts a significant advantage in user engagement. On average, U.S. users spend about two hours daily on the platform, while Amazon users spend only about 9.7 minutes a day. In response, Amazon has integrated social features into its app, such as Inspire, which provides a TikTok-style feed of shoppable content. This feature allows users to upload their content and share what they find. Although Amazon’s efforts aim to keep users engaged, it’s challenging to divert customers from their established shopping patterns.
Amazon has also partnered with social media influencers to promote its products and earn commissions, but TikTok still maintains an edge in this domain. TikTok influencers, like Kayla Ruliffson, have reaped substantial benefits by promoting products on TikTok Shop, earning thousands of dollars in a short period. Amazon is slowly catching up, offering influencers better tools and analytics and hosting retreats to keep them engaged.
Logistics: Amazon’s Upper Hand
In the logistics department, Amazon has a significant lead. The company has spent years building a distribution network that can deliver packages within two days or less to nearly any location in the U.S. On average, Amazon delivered over 13 million packages daily in the U.S. last year. In contrast, TikTok is still in the early stages of building a logistics apparatus to rival Amazon. The company is instructing sellers to ship products within three days or face payment delays, and they are establishing their own distribution networks.
While TikTok has recruited workers with experience in supply chains and logistics, including former Amazon and eBay executives, Amazon’s U.S. marketplace boasts an estimated one million active sellers, overshadowing TikTok’s efforts.
Influencers: TikTok’s Strength, Amazon’s Growth
The battle over influencers is fierce. Amazon has been making strides since launching its influencer program in 2017, enticing creators with financial incentives. Amazon is providing influencers with better analytics and tools to improve their engagement. However, TikTok remains the go-to platform for influencers. The number of views for TikTok videos promoting Amazon Prime Day sales has consistently doubled since 2019, reaching over 400 million this year. Despite Amazon’s efforts to court influencers, TikTok still reigns supreme in this aspect.
In the burgeoning field of social shopping, Amazon and TikTok are locked in a fierce competition, each leveraging its unique strengths. Amazon’s solid logistics, trusted reputation, and growing influencer network give it an edge, while TikTok’s unrivaled user engagement and influencer appeal keep it in the race. As they continue to innovate and adapt to evolving consumer preferences, it will be intriguing to witness how this battle for social shopping supremacy unfolds in the coming years.
You can read the original WSJ article in full here.
Watchful insights published in the WSJ to inform this analysis piece include:
If you’d like to learn more about what type of insights Watchful can deliver about your competitors’ apps, get in touch with our team and schedule a demo with our team of analysts.
