Is TikTok's In-App Shop a Threat to Amazon Sellers - Or a New Opportunity?

In November 2022, TikTok entered a new sector of the US ecommerce market with the launch of a livestreaming shopping feature in its in-app Tiktok Shop. This move, internally called "Project Aquaman," raised many questions among sellers and industry professionals.

Will it succeed? How big will it get? Should other marketplaces be worried?

While some of these questions will take time to be answered, what we can do for now is look at the facts and plan accordingly. Figuring out what TikTok Shop livestreaming is, how it works, and how other livestream shopping endeavors panned out, will at very least inform and shape the plans of some businesses going forward.

What Is TikTok Shop and How Does It Work?

TikTok’s influence on ecommerce isn’t new, of course. Products from Amazon frequently go viral, and #TikTokMadeMeBuyIt is a popular hashtag across social media. Influencers often post about their top Amazon finds, with links to external listings from their pages. 

TikTok Shop, on the other hand, is a tool that can be accessed directly from the app, allowing users to browse and make purchases without leaving TikTok. This is good for TikTok because it can capture some of that revenue and keep its users engaged for longer. 

RELATED: How TikTok Social Shopping Can Expand Your Ecommerce Business

While this is still a relatively new marketplace for the US, the addition of livestream shopping could change the way users shop on the platform. According to this article on Semafor, TikTok, thanks to its owners ByteDance, is trying to bring over a version of livestream shopping that is a successful industry in China.

As it exists in China, livestream shopping resembles TV shopping channels and networks like QVC. Whether that style of commerce pairs well with TikTok, and its largely Gen Z and Gen Y audience, remains to be seen. 

Is TikTok’s “Project Aquaman” Really an Amazon Competitor?

One of the main areas of concern with the rise of TikTok Shop is that it will detract from customers being directed towards Amazon listings.

Funneling users into the in-app shop instead of letting them shop elsewhere is good for TikTok, but may not immediately seen as beneficial for for sellers. But will it really affect them, and will it change current online consumer culture?

TikTok Shop Fees

TikTok saw the revenue driven to Amazon by its users, and now wants to capture its own share. According to the FAQs on its Seller Center page, TikTok is planning on charging a commission fee, but it's in the early testing stage in the US and will be further updated.

A Business Insider report states that this fee was 5%, with a reduction to 1.8% for the first 90 days after successful registration. But again, the official publication of the fees is still developing. 

The benefits to sellers in exchange for these fees are presently listed on TikTok Shop Seller Center:

• Qualified Traffic: Visibility on purchases will bring higher quality traffic to shops,
• Better Experience: Faster, frictionless checkout increases engagement and gives a better customer experience,
• Creator Collaboration: Get access to creators in the Affiliate Marketplace, and become an exclusive part of TikTok Shop.

Trust in FBA Sellers and Amazon

The current boost for Amazon "finds" going viral on TikTok could largely be due to the trustworthiness and sheer depth and breadth of the listings. If customers can find any number of gadgets and know their financial information is secure, why would they risk using something new?

Any search for TikTok Shop invariably brings up related questions on the legitimacy and security of the feature. As it stands, it doesn’t have the embedded trust Amazon enjoys; at least, not at the moment. 

RELATED: Navigating the Amazon Customer Journey From Search to Purchase

Something that could prevent trust in TikTok Shop is the emerging political and legal challenges it faces. Semafor reported that Republican lawmakers, and advocacy group Public Citizen, have called for investigations and bans of the app due to its links to China and potential threats to US citizens. While nothing may happen as a result of these requests, the media representation and public perception of TikTok may be further affected.

Should Amazon Sellers Fight TikTok Ecommerce - Or Join It?

At this early stage, it's too soon to tell if TikTok Shop will cause problems for Amazon sellers. Since Tiktok was, and still is, primarily a social media platform, its marketplace functionality will most likely only exist as part of its overall agenda, even if it is wildly successful. 

Continuing or starting to work with influencers and content creators would be a good choice for any business, regardless of whether it intends to sell on TikTok or not. As Andrew Morgans discussed at our Q4 Ultimate Kickoff, influencers are a trusted source for their followers, and can hugely impact sales. 

As a seller, using TikTok Shop as another viable marketplace can be part of a savvy expansion strategy, but sellers should, as always, use caution. It remains unclear if this particular social shopping platform will take off, flop, or just grow slowly, especially in light of the livestreaming shopping efforts of Meta, Walmart, and Amazon.

RELATED: Amazon Raised FBA Fees Again: How Bad Is It This Time?

In addition to the new forays into livestream shopping, Amazon just announced the imminent launch of Amazon Inspire, an in-app feed of shoppable content. If you are already creating images and videos for TikTok and Instagram with influencers or celebrities, it looks like this will be an easy transition over to Amazon Inspire. 

If you’re curious about expanding your business with TikTok, you can learn more in this article, along with tips and suggestions on how to maximize it. 

Is Amazon Inspire Really a TikTok Competitor?

The newly announced Amazon Inspire can be seen as a direct response to TikTok’s popularity as a product discovery platform. However, whether it will be as successful for the same reasons is debatable. 

TikTok’s popularity is primarily rooted in the fact that it is used for many different types of content, not just products. Another factor of the platform's success is that users feel they discover products organically, instead of buying into some "evil corporate marketing machine." With Amazon Inspire being purely product discovery content, it makes the marketing tactics that currently work in the background glaringly obvious, and potentially off-putting.

On the other hand, if you look at Amazon Inspire as a new type of window shopping, it’s actually pretty smart. According to TechCrunch, users will select areas of interest when they first open Inspire. Many customers already browse the other curated feeds and lists on Amazon, but Inspire will give them a new way to discover new products. 

Walmart, TikTok, and the Future of Ecommerce Sellers

TikTok’s foray into ecommerce, and now livestream shopping, is not that surprising. Many businesses are diversifying how they interact with their customers and capture their spend. 

Walmart is another example of a business changing with the times: embracing third party sellers to build out its own marketplace. Clearly, this is a strategic move to compete with the likes of Amazon. 

Amazon, for its part, has also begun beta testing a program called Creator Connections, which will allow creators to easily connect with brand partnerships, increasing earnings on top of their Amazon commissions. 

RELATED: Why Amazon’s New Reimbursement Policy Will Anger FBA Sellers

Currently, the relationship between TikTok and Amazon is in sellers’ favor. According to Carbon6 Community Ambassador, Vanessa Hung, “Amazon pays sellers for driving traffic from places like TikTok, they work together in a way.” As such, she sees TikTok Shop as a positive thing, saying, “This will mean another marketplace platform, which is fantastic for brands that are already building audiences and advertise on TikTok.”

As smaller businesses and independent sellers, the best cue to take from the moves the big companies make is to always be adaptable. Being prepared for what might happen, and using all of your available tools, are the surest ways to capture and keep success.