There is a new king of online shopping, and I’m pretty sure most people didn’t see it coming (not you, though, since you read ZDNET 🙃).
I know what you’re thinking. It’s Temu or Shein. Nope, not even close!
Understanding the landscape
Before we get into who the new king is, we first need to understand the current landscape.
We have popular media darlings like Amazon, Walmart, and Target, who are the largest in the space, but there are also platforms that allow smaller merchants to reach a global audience, like Shopify, eBay, and Amazon’s Seller Program.
Also: 8 ways Intel can still pull itself out of free fall after its CEO’s sudden exit
Internationally, there are huge players like Alibaba, AliExpress, and so on.
For the sake of our conversation, I’ll refer to these guys as “traditional online shopping.” Traditional online shopping is challenging for several reasons, but one of the biggest issues the industry faces, regardless of size, is the rising cost of driving traffic to their online store.
Big or small, it’s expensive. And ultimately, that’s how the business works…
How the internet really works
Here’s your crash course on how an online business operates: a merchant buys traffic using ads on platforms like Meta or Google. A customer sees an ad, clicks on it, is taken to your website, likes what you offer, and boom, you just made a sale.
Simply put, blogs, social media apps, and search engines control the flow of online traffic. Basically, they control the internet, and it’s pay-to-play for the most part.
Also: ChatGPT Search could destroy online businesses – how you can stay ahead
It’s like a toll road for attention. I’m sure you’ve heard the term “attention economy.”
This is what it really means. And this economy is made up of two players: you’re either buying the attention or selling the attention.
Stay with me. I promise this is important.
Back in the day, “traditional traffic,” like blogs and search engines, was the dominant traffic source. Then, social media platforms started making a name for themselves, and consumers started hanging out on these platforms for hours.
Fast-forward a few years, and these social platforms like Meta are the 800-pound gorilla in the room. In other words, Zuck is Deebo from Friday, and the rest of the internet are Smokey and Craig.
These social platforms have completely changed the way we interact with each other as well as the way we shop online, with “social commerce” slowly but surely becoming a thing.
Also: My top 5 Cyber Monday deals are all hovering near all-time low prices
Your favorite influencer talks about a product they like, and the next thing you know, you’ve added it to your cart and you’re waiting for the mailman to drop it off.
Platforms like Instagram, Facebook, and Pinterest have embraced social shopping on their platforms, allowing merchants to connect and transact in a way that has never been done before.
But the new incumbent has done it in a way no one could foresee.
The Rocky Balboa of online shopping has arrived
Enter TikTok Shop, aka the new undisputed king of online shopping… I’m sure you’re thinking, “Huh? How did it become the king?” Grab a coffee, my friend, because this is the plot twist of all plot twists.
This plot twist is so good it makes Christopher Nolan jelly.
Also: Why Jaguar’s new campaign broke the internet – and 5 ways to nail your next product launch
Remember how the internet runs on attention and is made up of buyers and sellers of said attention? Well, TikTok owns massive amounts of attention and is selling it to itself.
This puts traditional online shopping in an impossible situation. It’s kinda like you rent a location in a busy mall, and your landlord decides he’s going to sell the exact same stuff as you.
The difference is your landlord gets the best buyers and the best location, while you’re paying top dollar to be in the back fighting for scraps.
TikTok has seamlessly combined content discovery and online shopping and is prioritizing traffic flow within its app.
What makes this move so unique is that when platforms try to do stuff like this, they usually end up pissing off the merchants or the customers… but somehow, everyone loves TikTok Shop.
Sure, it has some growing pains, but most merchants love it, and customers are equally excited.
How TikTok Shop is winning over consumers
Consumers enjoy a seamless checkout experience while supporting and connecting with the brands they care about. In real-time, customers can see behind the scenes and talk to the brand owners in a way that has never been done before.
TikTok will almost pay you to shop by self-funding deep discounts for customers. In some cases, discounts are as much as 90% off… and that’s not a typo.
Merchants are flocking to set up TikTok Shops
TikTok is pulling out all the stops to make its merchants successful. It offers an Affiliate Program that connects creators and brands meaningfully and thoughtfully.
Merchants can see the actual value of a creator with metrics like how much revenue a creator generates for brands so merchants don’t have to guess if creators can move the needle. In return, creators get to see if a brand is worth promoting.
Also: The 10 best tech gifts you can buy at Walmart
But that’s not all. Creators and brand owners can go live and sell their products directly from the event. It’s like QVC.
They also allow merchants to connect external apps that manage customer service and order management, which is a direct attack on Shopify.
Full Disclosure: I own a TikTok Shop, and I’m here for it. With TikTok Shop, I genuinely feel like I’m a partner, and we’re in it together. Sure, the customer service could be better, but it’s expected at the rate it’s growing.
Gen Z’s latest obsession is seeing impressive growth
I know what you’re thinking: “Cool story, Les, but I don’t see how TikTok Shop is the new king…”
I have 17.5 billion reasons why you should be paying attention. 17.5 billion is TikTok Shop’s expected revenue in 2024, but keep in mind that it officially launched TikTok Shop in the US in September 2023. 🤯
Oh, it gets better: about 67% of TikTok users have been inspired to shop for a product they saw on the platform, even when they weren’t initially looking to make a purchase.
Also: 6 reasons why I switched to a digital wallet, and you should too
Gen Z is particularly active on TikTok Shop, with 52.5% of Gen Z consumers using the platform for shopping or product discovery. It’s also the preferred platform for 29.1% of Gen Z consumers starting their product search.
You heard it here first: Traditional online shopping is in trouble. With TikTok having a chokehold on attention and TikTok Shop being one of Gen Z’s favorite places to shop, TikTok Shop is shaping up to be an unstoppable monopoly, bringing new meaning to vertically integrated.
But the immediate future is iffy at best
TikTok Shop isn’t all sunshine and rainbows. As we speak, the US government is pushing for a TikTok ban.
President Biden signed a law in April 2024 requiring TikTok’s parent company, ByteDance, to sell the app or face a complete ban in the US by January 19, 2025.
The concerns are primarily related to national security risks, as the US fears that TikTok, under Chinese ownership, could provide the Chinese government access to vast amounts of personal data on American users.
Federal officials are also worried about potential manipulation of information through the platform.
For now, we’ll wait to see how this one plays out, but from the way I see it, this could be the only thing that saves traditional online shopping from the wrath of TikTok Shop.
😇 Hope this helps; I’m rooting for you.
P.S. 📩 Want more data-driven marketing insights? Sign up for my free newsletter, No Fluff Just Facts. I share what’s working in the world of digital marketing, the latest trends, and the occasional pep talk to keep you inspired. If this sounds like your jam and you wanna be besties forever, click here to sign up. It’s totally FREE!
Disclaimer: I hold stock in Shopify and Meta and actively operate a TikTok Shop. This article reflects my personal opinions and insights, which are based on my own experiences and observations in the industry. While I strive to provide an unbiased perspective, my involvement with these companies may influence my views. Readers should consider this context when interpreting the content presented here.
