When Social Meets Shopping: How Tiktok Shop is Revolutionizing Social Commerce

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By definition, social commerce means selling items online through social media platforms. Although social media platforms were not designed initially as e-commerce channels, their vast popularity made it almost inevitable for them to evolve as business (specifically shopping) tools and go beyond the mere sharing of social media content.

Not that social media platforms do not have business components, but initially, social media platforms were used as “business pages” to augment a company’s website. Social media platforms are very effective marketing and advertising tools due primarily to the variety of content one can put in. Videos, text, links, real-time (or “live”) broadcasts, and the ability to interact with your audience make social media platforms indispensable when it comes to digital marketing. 

Fast forward to the present and we now see Facebook and Instagram becoming extremely popular channels for e-commerce, particularly online selling, simply because of the sheer number of people using them. 

It is then hardly surprising that TikTok—that ubiquitous, short-form video-sharing channel—has joined the fray and now has a “shopping” component.

But first, a few fun facts about TikTok:

TikTok is owned by Chinese company ByteDance and was known initially as “Douyin” in China when it was launched in 2016. ByteDance designed the app to host a variety of short-form videos, lasting anywhere from 15 seconds to 10 minutes, from genres like pranks, stunts, tricks, and jokes, to dance and entertainment in general.

The name “TikTok” is actually the international version of Douyin. In 2017, the app was introduced and became available for the iOS and Android mobile operating systems. Worldwide, the version of TikTok we know today was launched in 2018, and the rest, as they say, is history.

The app has evolved beyond entertainment and currently has more than 1 billion active users. Downloads for TikTok have hit 3 billion as of 2022. From January to June of 2021, the app was downloaded 383 million times, eventually surpassing other social media platforms. What is truly notable is that TikTok was launched later than most other social media platforms.

In terms of engagement (a measure of interactions on a social media page), TikTok has been hailed as the “most engaging social media app,” with an average session length of 10.85 minutes. In 2019, experts estimate that time spent on TikTok was a whopping 68 billion hours.

The entertainment value of these short-form videos is what makes TikTok so popular. Viral videos are often funny, insightful, interesting, weird, controversial, etc. It is no wonder that so-called dance challenges are currently some of the most-viewed videos on TikTok.

How is TikTok revolutionizing social commerce?

Even before it had a shopping component, TikTok has been a lucrative source of income for creators. Reports say the combined earnings of TikTok content creators reach at least $5 million a year.

In terms of demographics, industry reports said TikTok is used mostly by the younger set (Generation Z), although the demographics are much wider. The relative ease of making short-form videos also appeals to earlier generations.

If we take the United States as an example, TikTok’s Gen Z penetration is the highest with more than 47 percent of active users between 10 and 29. In the US, female users outnumber males by 2:1. On average, Americans are estimated to have spent 1.43 billion hours on TikTok as of March 2020. These figures are expected to be significantly higher in 2021 and 2022.

If we go to Asia, particularly Southeast Asia, TikTok continues to enjoy rapid growth with more than 360 million downloads for 2020 alone. Considering the region’s population is about 658 million, the potential market for online selling is truly astounding.

In the Philippines, TikTok was launched only this year. According to TikTok, it now has its own online marketplace called “TikTok Shop.” 

The opening of TikTok Shop opened a whole new avenue for sellers—from known brands to small- to medium-sized enterprises. TikTok Shop has lofty goals of providing a fresh new shopping experience for users and opportunities for local content creators.

TikTok Shop offers items from various categories including fashion, home and living, beauty, and personal care. At its launch, TikTok Shop merchants will be able to enjoy zero commission fees on the platform for selected products. Payment service fees are capped at one percent to payment service partners.

So how do sellers actually “sell?” Since TikTok is limited to short-form videos, content creators can use feed, content, or livestream to sell their products. At launch, TikTok also offered vouchers for sellers and discounts for first-time buyers. 

TikTok selling: The pros

Going viral. One of the major reasons that differentiate TikTok from other social media platforms is that you do need to have many followers for the algorithm to show your content to the TikTok community. According to its designers, if you are on TikTok, you do not need thousands and thousands of followers for your content to go viral.

TikTok promises to show your content to other accounts based on your interests. This is good news for sellers, as they can now be assured that their products will “reach” users or accounts with similar interests.

Link to your online store. Another advantage of using TikTok Shop is that the seller can include a link to your online store (if you have one). So basically you can live-sell using TikTok, and if need be, the potential buyer can click on the link to your online store.

First mover advantage. TikTok Shop is in its infancy (in the Philippines, at least), so selling products using the app is not that competitive, at least not yet. 

Selling with TikTok: The cons

Limitations. TikTok’s greatest advantage (short-form videos), can also be considered its greatest weakness. Some will say the 10-minute maximum length of the video might not be enough for the seller to live-sell depending on the product. Also, if your product is not visually appealing, then a short video might not be the ideal vehicle to sell said product.

No in-app purchases. To date, there is no TikTok Shop in-app purchase system. But it is expected that some type of similar feature will be available soon.

As it is still in its infancy, TikTok Shop is expected to have more features to allow sellers to use the widely-popular app as a tool for e-commerce.

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