TikTok’s Coming for Amazon’s Search Traffic

Young shoppers want to be entertained, engaged and surprised, things the biggest online e-commerce company is surprisingly bad at.

| Updated on: Jan 31 2023, 07:47 IST
Instagram looks to do a TikTok, YouTube; video war coming soon; here is what IG users will get
1/8 Good things are coming to Instagram even though it is more due to fierce competition by the likes of TikTok and YouTube rather than something it really wanted to do. As far as Instagram users are concerned, their favourite app is all set to get features that they could only see in other apps and it is going to get more entertaining. The Instagram feature coming soon is full-screen videos and indicates that the app is focusing on staying relevant. In a world where user attention span is short and very fickle, this move is expected to, not just to retain Instagram's base, but actually add to it. (REUTERS)
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2/8 Instagram head, Adam Mosseri, posted a video on Twitter where he elaborated on new features. In it he underlined that perception is important and therefore, Instagram does not want to be bracketed as a "square photo-sharing app" in the minds of users and the rest of the global digitally aware community and henceforth, it will get more into entertainment and video. (AP)
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3/8 Mosseri took to Twitter to explain and this is what he posted. "At Instagram we’re always trying to build new features that help you get the most out of your experience. Right now we’re focused on four key areas: Creators, Video, Shopping and Messaging." (REUTERS)
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4/8 Mosseri said, "Video is driving an immense amount of growth online for all the major platforms right now and it is one direction I think we need to lean into more. People say they use Instagram to be entertained. Because lets be honest, there is some serious competition right now. TikTok is huge and YouTube is even bigger. We have to embrace that and that means change." (AFP)
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5/8 As far as the point about videos is concerned, Instagram already is into videos with IGTV, Reels, and Stories, but from now on, it will be giving much more emphasis on this medium. (AFP)
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6/8 And what is it exactly regarding videos that Instagram has in mind? Macrumours has listed these - "full screen, immersive, entertaining, mobile-first video." This surely, sounds like TikTok. Mosseri has said that this app's popularity is something Instagram wants to have. (AFP)
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7/8 Macrumours has it that Instagram will start testing recommendations and these will show up on users' Feed and that too in a month or so. (REUTERS)
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8/8 Over and above that, Mosseri says Instagram wants to be more transparent in the public's eye regarding its plans. So, expect to hear a lot more about what is going on in the House of Instagram going forward and today's video can be considered as part one. (Pixabay)
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TikTok is beating Amazon in terms of influencing people to buy products and helping them discover new products. (Bloomberg)

Amazon.com Inc. has long been the dominant platform where people start their shopping searches for everything from earbuds to summer dresses. But its grip over that first step in a shopper's journey is loosening as ByteDance Ltd.'s TikTok aggressively draws traffic and becomes a more popular place for people to shop. TikTok's growing influence has exposed Amazon's big weakness: for all its success in retail logistics, it's not really a fun place to browse or discover new trends.

Many giants have fallen in the cut-throat world of retail, and Amazon's frumpy, catalogue-style platform risks pushing it into irrelevancy among those in their teens and early twenties — the shoppers of tomorrow — who demand entertainment, engagement and a dash of the unexpected from the brands and platforms they spend time on. Take, for example, the last festive quarter when 67% of consumers quizzed by Jungle Scout about social media and gifting said TikTok was the most influential platform for gift ideas.Last month, Amazon announced steps to catch up with a new feed called Inspire, billed as helping it break into what retail experts call social commerce. Over the next few months, shoppers will see a lightbulb in the navigation bar of the Amazon app that will take them to curated reviews and ads for different products on the site. Think Instagram, but on Amazon. The idea is for shoppers to discover new things and feel influenced to buy the product with Amazon.

If that sounds familiar, it's probably because Amazon announced something similar not too long ago. Amazon Spark launched in 2017 as a feature within the app, where members of its Prime service could post pictures of products with reviews, and anyone scrolling through could like the photo or tap the shopping bag icon to see a product listing. Spark never really caught on as a feature within the app and in 2019 was transformed into Shop-by-Interest, where shoppers can select categories they are interested in and interact with other customers.

TikTok's success has added urgency to the Inspire launch. But as Amazon's last foray into social commerce showed, adding another feature to the app won't fix the glaring weaknesses exposed by companies like TikTok and retailers whose sites and apps are actually pleasant to use like Inditex SA's Zara or Urban Outfitters Inc. The fact is that shopping on Amazon feels like paying a gas bill online. Its flat two-tone site lacks any aesthetic or organization that makes it easy or interesting to browse. The app is similarly difficult to navigate. It's designed as a place where people log in with a certain intent, complete their purchase, and sign out. More than 60% of shoppers start their search on Amazon with a high intention to buy, according to a September report from search and marketing analytics firm Jungle Scout. If all goes well, their goods arrive a couple of days later in a simple brown box. No razzle-dazzle, no fuss, just your order on time.

Amazon has made billions of dollars from being predictable, efficient and competitive on price. It quite literally transformed the retail industry around the concept of convenience. But after a rough 2022, which saw its retail business fray, growth in Prime membership flatline and thousands of layoffs, the biggest US online retailer is under pressure to figure out how to be more than a great delivery company.

Social shopping will only continue growing and Inspire will help connect customers with “shoppable content” created by other customers, influencers and brands, Oliver Messenger, director of Amazon Shopping said in an emailed response to questions. For now, shopper disenchantment is showing in the numbers. About 63% of those surveyed by Jungle Scout said they began their search on Amazon in the third quarter of last year, down from 74% in the first three months of 2021. In that time, TikTok's share climbed to 21% from 10%. Losing its hold as the place shoppers go first to discover things means losing dollars. The more shoppers browse TikTok and are directed to purchase straight from a brand, the less they spend with Amazon. Already, Walmart's e-commerce business has squared up with Amazon stealing some market share during the online shopping boom fueled by the pandemic, and the turn toward essentials that's followed.

It makes sense that TikTok is rapidly catching on with retailers and advertisers. About 40% of TikTok users are between 18 and 24 years old with another 27% in the 13-to-17 age bucket, according to Influencer Marketing Hub, demographics that have major (and growing) buying power as well as influence over trends. Only about 4% of Amazon's shoppers are younger than 26 years old, according to market research firm Numerator. TikTok's potential as a shopping app is unquestionable. Its For You page is scarily precise in targeting users with content they are likely to want to see, forging highly addictive behavior. It shows scrollers less interesting videos before ones they'll really like to create the kind of dopamine rush gamblers get when they hit the jackpot on a Las Vegas slot machine. And parent ByteDance has played and won in e-commerce before with TikTok's Chinese sister app Douyin. It has become so enormous that some analysts believe it's reaching a saturation point in China. Amazon's livestream shopping business, on the other hand, hasn't quite taken off (it's buried somewhere on the site and has poor engagement). With TikTok's addictive surprise factor, it's better positioned than Amazon to figure out what might make its US audience mix entertainment with shopping.

Instagram and YouTube have popularized the use of paid influencers to market products to their following, which has led to epic fails like Fyre Festival. But TikTok's culture of authenticity, stemming from young people's marketing fatigue, is quick to out paid influencers who aren't honest with their reviews or sponsored content. That gives shoppers more confidence in what they read and see about a product unlike Amazon reviews which have been plagued by abuse and manipulation. Instead, successful “ads” on the platform either catch fire organically like with a Subway worker who drove millions in sales for the franchise by sharing sandwich combinations, or are simply company-created entertainment that captures the surrealist humor of Gen Z.

Of course, TikTok's encroachment on Amazon's e-commerce dominance is not certain. Amazon took years to develop and refine its sophisticated marketplace and delivery network. So far, TikTok has mostly worked with merchants of Shopify Inc. and recently began to hire US staff to build a fulfillment and delivery network. And like any social media success, TikTok's place in the lives of fickle young internet users is not permanent. Diplomatic concerns over its Chinese ownership and political ad ban could compromise trust with users and dissuade people from spending money on the platform.

Whether or not it succeeds as a shopping platform though, TikTok has exposed Amazon's biggest weaknesses in online shopping. This time, Amazon will have to commit to making broader changes across its retail business or face being outdone by the clock app.

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First Published Date: 31 Jan, 07:46 IST