Amid the whiplash-inducing news surrounding TikTok’s future in the United States, which has left even the company itself struggling to understand its future status, the Bytedance-owned app continues to move forward with monetization efforts in international markets (with the obvious exception of India) as it gains popularity among the increasingly lucrative Gen Z demographic.
TikTok is looking to replicate the success of Douyin, its more feature-rich mainland China counterpart, through the development of shoppability and content-commerce. Last month, TikTok announced a partnership with Shopify, representing one of the its most important moves to incorporate social commerce and advertising since the launch of TikTok for Business earlier this year.
The Shopify partnership represents a strong shift towards content-commerce for its the global app, and it stands to benefit brands in the direct-to-consumer (DTC) brands space first. In the U.S. market, as in China — where “internet-famous” (wanghong) brands are all the rage — Gen Z consumers have proven themselves to be extremely interested in these fast-moving brands, such as ultra-cheap Chinese fashion label Shein.
Other Chinese brands such as C-beauty unicorn Perfect Diary are using TikTok as their conduit to reach young consumers in markets from North America to Europe, yet without the expense of opening physical stores or working with overseas retailers. Perfect Diary recently launched a collaboration with Australian performer Troye Sivan (who boasts 1 million TikTok followers), a move aimed squarely at building brand equity among Sivan’s largely teenage fanbase.
Shopify looks well placed to benefit from TikTok’s appeal for DTC brands to use content-commerce strategies to reach Gen Z through short video. “It was obvious early on how [TikTok] was starting to influence commerce trends and trajectories,” Shopify Channels head Satish Kanwar recently told the Financial Times. “With direct-to-consumer brands, that relationship between storytelling and entertainment and the product they sell is so close.” The partnership will launch first in the United States, extending to European and Southeast Asian markets in 2021.
The question now is whether TikTok can follow in Douyin’s footsteps and successfully build a vertical entertainment-and-shopping infrastructure that keeps young people engaged with its content while giving them the ability to shop within the app (something that Instagram is also trying to do, with mixed success). Douyin recently moved to bolster its e-commerce business by blocking links to third-party sellers from livestreamers on its app, requiring viewers to be directed to Douyin’s in-app shops (outside links are still allowed from short videos, however).
TikTok could follow a similar path over time (especially if e-commerce livestreaming takes off on the platform) and it could potentially force brands to use a proprietary e-commerce infrastructure, along with its in-house influencer identification and marketing tools.
But in the nearer term, if TikTok survives in the American market and manages to become a global DTC content-commerce powerhouse, it has a good chance of achieving long-term revenue gains. The next question is whether TikTok will be able to expand on its success with younger consumers to reach older, more affluent audiences and the brands that appeal to them.
If it can manage to make that leap, TikTok may find more major brands throughout the consumer spectrum willing to take it seriously, and Instagram and Facebook should be very concerned.
Read more here at Content Commerce Insider.
