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Analysis | TikTok is coming for Amazon’s search traffic


Amazon.com Inc. has long been the dominant platform where people start their search for everything from earbuds to summer dresses. But his grip on that first step in a customer’s journey is loosening as TikTok from ByteDance Ltd. attracts aggressive 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 exactly a fun place to poke around or discover new trends. Many giants have fallen in the unforgiving world of retail, and Amazon’s scruffy catalog-style platform threatens to make it irrelevant among teens and early twenties—the shoppers of tomorrow—who demand entertainment, engagement, and a touch of luxury. unexpected from the brands and platforms they spend time on. Take the last festive quarter, for example, when 67% of consumers surveyed by Jungle Scout about social media and gifts said TikTok was the most influential platform for gift ideas. Last month, Amazon announced steps to keep up with a new feed called Inspire, billed as helping break what retail experts call social commerce. In the coming months, shoppers will see a lightbulb in the Amazon app’s navigation bar that directs them to curated reviews and ads for various products on the site. Think Instagram, but on Amazon. The idea is that shoppers discover new things and feel influenced to buy the product from Amazon.

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

The success of TikTok has made the launch of Inspire even more urgent. But as Amazon’s latest foray into social commerce showed, adding a new feature to the app won’t fix the glaring weaknesses exposed by companies like TikTok and retailers whose sites and apps are actually nice to use, like Inditex’s Zara. SA or Urban Outfitters Inc. is that shopping on Amazon feels like paying a gas bill online. The flat two-tone site lacks any aesthetic or organization that makes browsing easy or interesting. The app is equally difficult to navigate. It’s designed as a place where people log in with some intent, complete their purchase, and then log out. More than 60% of shoppers begin their search on Amazon with a high intent to buy, according to a September report from search and marketing analytics firm Jungle Scout. If all goes well, their goods will arrive a few days later in a simple brown box. No glare, no hassle, just your order on time. Amazon has made billions of dollars by being predictable, efficient and competitive on price. It has literally transformed retail around the concept of convenience. But after a rough 2022 that saw retail disintegrate, Prime memberships grow and thousands of layoffs fall, America’s largest online retailer is under pressure to figure out how to be more than a great delivery company. Social shopping will only continue to grow 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 email response to questions. For now, the disillusionment of shoppers is reflected in the numbers. About 63% of those polled by Jungle Scout said they started their search on Amazon in the third quarter of last year, up from 74% in the first three months of 2021. During that time, TikTok’s share jumped from 10% to 21% . Losing its traction as the place where shoppers go to discover things first means losing dollars. The more shoppers browse TikTok and are directed to buy directly from a brand, the less they spend at Amazon. Walmart’s e-commerce business has already thrived with Amazon stealing some market share during the online shopping boom fueled by the pandemic, and the turn to essentials that followed.

It makes sense that TikTok is quickly catching on with retailers and advertisers. About 40% of TikTok users are between the ages of 18 and 24, with another 27% in the 13 to 17 age range, according to Influencer Marketing Hub, demographics with high (and growing) buying power and influence on trends . According to market research firm Numerator, only about 4% of Amazon’s shoppers are under the age of 26. TikTok’s potential as a shopping app is beyond question. The For You page is eerily accurate at targeting users with content they’re likely to want to see, forging highly addictive behavior. It shows scrollers making less interesting videos than videos they actually like to create the kind of dopamine rush gamblers get when they hit the jackpot on a Las Vegas slot machine. And older ByteDance has previously played and won in ecommerce with TikTok’s Chinese sister app Douyin. It has become so huge that some analysts believe it is reaching a saturation point in China. Amazon’s livestream shopping business, on the other hand, hasn’t quite taken off yet (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 would allow the American public to mix entertainment and shopping.

Instagram and YouTube have popularized the use of paid influencers to market products to their followers, leading to epic busts like Fyre Festival. But TikTok’s culture of authenticity, born of young people’s marketing fatigue, is quick to outsmart paid influencers who aren’t honest with their ratings or sponsored content. That gives shoppers more confidence in what they read and see about a product, unlike Amazon reviews that have been plagued with abuse and manipulation. Instead, successful “ads” on the platform either catch fire organically, such as with a Subway employee who drove millions in sales for the franchise by sharing sandwich combos, or are simply company-created entertainment that captures Gen Z’s surreal humor .

Of course, TikTok’s encroachment on Amazon’s e-commerce dominance isn’t certain. Amazon has taken years to develop and refine its sophisticated marketplace and delivery network. So far, TikTok has mainly worked with merchants from Shopify Inc. and recently started hiring 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 isn’t permanent. Diplomatic concerns over Chinese ownership and the ban on political ads could jeopardize user trust and deter people from spending money on the platform.

Whether or not it succeeds as a shopping platform, TikTok has exposed Amazon’s biggest weaknesses in online shopping. This time, Amazon will have to commit to making broader changes to its retail business or else it will be outdone by the clock app. More from Bloomberg’s opinion:

• Skiing in your neighborhood shopping center? Why not?: Leticia Miranda

• ChatGPT is not a panacea for Microsoft’s Bing: Parmy Olson

• Put the Nepo babies in charge of luxury: Andrea Felsted

This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.

Leticia Miranda is a Bloomberg Opinion columnist on consumer goods and retail. She was previously a business reporter at NBC News and a retail reporter at BuzzFeed News.

More stories like this are available at bloomberg.com/opinion

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