June 15, 2024

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Will TikTok Become a Major Amazon Competitor?

TikTok is currently hiring for positions related to building out fulfillment capabilities in the US, aimed at providing warehousing and supply chain systems to support ecommerce efforts. As many have noted, this may put the short form vertical video giant in direct competition with ecommerce titans like Amazon in the near future.

In order to compete with Amazon, however, TikTok will have to build trust with consumers, as it’s currently held in far lower regard than the leading ecommerce platform in the US. Still, there are reasons to believe it might be able to overcome this to establish itself as a major shopping channel for US consumers.

 

US Consumers Four Times as Likely to Trust Facebook as TikTok

 

This year, Tinuiti surveyed 1,000 US internet users to better understand how they felt about key issues regarding online privacy. One of the questions asked which social media platform respondents thought best protected online consumer privacy.

The biggest takeaway from the responses was that consumers don’t know which social platform to trust, with 43% saying all social media platforms were the same and 23% saying they weren’t sure, such that two-thirds of respondents couldn’t identify a platform they felt protected their privacy better than others.

Only 3% chose TikTok as the platform they most trusted to protect their privacy. Compare that to Facebook, long criticized as failing to build trust with the public, drawing 12% of all respondents. Further, Meta-owned Instagram drew 7% of respondents. Simply put, TikTok is far down on the list of social media network consumers trust to protect their privacy, and consumers aren’t particularly fond of any social media networks in particular when it comes to this area.

 

 

This isn’t particularly shocking, given that TikTok is known and used by far fewer Americans than older platforms like Facebook, and a lack of familiarity naturally leads to less trust than more known entities. Additionally, news reports have long questioned how much user data might be shared with the Chinese government by TikTok’s parent company, ByteDance. When evaluating the likelihood that users will plug in payment information and buy products directly from TikTok videos, this lack of trust has to be considered.

Compare this to Amazon, which dominates other marketplaces in terms of consumer belief in their protection of privacy.

 

40% of Consumers Believe Amazon is the Best Marketplace at Protecting Privacy

 

Our study asked the same question with regards to which online marketplace consumers believe best protects their online privacy. 40% of respondents chose Amazon, more than five times the second-place marketplace, Walmart, and more than 14 times as many as chose TikTok as the most trusted social platform.

Further, while two-thirds of respondents couldn’t pick a specific social platform that most protects their privacy, only 41% couldn’t choose a specific marketplace. In contrast to social media networks, a majority of US consumers can choose a marketplace as the best at protecting online privacy, and most of that group chose Amazon.

While respondents weren’t asked to directly compare TikTok and Amazon, one question did ask them to rank Amazon, Facebook and Google in terms of how much they trusted each to protect online consumer privacy. Facebook was a distant third, with only 5% of respondents saying it was the best of these three, while Amazon finished first with 55% of first place votes. If Facebook is seen as more trustworthy than TikTok, but still lags Amazon meaningfully, it stands to reason that TikTok would also fare poorly if consumers were asked to directly compare it to Amazon in terms of protecting consumer privacy.

That said, there’s reason to be optimistic about TikTok’s prospects to become a shopping destination for consumers.

 

Two Reasons Why TikTok Might One Day Become an Ecommerce Titan

 

It’s certainly not all gloom when it comes to consumers’ perception of TikTok, and I think two key trends stick out as being positive indicators for TikTok’s commerce journey.

The first is that younger generations are far more likely to trust the platform. 9% of Gen Z respondents chose TikTik as the social platform they most trust to protect consumer privacy, compared to just 1% of Boomers. As this cohort ages up into more buying power, their familiarity and comfort with TikTok will help build momentum for commerce that occurs directly on TikTok.

The second is that TikTok has already shown the ability to influence purchase decisions, with trends like #tiktokmademebuyit creating a viral element to product discovery that helps accelerate purchase behavior. Creators on the platform have built loyal followings who trust them to promote quality products, allowing them to help consumers get past hesitations to purchasing on TikTok. Keeping these creators active on the platform and building their audiences will be key to TikTok establishing itself as a trustworthy platform for ecommerce transactions.

 

What Does All This Mean for TikTok’s Future as a Commerce Platform?

 

Does a current lack of trust mean TikTok will never become a major player in the US ecommerce space? Of course not! But it does highlight how differently Americans view social media networks and marketplaces in terms of protecting consumer privacy.

While Facebook topped other social networks as the network voted most likely to protect consumer privacy in Tinuiti’s study, it probably also diminished the likelihood that Americans will ever trust social media platforms as much as other kinds of websites over the years, as scandals like Cambridge Analytica made Americans weary of how their data is used by social networks.

TikTok may one day buck this trend, but for now continues to be impacted by its new kid on the black status creating a lack of trust, as well as by government and news reports that question how much user data from Americans is making its way back to the Chinese state.

Beyond simple user data, Amazon has built trust with its users that it offers competitive pricing and reliable fulfillment. There are also more than one hundred million Prime members who are incentivized to convert with Amazon over other options, and that loyal base is something even like the likes of Walmart has had trouble replicating in terms of online membership.

Building out fulfillment capabilities and streamlining consumer purchases through its platform won’t quickly put TikTok on even-footing with Amazon when it comes to ecommerce. To truly become an ecommerce giant in the future, TikTok will first have to overcome the lack of trust many consumers have with social media platforms, and build consumer confidence that it’s a strong option for users to convert through in making purchases online.