Speaker 1: Alex Barinka is used to opening up her TikTok and
Speaker 1: seeing it look more or less the same every day.
Speaker 2: A little bit of Formula one content for Ari drivers,
Speaker 2: design the hardest F one track. A little bit of
Speaker 2: cooking content. This dinner is quick, delicious and you only
Speaker 2: need to buy five things to make it. I'm a
Speaker 2: bit of a fashion junkie as well, so I get
Speaker 2: some kind of eclectic cowboy slash edgy style in there, elgurlies.
Speaker 3: I'm looking for white cowboy boots for Coachella because fashion.
Speaker 1: Alex is a technology and social media reporter here at Bloomberg,
Speaker 1: and she's a regular TikTok user, but lately she's been
Speaker 1: spending her time looking at a newer feature in the app,
Speaker 1: TikTok Shop, icy.
Speaker 2: Socks, icee utility items, a statue of a gnome using
Speaker 2: the restroom that somebody could put in their lawn.
Speaker 1: TikTok Shop is the latest commercial venture from Byteedance Limited,
Speaker 1: the parent company that owns TikTok. It's TikTok's own marketplace
Speaker 1: where users can find and buy products as they scroll.
Speaker 1: Content creators on TikTok have been trying to sell us
Speaker 1: things for years, but before TikTok Shop, you had to
Speaker 1: leave the app to buy the stuff elsewhere. Now you
Speaker 1: can buy things directly through the app without ever leaving it.
Speaker 1: TikTok shop is banking on using its powerful discovery algorithm
Speaker 1: to connect users with the products they think they're most
Speaker 1: likely to buy.
Speaker 2: So if you're somebody who loves to watch dog training videos,
Speaker 2: you might see a video with a leash tagged.
Speaker 1: In it, and it's shooting for the moon.
Speaker 2: We've reported, according to people familiar with the matter, that
Speaker 2: TikTok is aiming to sell seventeen point five billion dollars
Speaker 2: worth of goods in the US in twenty twenty four.
Speaker 2: That is an ambitious, kind of audacious number, but it's
Speaker 2: also why we can start kind of confidently talking about
Speaker 2: TikTok in the same vein as Amazon.
Speaker 1: Today. On the Big Take, we'll take you inside the
Speaker 1: strategy behind TikTok shop as it seeks to compete with
Speaker 1: bigger e commerce rivals. To succeed, it might have to
Speaker 1: change the way we shop. I'm your host, Sarah Holder,
Speaker 1: and this is the Big Take from Bloomberg News. TikTok
Speaker 1: Shop got its start in southeast Asia. In twenty twenty one,
Speaker 1: it started attracting customers with something called live stream shopping.
Speaker 2: Let's try them.
Speaker 3: This is literally the first thing.
Speaker 2: I've tried on and I'm obsessed. This is the coolest jumpever.
Speaker 1: Live Stream shopping is exactly what it sounds like.
Speaker 2: That's where people show up, they turn their camera on,
Speaker 2: they're hawking goods, they're selling things. They might sell something
Speaker 2: as small as a tube of lip gloss or as
Speaker 2: big as a house. It's something that in Asia has
Speaker 2: really taken off and users are really used to it.
Speaker 1: But replicating the success of live stream shopping in other
Speaker 1: parts of the world hasn't been easy.
Speaker 2: Two years ago, they set their sights on more western markets.
Speaker 2: TikTok started in the UK rolling out shop, and they
Speaker 2: did it in a way that was similar to Southeast Asia.
Speaker 2: What they found was users there are just not willing
Speaker 2: to show up at the same time and buy from
Speaker 2: someone on a live video. They're much more used to
Speaker 2: the social media ad experience where they see something in
Speaker 2: their feed, they can click on it and buy it
Speaker 2: whenever they feel like so.
Speaker 1: When TikTok shop finally dropped in the US this past fall,
Speaker 1: the company tried something.
Speaker 2: Different, so they took that insight from the UK market,
Speaker 2: and when they turned their sites on the US, which
Speaker 2: is kind of a gem in e commerce world, they said, hey,
Speaker 2: let's actually split our strategy here.
Speaker 1: They'd keep live streaming shopping as an option, but add
Speaker 1: the ability to tag products in all the other videos
Speaker 1: on your feed. The plan was to create an e
Speaker 1: commerce experience unlike other social networks.
Speaker 2: With Instagram, with Facebook, with YouTube. Often what they did
Speaker 2: is they linked you out to another website to check out,
Speaker 2: and everything else was off platform.
Speaker 1: But TikTok wants you to shop within the app itself.
Speaker 1: And to do that, TikTok has been hiring different types
Speaker 1: of employees to work on this part of the business.
Speaker 2: TikTok is starting to grow and cultivate this walled garden
Speaker 2: where they are hiring e commerce people. They're hiring people
Speaker 2: who used to work for department stores and brands, They're
Speaker 2: hiring logistics people.
Speaker 1: With this new feature, TikTok is hoping to tap into
Speaker 1: how people already use the app. Users already scroll to
Speaker 1: find new trends and products to buy, Influencers already post
Speaker 1: to sell stuff.
Speaker 2: TikTok's been known kind of as a place where fashion
Speaker 2: fads and new products sell out. There's a hashtag called
Speaker 2: TikTok made Me buy It that existed well before TikTok Shop,
Speaker 2: so that kind of user behavior is already there.
Speaker 1: So if an influencer recommends and tags a new mascara,
Speaker 1: for example.
Speaker 2: An influencer for a beauty product might make you know,
Speaker 2: lower than ten percent, but they'll make a cut of
Speaker 2: that revenue.
Speaker 1: And then if you watch the video and end up
Speaker 1: buying the product.
Speaker 2: The merchant then would take home, you know, maybe half,
Speaker 2: maybe it's a large majority chunk of the sales, and
Speaker 2: they would pocket that as revenue, and then TikTok takes
Speaker 2: their cut. So they've created this kind of three legged
Speaker 2: stool of an ecosystem.
Speaker 1: We spoke to one of the vendors that TikTok invited
Speaker 1: to start using TikTok Shop, Scott Macintosh.
Speaker 3: I invented cell phone seat here. They are new cell
Speaker 3: phone seat colors are in limited editions.
Speaker 2: So I got the viral cell phone seat phone holder
Speaker 2: for your car here on TikTok shop. Absolutely love.
Speaker 1: It's basically a cup holder that holds your cell phone.
Speaker 1: You can put it in your car. Scott used his
Speaker 1: savings to create the cell phone seat with help from
Speaker 1: some investors. And when Scott first started trying to use
Speaker 1: TikTok shop, he says, it wasn't a great experience.
Speaker 3: I jumped through a lot of hoops to regster for
Speaker 3: the shop because it was real glitchy because they were
Speaker 3: just launching it.
Speaker 1: The learning curve seemed worth it though, because of the
Speaker 1: huge boost invisibility he got.
Speaker 3: So previously you would see my video, you would find
Speaker 3: my link to my website and buy on my website,
Speaker 3: whereas TikTok shop made it direct path to purchase, Like
Speaker 3: I don't have to click to another website wait for
Speaker 3: that to load, find the product I want, you know,
Speaker 3: enter my information. No, it was click the video button
Speaker 3: in that you can buy the product right there, and
Speaker 3: you can use Apple Pay. It was like two clicks.
Speaker 3: So I was like, yeah, I want to be part
Speaker 3: of this. This this is going to be great.
Speaker 1: And because of the perks that TikTok was offering.
Speaker 3: The fact that they were paying for the shipping, which
Speaker 3: still they still do, by the way, is a huge
Speaker 3: part of my margin for this product. That was a
Speaker 3: huge incentive to put as much effort as I could
Speaker 3: into TikTok shop.
Speaker 1: The catch Scott needed to make a bunch of videos
Speaker 1: to promote his items.
Speaker 3: We got the shop going and TikTok was going great.
Speaker 3: And I met with this with a TikTok rep named Mandy,
Speaker 3: and she told me, Okay, you have to go live
Speaker 3: on TikTok for at least, you know, thirty minutes, but
Speaker 3: we recommend two hours every day. And I was like what.
Speaker 3: I was like, okay, I'll try it. I was a
Speaker 3: believer in TikTok after what I'd seen, but he.
Speaker 1: Ended up loving doing these livestream videos.
Speaker 3: Then it started to work. I started seeing sales, people
Speaker 3: started buying the products, People started coming back to my show.
Speaker 3: They would ask me questions and they would give me ideas.
Speaker 3: And we only had the product in black, and somebody
Speaker 3: was like, hey, why don't you have other colors? And
Speaker 3: I was like, I don't know, I guess we could
Speaker 3: have other colors.
Speaker 1: Scott getting hooked on live streaming is no coincidence. It's
Speaker 1: part of TikTok's longer term strategy.
Speaker 2: Going into twenty twenty four, we've seen them start to
Speaker 2: do what is really worked for them in Asia and
Speaker 2: push more into live stream and live stream shopping. You're
Speaker 2: also seeing them roll out live partnerships like with Peloton,
Speaker 2: who's going to stream fitness classes on the app live.
Speaker 1: In this way, TikTok's ambition with TikTok Shop is twofold.
Speaker 1: They're hoping to capture a piece of people's daily e
Speaker 1: commerce activity, but also to introduce new shopping habits to
Speaker 1: audiences in the US.
Speaker 2: If there's one truism in the tech world, it's that
Speaker 2: changing user behavior is hard, and usually when it happens,
Speaker 2: those are the companies that go big.
Speaker 1: After the break, we'll look into the advantages challenges TikTok
Speaker 1: faces in this new world of online shopping. Hey, we're back.
Speaker 1: Before the break, we were hearing from tech and social
Speaker 1: media reporter Alex s Birinka about how TikTok Shop, TikTok's
Speaker 1: latest venture in the e commerce space, not only wants
Speaker 1: to beat the competition, but also wants to shape the
Speaker 1: way we shop. But with huge, entrenched competitors like Amazon
Speaker 1: in the mix, can TikTok Shop really hit their sales
Speaker 1: targets When it comes to having the edge among social
Speaker 1: media platforms, TikTok has time on their side.
Speaker 2: TikTok has reached a moment where, on average in the US,
Speaker 2: the average US user is spending an hour and a
Speaker 2: half on the app.
Speaker 1: That's roughly thirty to forty hours per month.
Speaker 2: That's almost double other social media apps like Instagram. That
Speaker 2: is a ton of time.
Speaker 1: But Alex says just because people are spending their time
Speaker 1: there doesn't necessarily mean they'll shop there. Many users are
Speaker 1: still going to Amazon to actually buy the items they
Speaker 1: first saw on TikTok.
Speaker 2: When you're asking somebody like TikTok is to open your
Speaker 2: pocketbook to enter your credit card information, that's a different
Speaker 2: level of trust that Amazon already has. They need to
Speaker 2: kind of start breaking that user behavior that people are
Speaker 2: so used to where they see something and they say, hey,
Speaker 2: let me go enter that search bar in Amazon, find it,
Speaker 2: check it out from a place that I know, and
Speaker 2: instead convince them to make that action on TikTok shop.
Speaker 1: Another challenge TikTok faces is that not every seller knows
Speaker 1: how to make videos that are engaging enough to sell
Speaker 1: their products.
Speaker 2: If a video is not interesting, they're not going to
Speaker 2: show it to people. You can't just rely on having followers,
Speaker 2: So you have to not only show off the product
Speaker 2: in a way that people might want to buy it,
Speaker 2: but work it into videos that are entertaining, interesting, intriguing
Speaker 2: enough to also show up on people's feeds and look,
Speaker 2: I am somebody who posts on TikTok.
Speaker 1: It's not easy, and the initial incentives that first do
Speaker 1: even inexperienced TikTok vendors like Scott to the platform are
Speaker 1: drying up. After all, TikTok shop eventually needs to make
Speaker 1: a profit.
Speaker 2: We have reported that they will raise their fees to
Speaker 2: more kind of industry standard levels, but for a lot
Speaker 2: of the different product categories, they're still lower than places
Speaker 2: like Amazon, certainly because they're trying to convince more people
Speaker 2: to sell on TikTok shop.
Speaker 1: TikTok shop being such a priority for the company also
Speaker 1: risks alienating users on the app who are not as
Speaker 1: interested in buying stuff and just want to watch the
Speaker 1: usual cooking videos they came for.
Speaker 2: There will be over the next twelve months a really
Speaker 2: interesting line that TikTok will be walking where it will
Speaker 2: be showing more shop content to people while also not
Speaker 2: showing them too much that they feel like the whole
Speaker 2: app has just turned into one big ad role for
Speaker 2: all of the products that are being sold on TikTok shop.
Speaker 1: As for how this is all going so far, Alex
Speaker 1: says there was some good news this past holiday season.
Speaker 2: Five million new US users was buy something who hadn't
Speaker 2: bought something on TikTok shop before.
Speaker 1: And for Scott McIntosh, December was a knockout month in
Speaker 1: TikTok sales.
Speaker 3: I mean, in a nutshell, it was unbelievable. We made
Speaker 3: our net revenue for the whole year in December pretty
Speaker 3: much from TikTok.
Speaker 1: He said that these results were a combination of ads
Speaker 1: working alongside TikTok affiliates and continuing to make videos. But
Speaker 1: to reach that goal of selling seventeen point five billion
Speaker 1: dollars worth of goods in the US in twenty twenty four,
Speaker 1: TikTok needs a lot more months like December, or it
Speaker 1: needs a lot more Scott McIntosh's thanks for listening to
Speaker 1: the Big Take from Bloomberg News. I'm Sarah Holder. This
Speaker 1: episode was produced by Adrianna Tapia and Alex Sugia. Special
Speaker 1: thanks to Spencer Soaper and Alex Barinka for their reporting
Speaker 1: It was edited by Caitlin Kenny. It was mixed by
Speaker 1: Alex Zugia. It was fact checked by Mollie Nugent. Our
Speaker 1: senior producers are Jill Diddy Carley and Naomi Shaven. We
Speaker 1: get editorial direction from Elizabeth Ponso. Sage Bauman is our
Speaker 1: executive producer and head of Podcasts. Thanks for tuning in,
Speaker 1: We'll be back tomorrow.