TikTok wants to be a marketplace

It has shoppable ads and e-commerce ambitions in the US, but buyers we spoke to said challenges could lie ahead.
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Illustration: Francis Scialabba, Photo: TikTok

· 5 min read

TikTok, the platform rife with controversy but loaded with ad budgets, wants to be a marketplace.

The company is striving to make it easier for users to make purchases on TikTok, courting advertisers with shopping advertising inventory and ambitions to expand its live-shopping capabilities, like the kind already popular in China.

“They’re going to become a store,” Amie Owen, UM’s head of shopper in the US, told Marketing Brew. Though some of its shopping inventory is new and still being tested, advertisers are confident TikTok has an audience worth reaching, but to what extent that audience will embrace shopping on the platform is TBD.

Social commerce—buying stuff on or through social platforms—has a somewhat complicated history in the US.

Meta brought virtual storefronts, “Shops,” to Facebook and Instagram in 2020 with high expectations, but, according to The Information, is expected to soon remove the Shops Tab from Instagram, reportedly citing sales that weren’t meeting expectations. Meanwhile, Pinterest and YouTube have bolstered their on-platform shopping capabilities.

TikTok’s Chinese equivalent, Douyin, has been successful as a live-shopping platform, but that success hasn’t quite spilled over to US audiences. According to the Financial Times, TikTok was set to abandon its live-shopping efforts in the US this summer but reversed course in October, partnering with TalkShopLive.

Later that month, Axios reported that TikTok intended to “build product fulfillment centers” in the US.

Trial, error

In the meantime, advertisers are still using TikTok for brand awareness via in-feed ads.

Offering lower-funnel inventory, like an ad that says “Buy here,” can provide advertisers with an opportunity to drive sales. In August, TikTok introduced three new kinds of shopping inventory: “video,” “catalog listing,” and “live shopping.” The inventory is currently being tested with advertisers and isn’t widely available yet.

Some buyers toying with the platform’s shoppable offerings have run into hurdles.

For one, Robert Pearsall, managing director of social activation at Omnicom Media Group, told Marketing Brew that TikTok has created so many new products so quickly that it hasn’t had time to test them fully.

He said that he was testing TikTok’s shopping inventory “a little bit,” but declined to say with whom, or how it was performing.

“In general, some of the native checkout experiences across social platforms have been a little bit of a challenge to gain scale from a user-adoption perspective,” he told us. That has led the agency “more toward driving traffic to our clients’ websites” instead, he said.

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“For whatever reason, there’s not as much traction in users wanting to sort of adopt that behavior,” he said.

Mike Feldman, SVP and head of commerce and retail media at Dentsu, agreed. “From a consumer and then especially from an advertising standpoint, the lack of a seamless experience is certainly a barrier,” he told Marketing Brew. Still, both agreed that, compared to the competition, TikTok has a serious opportunity in terms of its e-commerce ambitions because of its scale and user engagement.

Building blocks

TikTok appears to want to become its own retailer of sorts in the states: The company was set to begin beta testing TikTok Shop—a function that enables users to place orders directly on TikTok—in the US starting last month, according to Semafor.

But retail outside of the “traditional distribution channels,” can be hard, Kieley Taylor, global head of partnerships at GroupM explained.

If a brand is selling candles, those candles need to be in stock on TikTok and on every other platform it’s selling on. There can also be more nuanced supply-chain issues; those candles could melt if they’re kept in a warehouse without air conditioning.

Selling via social platforms “presents more logistical challenges than if you have a key customer—it’s Target, it’s Kroger, it’s Walmart, they buy pallets worth, [and] you ship them on a regular basis,” she said.

And though social commerce might present an opportunity to sell a product, that sale would happen on another platform, where brands might not have as much visibility into a customer’s journey.

There’s also a serious signal loss impacting mobile apps in part because of Apple’s privacy changes, from which TikTok is not immune. And this new type of inventory comes at a tough time, Pearsall explained.

“Budgets are under scrutiny, and we don’t necessarily have as much to test with,” he said.

TikTok seems to be asking advertisers to crawl and run at the same time by offering shopping inventory and reportedly testing live shopping, a feature that many American consumers aren’t used to yet. UM’s Owen said she’d tested livestreaming ads, though she declined to say on which platforms.

“I don’t know if livestreaming has really done its due diligence across any platform because we’ve tested it with several different retailers and it’s great for buzz but it’s not great for sales,” she told Marketing Brew.“The whole space is still in its infancy. We’re all just trying to figure it out.”

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