0:05

If you spend any time on TikTok, you've

0:07

probably noticed that there are a lot of videos about amazing

0:10

things you can buy. There

0:13

are unboxing videos where people show off all

0:15

the new clothes they bought.

0:16

Okay, guys, so I just received two very

0:19

exciting packages, and I'm going to give you a little

0:21

haul. There are videos about cat toys. I

0:23

got this flabbing toy from like Crazy Cat. Let's

0:26

see what it does. So much

0:28

stuff. You probably didn't even know existed,

0:31

but now feel like you desperately need. This

0:33

is a human-sized dog bed that comes with its own blanket,

0:36

and it's machine washable, so it's easy to clean. In

0:38

the past, if you wanted to buy what you saw,

0:41

you had to leave TikTok and find

0:43

the product online.

0:45

But now TikTok is making it easier to

0:47

buy stuff directly on its app.

0:50

And so what TikTok is trying to do is cut

0:52

out that middleman. They're trying to cut out Amazon

0:55

and say, okay, you discovered this product

0:57

here. Well, you can actually just buy it here.

1:00

And you know, with the click of a button, make it so easy

1:02

for them to do that. And so that's

1:04

exactly what TikTok is trying to do.

1:06

That's our colleague Megan Bobrowski. She

1:09

says TikTok has big ambitions when it comes

1:11

to online shopping. I think they're

1:13

sort of looking for their next big bet, and they

1:15

sort of see it, e-commerce, as

1:17

the natural next step for them, given

1:20

the situation that happens where people

1:22

discover products on TikTok and then go to Amazon

1:24

to buy them. And so I think they just see this as the next sort of like

1:27

natural evolution for them. And, you

1:29

know, there is a lot of

1:32

money to be made here if they can pull it off.

1:37

Welcome

1:37

to The Journal, our show about

1:39

money, business, and power. I'm

1:42

Ryan Knudsen. It's Friday,

1:44

October 27th.

1:49

Coming up on the show, TikTok's

1:52

new storefront and the power

1:54

of social media marketing.

2:03

This

2:06

episode is brought to you by Slack. Productivity

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2:38

People realize pretty early on that social

2:40

media is a powerful tool to sell

2:43

stuff. There's a whole economy

2:45

that's built up around it. And it's not just super

2:47

famous influencers like the Kardashians who

2:49

do it. There are tons of smaller

2:51

accounts that promote products. There's

2:54

the interior design account, Arfo

2:57

Farmhouse, which has a partnership with the Home

2:59

Depot.

3:00

I am here to tell you that the Home

3:02

Depot is having their first ever

3:04

Decor Days event.

3:05

And there's Loki the Wolfdog,

3:08

a dog with nearly 2 million

3:10

followers that has a partnership with Toyota

3:13

on Instagram. There's just something

3:15

about a person you follow talking

3:17

about a product they love that just really

3:19

makes you want to buy it. So this is

3:21

sort of like parasocial relationship

3:24

that forms between people and influencers

3:26

they follow. You know,

3:29

influencers are showing you their life. Maybe

3:32

you follow them, you get to know them a little bit. You

3:34

sort of develop this trust with them. And

3:37

so you, you know, like you're

3:39

more likely to trust what they want to sell you or what

3:41

they are saying they use to look a certain way versus

3:44

like a traditional ad. Like you have

3:46

no personal connection to that. I'm

3:48

often amazed by the times that I see somebody

3:51

who I don't even know them on social media, but if they're

3:53

just talking into the camera and they're saying, I

3:55

had this experience and I did this thing and I bought

3:57

this product and it changed my life. And it's really amazing.

4:00

how I'm like, oh yeah, that

4:03

must be great. I probably should buy that

4:05

thing too. Yeah, if it's someone you

4:07

follow and it's

4:09

a product they actually use, the product they actually like,

4:11

and then they're advertising

4:13

that and saying, hey, this

4:15

is the hair product I use or this is the skin product

4:17

I use, here's where you can buy it.

4:22

Shopping on social media is expected to become

4:24

a $100 billion market in the US by 2025. TikTok

4:29

is trying to capitalize on this by creating

4:32

TikTok shop. Last month,

4:34

the company launched the shop feature for users in

4:36

the US. Can

4:38

you just tell me, like, what is

4:41

TikTok shop? Explain what it

4:43

is and how it works. Yeah, so TikTok

4:45

shop, if you open your TikTok app,

4:48

at the top there's normally a following

4:50

tab for you to see people you follow, and then there's

4:52

like a discovery tab for you to

4:53

see content from new people, and

4:56

now there's an additional tab that says

4:58

shop.

4:59

And so if you click on that, you

5:02

will be taken to a page that

5:04

has a bunch of products

5:05

listed on it, and in

5:07

some ways it kind of does look like Amazon. Like,

5:09

you can search for products, you can scroll,

5:12

you can click, and they sort of built

5:14

this marketplace within TikTok.

5:17

Have you bought anything on TikTok shop?

5:19

I have not yet, have you? I have,

5:22

actually. I didn't even realize I had forgotten

5:24

about it, but I bought this, like, drain

5:26

funnel that, like, says if you

5:28

get clogged drains in your sinks, which I got

5:30

this ad right around the time that I did, it's

5:33

like this funnel that you can put in your

5:36

sink drain that's supposed to, like, funnel all

5:38

the hair and other gunk just down one

5:41

of the sides so that it doesn't get caught

5:43

on the inside

5:45

of the sink. You have a lot of hair. That

5:48

was pretty nice. Thankfully,

5:50

I do have a lot of hair. Good.

5:54

So, yeah, I guess it does

5:56

work, because I got influenced. Even

5:59

though I bought it on TikTok, TikTok

6:01

isn't actually selling you the drain funnel. The

6:04

guy who makes the drain funnel is. TikTok

6:06

is just providing a storefront and taking a cut

6:08

of the sale.

6:10

They are just serving as

6:12

like the marketplace right now. They

6:15

are working on setting up warehouses

6:17

to eventually be able to ship stuff, but

6:20

right now, sellers are shipping

6:22

their own product and keeping

6:24

their own product. And in an effort

6:26

to compete with Amazon,

6:28

they are telling sellers they

6:30

have to ship items within

6:32

three days of receiving an order. What

6:34

kind of businesses are selling on TikTok? I

6:37

think there's a lot of small businesses actually

6:39

who make like kind of like crafts

6:42

or homemade goods.

6:45

And like something that I've seen a lot of

6:47

over the past month have been these like fall

6:50

themed sweatshirts. And so it'd

6:52

be like a sweatshirt with like Snoopy

6:54

and then a bunch of like fall leaves. Or it'd be

6:56

like

6:57

this one, this is not fall themed,

6:59

but

6:59

there's a sweatshirt that had pickle

7:01

jars on it. And this went viral and sold out

7:03

and inspired like copycat shops

7:05

to make like fake versions of this. A sweatshirt

7:08

with pickle jars on it? Yeah, it's actually,

7:11

it's pretty cute. Again,

7:14

it's one of those things that like I would maybe consider

7:16

buying it, but it's gone

7:18

like insanely viral. And I spoke

7:20

to the woman who runs this shop that makes this sweatshirt.

7:23

And she said like, you know, they're

7:25

getting sales through the roof. And so it's sort of like

7:27

stuff like this, where it's like small businesses

7:30

or people running these things like out of their

7:32

homes. Just to summarize, so people

7:35

that are selling stuff on TikTok, it's their own, the

7:37

seller has the inventory, the seller is doing the shipping.

7:40

TikTok is just helping them facilitate the

7:42

payment and it's taking a little cut.

7:45

That's correct.

7:46

For now, that's one of those, but I think they

7:48

have bigger aspirations to turn it into

7:50

more of an Amazon type operation.

7:55

An Amazon type operation? Like,

7:57

are they trying to be like an everything store? Where?

8:00

I'll open TikTok instead of Amazon

8:03

when I run out of toilet paper and laundry

8:05

detergent.

8:06

No, it's not exactly that. I think it's

8:08

more that

8:10

you're scrolling and you see something

8:11

fun that you like. So maybe

8:13

a more aspirational purchase than a

8:16

utility purchase. And the

8:18

idea is that you're going to see something

8:20

that you like, like for instance, like was

8:23

it a drain funnel?

8:24

So you see this and you would never

8:26

think to buy this.

8:27

It's not like when you think of like,

8:30

yeah, I ran out of toilet paper. Let me go to

8:32

TikTok. It's more like you're scrolling. You see something

8:34

that looks really cool that you want and

8:37

they're making it very easy for you to just

8:40

go ahead and buy that thing. But

8:42

social shopping has some limitations, especially

8:45

if users start to think that influencers aren't being genuine

8:48

in their endorsements. That's

8:50

what TikTok learned when it first rolled out its shop

8:52

feature in the UK in 2021. The

8:55

company created a partner network of influencers

8:57

that sellers could pay to make videos about their

8:59

products.

9:01

And they sort of ran into

9:03

problems. It wasn't super

9:05

popular. I spoke to someone

9:07

who they worked with and

9:09

she was sure job was to make videos

9:11

every day promoting these products and

9:13

she'd promote everything from like Apple watches to

9:15

she told me a Bunyan corrector. I don't

9:18

even really know what that is, but I don't know

9:20

if I want to know. But so she

9:22

was saying that it

9:24

didn't really

9:24

work. Like what you really need is to inspire

9:26

trust. You need to get people to trust the spot for them. And

9:29

so in the UK, these brands

9:31

were just sort of they were hiring these influencers

9:34

to make these videos about things that those influencers

9:36

maybe didn't necessarily actually care about.

9:38

Exactly. That's exactly what was happening. And like the

9:40

woman I spoke to was like I didn't even really know what

9:42

the stuff was. And I was told

9:44

that I needed to speak really highly of all these things.

9:47

And I think it just like that came across to

9:49

people that, you know, this was a

9:51

genuine these weren't genuine things

9:53

that she was she was into.

9:56

A TikTok executive told the Wall Street Journal that

9:58

quote, this is a big change. of how

10:00

people shop, and so we wanna make

10:02

sure we're getting it right. While

10:05

it didn't go so well in the UK, TikTok

10:07

shops seems to be having more success in the US.

10:11

And one company that's taken notice, Amazon.

10:14

That's

10:18

next.

10:25

This episode is brought to you by NetSuite by

10:27

Oracle. Remember these numbers, 36,025, one.

10:33

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upgraded to NetSuite. 25 is the

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because NetSuite will help get everything you need in

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download NetSuite's popular KPI checklist

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absolutely free at netsuite.com

10:52

slash journal. In

10:56

the

10:56

world of e-commerce, there's

10:58

one undisputed king, Amazon. The

11:00

tech giant sells roughly $600 million of

11:03

goods worldwide every day. Right

11:06

now, TikTok shop only gets about $7 million a day

11:10

in the US, small beans by

11:13

comparison. But TikTok has something that Amazon

11:15

doesn't, people's

11:17

attention. And that's what we're

11:19

gonna talk about today. The average user spends about two

11:22

hours a day on TikTok compared

11:24

to less than 10 minutes on Amazon. What

11:28

does Amazon think of what TikTok is doing? It's

11:31

funny, neither of the companies will comment on each other publicly,

11:34

but that being said, Amazon last

11:35

year did launch in its app

11:37

a

11:39

tab called Inspire

11:40

that is a sort of TikTok-esque

11:42

feed where

11:45

you can scroll through and

11:47

see what's going on. So it's a TikTok-esque feed where you can

11:49

scroll through and see videos

11:51

and photos of content you might wanna buy, things

11:53

you might wanna buy on Amazon. And they put

11:56

this directly in their app. Wait,

11:58

Amazon has a feed inside? the app

12:00

that has videos. I don't think I've ever

12:02

seen this before. I'm

12:05

gonna open the app and see if I can find it. So

12:07

it's interesting that you say this because a lot of people

12:09

I spoke to had also never heard of this. So I

12:11

think I'm breaking this news to a lot of people,

12:14

but like this has existed since last year. Where

12:16

is it? So I see on

12:18

the bottom there's like the home logo, there's like a star

12:20

thing, there's my account,

12:23

there's a shopping cart.

12:24

Oh my God, the star thing is inspired.

12:27

Yeah, there

12:27

you go. Wow, okay, so

12:30

I'm suddenly inside, someone's home, but

12:34

I don't even know what they're trying to sell

12:36

here. Like there's

12:38

a chunky knit throw blanket that's in this

12:40

shot. I guess there's a washable

12:43

rug.

12:44

This video is in the user experience does kind of

12:46

feel like TikTok actually. Yeah, that's

12:49

exactly it. Like you see it's very similar to TikTok,

12:51

right? I have to say this content

12:54

is much less compelling than the

12:56

stuff that I used to sing on TikTok.

12:59

It's just like I'm scrolling through ads. Mm-hmm,

13:02

and so I think TikTok does a good job of they're

13:04

doing the same thing, but you don't realize that they're

13:06

ads. Why

13:10

did Amazon launch this type of social

13:13

feed? I think they're just trying to,

13:15

again, it's like they're not specifically

13:18

saying that they're doing this in an effort

13:20

to compete

13:20

with TikTok, but

13:22

they're doing things that pretty well position themselves

13:25

to compete with TikTok. So it seems

13:27

a bit obvious, but they want people

13:30

to spend more time on the app. Like they want

13:32

people to hang out

13:33

on the Amazon app. And I don't

13:36

know if this is your personal experience. This is definitely

13:38

my personal experience. It's like, I go to Amazon

13:41

knowing what I want to buy. I don't just like scroll

13:43

through Amazon mindlessly.

13:45

How has Inspire been working for

13:48

Amazon? Are people using it? So Amazon

13:50

hasn't released too many stats

13:53

or like details about how it's been doing, but

13:55

I

13:57

can say that it definitely hasn't made

13:59

a difference.

13:59

their bottom line yet.

14:02

Inspire might not be that inspiring,

14:05

but Amazon has a logistical

14:08

network that gets so many goods to where they need to

14:10

be so fast that cute

14:12

little videos might not even matter. And that

14:15

is where TikTok is also trying to be more like

14:17

Amazon. The company's also getting

14:19

into logistics.

14:21

And this is going to be

14:22

a big challenge for TikTok, you know, to

14:24

rival this sort of

14:25

operation that they have. And so they're

14:28

starting off small, they're, you know, not

14:30

even shipping, to

14:31

the most part, shipping products, but they're having the

14:33

sellers ship the products themselves, you know,

14:35

at this point, you know, they're poaching Amazon

14:38

employees, they're buying warehouses,

14:40

they're doing these things, but it's not something, you don't

14:43

just turn into like an e-commerce powerhouse

14:45

overnight. How do you think people are responding

14:48

to the TikTok shop so far?

14:50

Is it being well-received? It's sort of mixed.

14:52

I have been continuously

14:55

pulling people to see,

14:56

I've been pulling my Instagram followers to see if

14:59

they bought products from TikTok shop. And

15:01

I did a poll last week, and

15:03

I think it was 90% of people said they had never

15:06

bought anything from TikTok shop. But everyone's

15:08

thinking, I'll stumble upon someone who has. And

15:11

for the most part, they've had

15:13

a good experience.

15:16

It's obviously still at

15:19

the beginning stages of this, but I

15:21

think it really gives legitimacy to this category

15:24

of social shopping and online shopping

15:26

that we're going to start seeing more in the next few years.

15:28

And TikTok, I think,

15:30

is rightly trying to capitalize on that

15:33

and seeing this shift towards seeing

15:35

things that you like on social media and buying

15:38

them. If TikTok can shake up this

15:40

market and disrupt this market,

15:42

you know, you can one, it's good

15:45

for influencers, influencers could potentially

15:47

make more money here. It's good for sellers. It's

15:49

very easy to sell your products. I don't

15:52

know if it's good for buyers, you might spend more money. So

15:54

I don't know if that's a good or bad thing, but you might

15:57

have more things that you like. So, you know,

15:59

They're sort of like, it starts to take

16:02

the way that you shop online and

16:04

flip it on its head.

16:05

Can TikTok really take on

16:08

a behemoth like Amazon? I mean, it seems

16:11

almost surprising that they'd even want to try that. I

16:14

think many people would agree. The

16:16

flip side is if you look at TikTok, TikTok

16:19

came in to social media and

16:21

disrupted an industry that

16:23

largely had not seen a new

16:26

competitor in several years. And

16:28

look what they did. Look what they did to Instagram. If

16:30

they were able to disrupt social media, you

16:33

know, perhaps this is something like, why

16:35

can't they disrupt e-commerce or, you know, why

16:37

can't they disrupt something else?

16:49

That's all for today, Friday,

16:52

October 27th. Before

16:55

we go, we wanted to give our sincerest

16:57

thank you to the hundreds of you who

16:59

wrote in and shared your favorite episode.

17:02

Our whole team was completely overwhelmed

17:04

by all the love. And we want you to know

17:07

that we love you, too. We're

17:09

doing the raffle drawing today. So the

17:11

lucky winners will hear from us soon. The

17:14

journal is a co-production of Spotify and

17:16

The Wall Street Journal. The show is made

17:18

by Annie Baxter, Kylan Burtz, Katherine

17:21

Brewer, Maria Byrne, Victoria

17:23

Dominguez, Pia Gadkari, Rachel

17:25

Humphries, Kate Linebaugh, Matt

17:27

Kwong, Jessica Mendoza, Annie

17:29

Minoff, Laura Morris, Enrique

17:32

Perez de la Rosa, Sarah Platt, Alan

17:34

Rodriguez Espinosa, Heather Rogers,

17:37

Jonathan Sanders, Pierce Singi, Jeevika

17:39

Verma, Lisa Wang, Catherine Whelan

17:42

and me, Brian Knudsen. It's

17:44

so great to be back, by the way. Our

17:46

engineers are Griffin Tanner, Nathan Singapac

17:49

and Peter Leonard. Our theme music

17:51

is by So Wylie. Additional music

17:53

this week from Marcus Bugala, Billy Libby,

17:56

Emma Munger and Budot Sessions. Fact

17:58

checking this week by Kate Gallagher.

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Dr. Sophie Hurwitz and Adam Schiffman.

18:04

Thanks for listening, see you Monday.

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