TikTok Shop is taking on Amazon — one viral video at a time

The breezy TikTok is captioned "i will never use another serum!!" and shows a young woman holding a small tube and telling her followers how amazing it is.

"I have used every eyelash serum under the sun. ... About a year ago I tried this, and it has completely changed the game," says @wellnesswithlys, in a post that has more than 370,000 likes.

And there, at the bottom of the screen for people using the app, is the now-ubiquitous orange shopping cart symbol.

TikTok has surged into the e-commerce space with its TikTok Shop feature, loading users' feeds with options to buy directly from influencers without ever leaving the app.

It is positioning itself as a kind of Amazon for the social media age: a full-service, integrated marketplace where people can buy things with only a couple of taps of the screen.

Less than six months since its launch in the U.S., analysts say it might be working. But some users — and sellers — are asking: At what price?

It made a splash (but can it make cash?)

TikTok opened its TikTok Shop feature in the U.S. last September, following earlier debuts in the U.K. and Asia.

It sold about $7 million worth of stuff a day in the U.S. in the beginning, according to The Wall Street Journal, and Bloomberg reports that it aims to rake in as much as $17.5 billion this year alone in the United States.

A TikTok spokesperson declined to share any revenue figures with NPR but said more than 5 million new users made a purchase during the Black Friday and Cyber Monday period last November.

Like Instagram and Facebook, TikTok has always featured ads. But the transition to shopping brings key differences.

Instead of being redirected to a brand's webpage or an Amazon or Etsy storefront, people can now go directly to the in-app marketplace. That means it's TikTok that controls the flow of money.

And just who is doing the selling has also shifted. Instead of an ad coming from a brand's social media account, it's increasingly common to see an individual content creator selling their own products.

Lana Mushamel owns a business selling nail and beauty products, and she started using TikTok Shop in its beta phase before its official launch in September. She said the platform had been life changing.

"I had a video go viral. They assigned me my own personal TikTok Shop agent to help me out if I had any questions," she told NPR.

In just a short time last year, Mushamel said, she made about $20,000 more on TikTok than Amazon — helped along by an algorithm that boosted her videos, which then translated to product sales.

TikTok has also offered incentives for early adopters, like low commission fees and free shipping.

Yet while Mushamel says her experience has been positive, some teething issues are apparent.

In one instance, she said her orders were canceled after she dropped them off for shipping because the labels from TikTok were printing incorrectly and were so faded that the post office was unable to scan them.

This led TikTok to automatically cancel $2,000 worth of orders, although Mushamel said she was able to resolve this with the help of her support agent.

Others have reported similar issues, like Sarah Biggers-Stewart, who took to the platform itself to share her experience. After shipping hundreds of orders lodged in the app, she said TikTok canceled them and refunded the money even though she shipped the orders "well before the cancellation date."

"They don't allow us to set our own processing times, and if you go viral on TikTok ... our orders and our inventory got super backed up," Biggers-Stewart said in her video. "TikTok Shop is not conducive to small businesses."

A TikTok spokesperson told NPR that the shipping time frames were in place to ensure buyers were getting a good experience and that sellers have access to support from the platform and can appeal decisions that they deem unfair.

"I feel like I'm just watching commercials"

TikTok is unique in the amount of time it is able to hold people's attention. The numbers vary, but most estimates say the average user spends more than an hour scrolling daily, and the app has one of the youngest user bases of any major social media platform.

Arelis Caban-Oberst is a marketing and e-commerce strategist who thinks TikTok has the potential to disrupt the industry.

"I think Amazon is going to have a competitor like they've never seen before," she told NPR. But she said the social media powerhouse may also have to temper its expectations, particularly with the small-business owners who have curated a loyal following on the app.

"As a society, we want things yesterday. We have been conditioned with Amazon Prime. And I think TikTok launched their TikTok Shop kind of with the same expectations of its sellers," Caban-Oberst said, adding that small businesses can struggle to keep up with those expectations.

Then there are the users themselves, who vary from welcoming to skeptical to hostile to the addition to the app.

Student and content creator Maia McCormick says that the marketplace has worsened her experience and that she has been spending less time scrolling as a result.

"I feel like I'm just watching commercials," she said.

McCormick said that the videos served to her by the algorithm seemed to change noticeably after the Shop feature launched.

"Instead of seeing videos that I liked or anything funny, it just turned out to be more and more advertisements of some things I needed, but a lot of the time it was stuff I just didn't need," she said.

And if a user decided to try to cash in on this new frontier, that user appeared to be rewarded with a boost in views — something McCormick thinks is intentional.

"I have a friend who actually started doing TikTok Shop. She posts maybe three seconds of the product and gets 100,000 views in like an hour, which is insane. So I think it's really promoting that too, which is why we're seeing more and more of it," she said.

But McCormick acknowledges that her frustration — as a Generation Z user mindful about consumption — is not particularly common. For many young people online, shopping has become not just a hobby but a distraction from the daily stress of life.

"I know a lot of people around me use it to kind of unwind, relax at the end of the day or when they're taking a break," she said. "So there's not a lot of ... thinking happening during that time, mostly because you're trying to destress and relax after a long day."

Devon Rule is a content creator and entrepreneur who has felt the lure of the new feature.

"You can definitely see how hard they are pushing for creators to start using TikTok Shop from an affiliate point of view," she said. "Everyone is an advertiser now."

That advertising is clearly very different from what people experienced in the past, says Dr. Jenny Radesky, an associate professor of pediatrics at the University of Michigan who studies the impact of advertising and social media on young people.

"When we're watching social media, we're really connecting with our influencers that we love and have a parasocial relationship with," she said.

"That reduces a lot of friction around purchasing, and it may influence our decision-making when we go and click that button."

This, combined with the facts that the ads are integrated seamlessly into the experience and that algorithms can tailor what is shown, means it can be difficult to parse the differences between entertainment and advertising, Radesky says.

"You have an advertising message coupled with something that's very pleasurable, rewarding, satisfying and fun. And so it's activating this emotional part of your response to an advertising message. It's happening in more of an unconscious, subconscious way."

Now, less than six months into its U.S. foray, many of the initial policies set to draw sellers and consumers to the platform are expected to change. The Information reported in January that the company plans to increase seller fees for most items from 2% to 8% in July and that subsidies like free shipping and coupons are also likely to be rolled back.

As these incentives fall away, it's a sign that TikTok feels confident it's here to stay in the e-commerce market. [Copyright 2024 NPR]