Fifteen seconds to sell: TikTok moves into social ecommerce

TikTok users will be able to shop as they scroll through its short-form videos via a new deal with ecommerce platform Shopify, bringing the Chinese-owned app in line with social media rivals such as Facebook.

Canada-based Shopify is adding TikTok to a portfolio of partners that includes other social sites including Facebook, Instagram and Pinterest, as well as the likes of Amazon, Google and Walmart's marketplace.

The new alliance will be rolled out in the US from this week, before expanding to Europe and south-east Asia next year.

Blake Chandlee, TikTok’s vice-president for global business solutions, said the partnership with Shopify would help merchants “reach new audiences and drive sales on TikTok”.

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Social commerce is finally starting to scale up in the US after huge growth in China in recent years, driven by apps such as WeChat, Kuaishou and Pinduoduo. Research group eMarketer predicts that social commerce sales in China will grow to Rmb 1.7 trillion ($253 billion) this year, compared with under $20 billion in the US last year.

TikTok’s move follows Facebook’s launch of its Shops platform of digital storefronts in May. Some US brands on Instagram have been able to offer direct checkout within the photo-sharing app since last year.

Satish Kanwar, who leads Shopify’s Channels division, said TikTok had quickly become popular among retailers with a large “influencer” audience.

“It was obvious early on how [TikTok] was starting to influence commerce trends and trajectories,” he said. “With direct-to-consumer brands, that relationship between storytelling and entertainment and the product they sell is so close.”

Shopify merchants already using TikTok include The Knot Pillow, Brooklyn Tea and Adwoa Beauty.

Ecommerce boom

Shopify has been one of the biggest beneficiaries of this year’s boom in ecommerce, with its shares almost tripling in value since mid-March, giving it a market capitalisation of more than $125 billion. It is expected to report quarterly revenues of more than $650million on Thursday when it releases its latest earnings, a jump of 67 per cent over the third quarter last year.

TikTok’s decision to integrate with a third-party platform such as Shopify contrasts with its parent company ByteDance’s approach in China. Douyin, TikTok’s Chinese equivalent, blocked its users from linking to marketplaces such as Taobao and JD.com earlier this year, driving them towards its own ecommerce platform.

Mr Chandlee said last year that TikTok was ramping up its spending in the US as the app, which boasts highly engaged users relative to its peers, tries to lure first-time advertisers to the platform.

However, the group has lagged behind older counterparts such as Facebook in terms of its advertising technologies, only launching a self-serve ads platform this summer.

It also faces growing scrutiny over its Beijing roots, and still faces the threat of a ban in the US from president Donald Trump over security concerns.

Through the new partnership, Shopify merchants will be able to connect to a TikTok for business account and add a TikTok tracker on to their store, then turn existing product imagery into videos for “shoppable ads”. Purchases are completed on Shopify’s platform, so transaction and buyer data stay with the retailer rather than TikTok.

“We believe video is the default form of communication online today,” Mr Kanwar said. “We are very eager to see how video and commerce can expand.”

Copyright The Financial Times Limited 2020