This month, TikTok Shop will become active in the Netherlands. With this app, consumers can immediately order and pay for items that until now they could only view on the video app Tiktok.
There is already no shortage of videos promoting items on TikTok. Influencers show off their latest outfits. People walk through ‘get ready with mevideos their skincare and makeup routine on camera while telling an elaborate story. Clips show eerily well-organized refrigerators, including tips on how to make your own kitchen just as sleek.
The underlying message – buy this product and your life will be as slick as mine – is sometimes implicit, often explicit. In the description of the video, makers place a discount code, which once again encourages viewers to make a purchase. Via this exclusive code, sellers can see who seduced someone, so that the influencer commission can be paid.
This is how the economics of social media have worked for years. The arrival of TikTok Shop on June 15 makes it easier to make a purchase. The 7.5 million Dutch users of the platform no longer have to look up the recommended products in a webshop themselves, but can buy them directly from the video.
TikTok’s cash register is also ringing
Because users do not leave the TikTok app during the ordering process, the cash register of the social media company itself also starts ringing. TikTok charges a 7 to 9 percent commission on every product sold. That is less than the margins that large online stores such as Amazon and Bol charge for many products. For these two, the commissions depend on the type of product and can amount to around 15 percent.
TikTok Shop has been around for a few years in the United Kingdom, among others. The app has been active in France and Germany since last year. In addition to the Netherlands, Shop is also coming to Belgium and Austria this month.
Also read
Swipe, swipe, buy – and swipe again. Viewers must become buyers through the content of this Amsterdam ‘livestream factory’
According to market researcher NielsenIQ, the platform has become the fifteenth largest online store in Germany in terms of turnover in one year. TikTok itself does not publish turnover figures. It does say that 100,000 sellers are now active on its platform in Europe. They can sell their items in all EU countries where Shop is active with a single registration.
To promote those things, manufacturers and sellers have to make videos about them. They can do this themselves, but they can also outsource it to influencers. They then place a buy button on videos on their own account that leads to the seller’s TikTok store, in exchange for a fee.
Last year, Korean spicy noodles went viral in Germany on TikTok Shop. They subsequently sold out nationwide
Discover products
The way of online shopping that TikTok offers is different from the large online stores. Whether it is bol, Amazon or Temu, they all focus on a large search bar. They assume that customers already know – approximately – what they want and try to guide them there as quickly as possible via the search bar.
TikTok Shop is mainly about products that people didn’t know they wanted yet. This becomes the case in the online store industry discovery named. “One in two TikTok users discovers new trends and products while using the app,” said Ningxin Wu of TikTok. She heads the Dutch retail branch and was previously involved in the rollout of TikTok Shop in Germany.
Wu points to previous hypes that reached an audience of millions via TikTok: Dubai chocolate, the enormous Stanley drinking cups, the small Uniqlo bag that fits a surprising amount. Trends that emerged on their own and were (initially) not pushed with advertising budgets.
“You never know how such a trend will turn out,” says Wu. But once identified, a buy button can immediately be placed on it. “Last year, Korean spicy noodles went viral in Germany on TikTok Shop. Then they sold out nationwide.”
On TikTok we can quickly experiment with what works and what doesn’t and get direct feedback from consumers
For manufacturers, TikTok is a place where they can provide a lot of information about their products. For example, Versuni, the Philips offshoot that now makes that brand’s air fryers and other household appliances, will use the platform for a new steam appliance. “We have created a hybrid between an iron and a steamer,” says Debmalya Dutta, responsible for TikTok Shop at Versuni. “We know there is a demand for that. But it is quite a complex product, complicated to explain in a TV commercial. It is also too niche for that. But on TikTok we can quickly experiment with what works and what doesn’t and we get direct feedback from consumers.”
Dutta also sees that consumers discover products through social media. “We generate demand via TikTok and then try to convert it into a purchase on TikTok Shop. But it is also fine if it doesn’t happen there and people later buy the product at MediaMarkt or Coolblue. That doesn’t matter to me.”
Hyper-personalized store
The store that TikTok offers its users is hyper-personalized. The company has been building very detailed interest profiles of its users for years. The algorithm that keeps viewers glued to the video feed with its recommendations is now also used for stuff.
The Consumers’ Association is critical of the arrival of the shopping function and fears that the algorithmic recommendations will certainly lead young people to impulse purchases. The interest group is involved in a class action lawsuit against TikTok that has been going on for years. The social media company says it only shows TikTok Shop to adult users. “If we get signals that someone is younger, we limit access,” says Wu.