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Can TikTok Take Over Black Friday?
Starting in late October, TikTok plans to provide a month of steep holiday discounts, according to Bloomberg. The social media app will also be “offering to subsidize discounts of as much as 50% to entice sellers’ participation in its Black Friday program, which begins Oct. 27 and runs through Nov. 30.”
In mid-September, TikTok unveiled its Shop marketplace tab in the United States, marking a significant step in broadening its burgeoning commerce venture, which stands as a vital avenue for the company’s revenue expansion.
Notably, the platform is swiftly gaining a reputation among consumers for its affordability, with a significant number of products sourced from China. In a bid to entice users before the official rollout of the shopping tab, TikTok extended offers like complimentary shipping and discounts of up to 20%.
This revamped marketplace emphasizes pricing by displaying it prominently and accentuating discounts. Upon accessing the Shop tab, users are immediately greeted with “Today’s Deals,” and a select group of users have the ability to embed product tags within their videos, rendering them directly purchasable.
Now, with Black Friday looming on the horizon, TikTok has made an aggressive move to take over the sales holiday. TikTok “plans to subsidize discounts as high as a whopping 50%,” according to Forbes, and the Black Friday-specific deals will begin at 8 p.m. EST on Nov. 23, with Cyber Monday discounts running from Nov. 28 to Nov. 30.
As Forbes points out, “The stakes are high.” In 2022, “US shoppers spent more than $20 billion online during Black Friday and Cyber Monday. With TikTok reporting more than 150 million active users in the US, the popular app is hoping that this subsidy will drive TikTok Shop sales and help it get a sizable piece of that pie.”
The competition is on, and it has become increasingly intense due to economic fluctuations, consumers grappling with inflation, a burgeoning number of e-commerce contenders, and inconsistent performance on social advertising platforms like Facebook and Instagram over recent years. Given this environment, e-commerce brands must leverage every edge to maximize their share of consumer spending this quarter.
When e-commerce businesses offer deeper discounts, they typically see an uptick in sales conversions. This not only promotes financial efficiency but also augments the initial profit from online advertisements. As the festive seasons approach, these companies might rethink their ad budgets, possibly favoring platforms such as TikTok.
Discussion Questions
What do you think about TikTok’s move to pay for its discounts? Will other retailers fire back with the same tactic, or do they need to do something different?
Poll
Loading …BrainTrust
Georganne Bender
Principal, KIZER & BENDER Speaking
Lisa Taylor
Director of Retail Consulting U.S., Thought Provoking Consulting (TPC)
While TikTok has not always been focused on selling, it has previously stressed its influence in important retail occasions. In 2020 it noted that some 40% of its US users who bought something on Black Friday, bought an item they first discovered on TikTok. Now with almost 74 million active users in the US, it is hoping that Black Friday will be a launchpad to its ambitions to drive merchandise sales to $20 billion annually. Whether it succeeds remains to be seen. Translating users who primarily use the channel for entertainment into active shoppers will be a challenge.
Agree, TikTok’s pivot towards e-commerce is not necessarily a surprise. It’s a smart move to meet their entertainment-focused users where they are and provide in-app, frictionless shopping experiences. I think their ability to entice sellers with steep discounts and the impressive 40% figure from 2020 showcases their potential for success. It will be interesting to see if they can leverage their vast user base to drive merchandise sales and potentially achieve their ambitious $20 billion annual goal.
The meteoric rise of TikTok’s marketplace is impressive. This Christmas is shaping up to be a battle of discounts as economic conditions will depress consumer spending. Buying market share through deep discounts is a solid strategy for TikTok in the short term. I anticipate that they will be successful, but will they “win” the holiday? I suspect it’s still early in their eCommerce development to achieve victory. But I’ve been wrong before. Monday, November 27, will be an interesting day to evaluate the previous weekend.
I think retailers need to be very careful about TikTok. I read just this morning about an author who has taken off on TikTok – due to Shop sales – who, with absolutely zero qualifications has written a self-help book that is taking over best seller lists as a result and that qualified psychiatrists are calling “over-simplified” and “dangerous”. Brands should watch out for fakes, knock-offs, unlicensed sellers, scams and more – this could potentially be the worst of Amazon Marketplace, metastasized by virality, and TikTok piling on internal-facing promotions to spur more participation by sellers is only going to make that worse.
Let’s not forget that Black Friday is a highly anticipated annual event that consumers look forward to all year long. No one retailer owns Black Friday and no one retailer ever will.
TikTok is providing a means and an incentive to sellers to get involved, but buying sellers – and consumers – with deep discounts doesn’t necessarily translate into loyalty.
These days it seems like growth always has to come at the expense of profitability, for both the brand looking to grow and for competitors who chose to get pulled into the fray. Black Friday is now more of a promotional umbrella than it is the specific day of yesteryear. So of course, TikTok turns it into a month long event. And of course TikTok will siphon significant dollars away from the competition. I have a feeling that some day we will look back on our rush to consume, but in the meantime the competitive dynamics of the market have to play out.
TikTok has a lot at stake with the recently launched TikTok Shop to prove to their advertisers that they are more than an entertainment site. What better time than Black Friday to bring these features to the forefront with deep discounts, particularly in a time of high inflation.
This is a form of co-op advertising. I see three winners: