Image Source: iStock | Adam Yee
Does Tiktok Need a Private Label to Make Social Shopping Work?
TikTok is testing a dedicated in-app social-shopping section, “Trendy Beat,” in the UK to showcase products trending on videos on the app directly sold by TikTok’s parent, ByteDance.
According to the Financial Times, which first reported the development, users find items in the Trendy Beat section popularized on TikTok short videos, “such as tools to extract ear wax or brush off pet hair from clothing.”
Comparing the maneuver to tactics Amazon.com has used in developing its private label offerings, the Financial Times cited sources that said Trendy Beat “utilizes TikTok’s knowledge of items that are going viral on the app, allowing ByteDance to acquire or make those items itself” and then “heavily” promotes those items versus similar products sold on the video sharing app.
The launch is seen as a significant shift from TikTok’s current commerce strategy, launched last November, which enabled in-app purchases from third-party sellers through the TikTok Shop marketplace.
TechCrunch wrote, “With TikTok Shop, the company allows brands to sell their products directly within the app, but with this new feature, TikTok would be selling its own products. The new model sees TikTok operating an e-commerce model that is similar to how Amazon Basics and Shein promote and sell their own bestselling products.”
Business Insider wrote, “TikTok’s move to sell white-labeled versions of products via its e-commerce platform TikTok Shop follows a roadmap laid out by online-shopping giants including Amazon that have used vast pools of proprietary data on consumer habits to determine the best products to sell themselves.”
TikTok has filed related trademark applications for Trendy Beat to expand to the U.S. The rollout of TikTok Shop in the U.S. has been slow as influencer-driven livestream shopping has yet to achieve the mainstream adoption in America it has in Asia.
TikTok has been threatened with a U.S. ban due to national security concerns tied to the app’s Chinese ownership and data practices, although its status as the country’s most popular smartphone app, with more than 150 million monthly active users, remains a significant obstacle.
Discussion Questions
DISCUSSION QUESTIONS: Does TikTok have and does it need to have a private label strategy to support its social commerce ambitions? How much of an advantage does its access to trend data provide in developing private labels?
Poll
Loading …BrainTrust
TikTok’s adoption of a private label strategy would accelerate social commerce and grow its supply chain influence.
Abundant data would give TikTok a private label edge by informing its roles as tech platform, retailer and brand.
There is a massive amount of space between operating a social media company and having a credible private label offering. This is something that would require a ton of energy and resources. Personally, I believe they have other priorities at the moment if they want to keep their business in the United States intact.
If TikTok’s message to brands is, in effect, “You are just an umbrella that will enable us to sell our own proprietary labels”, that’s a pretty strong incentive for brands to severely limit what they serve up on TikTok. Yes, it’s already happening on Amazon. And yes, it’s been the dark side of the relationship between wholesalers and retailers for many years. The price that a brand pays (data!) for the exposure they get on Amazon and TikTok is painful.
If there’s anything that creators and small business operators hate, it’s corporate hegemons swooping in and ripping off their work. Great way to self-destruct the platform.
If anyone can pull off a social media-driven private brand launch, it’s TikTok. Several factors work in Tik Tok’s favor including direct access to trend-spotting data, brand affinity, platform control (like Amazon, TikTok can show digital “favor” to its owned brands), and more. Private brand development is the next logical step for TikTok as Trendy Beat gains traction.
A successful private label strategy involves more than just throwing out a selection of items that are trending. Anyone that doubts this should review Amazon’s private label development which – despite the knowledge, data and resources of a huge retailer – has been met with mixed success and many false starts. Of course, if TikTok’s aim is to simply chase sales with various anonymous white-label offerings that come and go, then they may get achieve some short-term success. However, that’s very different to developing a true private-label and it runs the risk of deterring customers if quality is poor.
Any advantage that TikTok has in accessing trend data will be lost in the ability to produce private labels and further to actually deliver. This is so far from their capabilities that it would be a huge waste of resources to develop. The better alternative would be to find a way to license the data for someone else to execute a PL program. But that, too, would be difficult. The ideal operators would be Amazon or Walmart. Of course, that is not going to happen.
I am mystified by how the idea of social shopping just won’t die — no matter how much failure it drives. The idea has been explored for over 30 years and never worked. Perhaps companies are so desperate to find income that they refuse to hear the customer vote: very few people will distract from their social in order to quickly buy something just because it’s endorsed. Money is far too important to consumers.
This is a very smart idea. Retailers are struggling with how to understand what is trending on social platforms like TikTok. Typically, they only find out after the fact, when the items featured in videos that go viral are out of stock. Knowing TikTok has access to these demand signals is definitely an advantage to growing a retailer’s private label.
No, TT does not need a private label to make social shopping work. They should focus first on their network, attracting a true minimum for shoppers to use for a “fulfillment by Tiktok” and develop the structure, systems and processes to offer wholesalers and manufacturers the ability to use, before they even consider a TT private label.
Excuse me, but doesn’t TikTok have a few other problems it should be addressing first? That aside, this seems like a stretch to me. Where is their demonstrated manufacturing capability? What – other than price – is their point of competitive differentiation? Oh, and, what happens when consumers figure out their data is being used to curate offerings. Seems to me this last point around privacy and data usage might be something Tim Tok might want to watch.