The TikTok Opportunity

While social commerce is still taking shape in the U.S., the video platform is proving to be a smart way to connect with teens.

How the video-sharing app is attracting brands and retailers.

TikTok, the ultra-popular short-form video app, is rolling out a set of new shopping features, turning its hundreds of millions of active users into an opportunity for brands and retailers.

TikTok, owned by Chinese media startup ByteDance, appears to be testing the new features with a select group of popular creators. The company has offered brands the chance to buy shoppable ads since earlier this year, but this is the first time users have been able to include their own links. FN found shopping buttons in videos dating back to mid-October, directing users to buy products like color-change lipstick, shampoo and molding clay. All of the links seem to go to Amazon for now, but there’s reason to believe that ByteDance may have a far more robust commerce experience in the works.

The company’s Chinese counterpart to TikTok, Douyin, has partnerships with most of the country’s biggest e-commerce players, including Alibaba’s Taobao and Tmall, JD.com and Kaola. Douyin’s 320 million daily active users can shop directly within the app, search for specific products and even start selling themselves after posting a minimum of 10 videos.

While social commerce is in its infancy in the U.S., it’s already huge in China, accounting for an estimated 20% of the country’s online retail sales this year, according to the Internet Society of China and Chuangqi Social Commerce Research Center.

The segment of consumers most open to this kind of experimentation, which research firm Forrester refers to as “Progressive Pioneers,” account for 69% of metro Chinese consumers, compared with just 25% of U.S. consumers. “That’s why Chinese consumers are more likely to adopt emerging technologies and digital innovations like social commerce,” said Xiaofeng Wang, a senior analyst at Forrester.

There are signs that the tide may slowly be shifting, however: Social referral traffic to e-commerce sites has grown 110% in two years, outpacing any other channel, according to the market research company eMarketer.

Already, brands and retailers are flocking

“YES IT’S A SIX SECOND VIDEO, BUT IT’S STILL ABOUT STORYTELLING.” — MAE KARWOWSKI, OBVIOUSLY MARKETING AGENCY

to the platform to connect with Generation Z consumers. About 60% of TikTok’s 26.5 million U.S. monthly active users are between the ages of 16 and 24, the company said this year. For brands to be successful, though, they’ll have to understand and reflect the culture of the platform, including the memes that shape much of the content users produce. “It’s a new way of working and strategies are different from other social [platforms] like Instagram,” said Mae Karwowski, founder and CEO of the influencer marketing agency Obviously. “Yes, it’s a six-second video, but it’s still about storytelling. There’s a narrative arc there, and there’s a resolution that’s funny, irreverent, informative, etc.”

Crocs is one brand that has led the way in terms of harnessing TikTok culture, launching a #ThousandDollarCrocs challenge in October that invited users to customize their Crocs and post videos of themselves embodying the brand’s “Come As You Are” slogan. Videos with the hashtag, which references a lyric by the rapper Post Malone, have since generated more than 2.5 billion views, and fans have continued to post memes featuring the waterproof clogs well after the end of “Croctober.” The strategy appears to be resonating with Generation Z fans: In Piper Jaffray’s most recent semiannual Taking Stock With Teens survey, Crocs surged to the No. 7 slot in the footwear category, up from No. 19 in the spring.

While some players have been slow to join TikTok, “Crocs just jumped right in,” said Gregg Witt, chief strategy officer at Engage Youth Co., an insights and marketing agency that helps brands engage with teens and tweens. Crocs is especially well-suited to TikTok, he said, because its products are relatively affordable (its classic clogs are priced at $44.99 a pair), instantly recognizable and already popular with the Gen Z demographic. Even more important, though, may be how customizable they are via the brand’s signature Jibbitz charms. “Anytime that your brand has an opportunity to be personalized, it’s going to do really well on TikTok,” said Witt.

Shoes don’t have to be officially customizable for this to be the case: Videos of users personalizing their Vans sneakers with paint and Sharpies have racked up millions of views, despite the fact that the brand doesn’t yet have an official channel on the app.

Like Crocs, Vans is a favorite among high schoolers. “Particularly in the fashion and footwear industry, brands that are naturally adopted by (and affordable to) teens and twenty-somethings will have the least friction being a part of TikTok creators’ content,” said Katy Wellhousen, an account director at RQ Agency, which helps build relationships between companies and influencers. What’s less likely to do well is runof-the-mill sponsored content, she said, adding that brands should also be conscious of Gen Z’s environmental concerns.

What’s clear is that it’s still early for the barely two-year-old TikTok. By comparison, Instagram and Snapchat launched in 2010 and 2011. As Karwowski pointed out, many TikTok creators with over a million followers have never worked with a brand before, and the rules of engagement on the app are evolving day by day.