Is TikTok Getting into the Fulfillment Business?
Some (not all) consumer tech companies in China have been known to copy Western counterparts. Then again, western consumer tech companies copy each other all the time, including the arms race for new social sharing formats — everything from viral stories to short videos to shoppable formats.
To that end, and not without irony, TikTok (owned by Chinese company ByteDance) is the latest company that everyone is racing to copy. Facebook and Instagram’s Reels format is the most notable culprit. And Instagram’s new UX, which has been quite controversial among embittered users, is very TikTok-like.
But the latest copycat move may not be with user-facing features but in broader business strategy. Axios reports today that TikTok may be following the playbook of another western internet giant: Amazon. Specifically, job postings signal TikTok’s plans to build an extensive network of U.S. fulfillment centers.
Why would a social media player do this? The implication is that TikTok wants to beef up its e-commerce operations in TikTok Shop. As is central to our shoppability thesis, shopping and product discovery go hand in hand with social media, which manifests in social commerce (more on that in a bit).
Raising Flags
Stepping back, the bigger question is if TikTok’s job posting tips its hand and reveals its intentions for an Amazon-style logistics network. It’s hard to argue otherwise, given that it specifically states its goals to build an “international e-commerce fulfillment system” including warehousing and shipping.
“By providing warehousing, delivery, and customer service returns, our mission is to help sellers improve their operational capability and efficiency,” the job posting reads, “[to] provide buyers a satisfying shopping experience and ensure fast and sustainable growth of TikTok Shop.”
More evidence of an Amazon-style copycat operation comes in the geographic placement of the job posting. It specifies a Seattle-based employee, which is logical as Amazon’s hometown is where ample shipping and logistics talent lies. TikTok is simply fishing where the fish are… and not attempting to hide it.
That last part is notable in that it raises flags about potential misdirection. As Apple often does with its patent filings, a legitimate form of corporate subterfuge is to telegraph moves that you have no intention of making, simply to confuse or throw competitors off your trail. Is TikTok doing that here?
One notion to suggest this possibility is how overt and descriptive this job posting is. Another point of skepticism is that launching a logistics network is outrageously ambitious… almost to unrealistic levels. Going from social software to a logistics network – from bits to atoms – is a huge (and painful) leap.
Compressing the Funnel
Back to social commerce, the marriage of shopping and social media continues to be consummated. The virality of channels like Instagram and TikTok has made them natural places for users to discover products. Merchants and brands have followed those eyeballs to establish firm presence in these apps.
Beyond product discovery, the shoppability part comes into the picture in that social apps are increasingly transactional. The idea is that users can discover, consider and purchase right within the app. This offers a user-friendly shopping flow that compresses the purchase funnel down to a few taps.
Beyond the user-centric benefits of this all-in-one flow, shoppability is driven by another key macro factor: privacy. The user data-collection reform of the past half-decade has made targeted advertising — previously the primary business of social apps — fall rapidly and ungracefully out of favor.
E-commerce conversely doesn’t come with all that baggage. Keeping a user under your own roof for the entire shopping flow is privacy compliant for the most part. In other words, it mostly means that you’re only relying on first-party data, which is privacy friendly. No data sharing or misuse is required.
These factors will continue to drive shoppability. But it doesn’t mean you need to own a logistics network to do it. Much can be outsourced for a lighter balance sheet. So if TikTok is really going for it here, it suggests a massive eCommerce power play. We’ll keep watching for clues, but consider us skeptical.
