Inspirational Commerce Is Not Going To Beat Amazon

Another week, another article from the Wall Street Journal about how TikTok is looking to compete with Amazon. Let's be clear: it is not.

Amazon has an excellent mobile app, the best product data, the best (although often flawed) reviews, the most extensive selection, and the best logistics network in North America by a wide margin.

You aren't going to create another marketplace the scale of Amazon even if Tiktok has logistics, an app marketplace, etc. etc. Google tried, and it gave up. The same Google who essentially forced every brand to give it all the product data. Tiktok does not have that same leverage.

What they are going to create is something different. Inspirational commerce is going to be necessary, but it's not going to compete with Amazon. It's a different modality.

For TikTok to continue growing, people need to keep spending more and more time there because the surface area to display ads is less than Google (the best), Meta (maybe second-best) or Amazon (maybe third-best).

There are 3 modalities for TikTok:

1 - Inspiration. This is the "For You" feed, the vast majority of activity. This is TikTok's gold, they can't over pollute this.

2 - Search. Searching for authentic content on a topic you care about. This is where pure ads will be more prevalent (they have more real estate)

3 - Livestreaming. Actively shopping from a set of influencers.

In other words, most people are only looking at one video at a time on average. Influencer-based content is the only one that can cut across all these modalities in the best way.

Live streaming will be useful, but mostly on certain days of promotional events with huge influencers involved. Not the average brand on the average day. The traffic and buying impulse must be concentrated to move the conversion rate.

If TikTok starts showing more than 20% ads in the "For You" feed (and I see the experiments already), the signal-to-noise ratio goes down. That means three things:

* Organic videos that brand, educate, and subtly sell products are going to win.

* Influencers will lead the way because they have the most trust.

* Brand video feeds function like brand websites - you get the official information, but it's not going to be the place where the consumer is deciding between options unless you have built up a lot of trust.

The lesson for brands here?

* Keep cultivating that authentic micro-influencer community. People are looking on TikTok and Youtube for product use case, but it's decisionmaking and lifestyle content that is going to win the day.

* Focus on trust and being helpful over selling. Combine that with frequency, and you have a winning formula.

If your customer service teams and product teams are not involved in your social media strategy, you are doing something wrong. Your marketing and sales people will 99% of the time screw it up because they are worried about their numbers.