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Can TikTok’s Addictive Algorithm Get US Shoppers Buying?

The company, which rolled out its Shop feature to all US users this week, is banking on its powerful algorithm to help it succeed where Instagram and others have failed by delivering a constant stream of products along with its targeted content into users’ feeds.
This week, TikTok rolled out its Shop feature to all US users. Along with shoppable videos, the update introduces a marketplace where businesses and individuals can list items from yoga pants to slow cookers.
This week, TikTok rolled out its Shop feature to all US users. Along with shoppable videos, the update introduces a marketplace where businesses and individuals can list items from yoga pants to slow cookers. (Getty Images)
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It’s a truism at this point that every big social platform will dream of becoming its users’ favourite place to shop, and every one will fail to make it a reality.

TikTok, which has a reputation for getting users to purchase what they see on the app — a sentiment summed up in the hashtag #TikTokMadeMeBuyIt — is betting it can buck the trend.

This week, the company rolled out its Shop feature to all US users, allowing people who go to the social network for a regular dose of animal videos, lip syncing and influencer posts to also purchase products directly within the app. Along with shoppable videos, the update introduces a marketplace where businesses and individuals can list items from yoga pants to slow cookers.

Shopping is a popular activity on Douyin, the Chinese version of TikTok, with the app growing into an e-commerce powerhouse over the past few years. But what works in Asian markets doesn’t always work in Western ones. For years social media companies have tried to integrate shopping into their US platforms with little to show for their efforts. Instagram, for instance, removed its shopping tab from the home feed earlier this year.

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TikTok is banking on the addictive precision of its algorithm, which prioritises a user’s engagement and interests over social connections to push an endless stream of content. From the platform’s perspective, it’s only a small leap to convince those same users to buy what they’re seeing.

Instagram and other companies have made a similar pitch. The question is whether it was their approaches that fell short, or if the concept of merging social media and commerce contains some inherent flaws, at least in how it’s been implemented in the West.

TikTok’s success would have major implications for fashion and beauty. The app has become the place where many young shoppers first learn about trends and products. Google’s own research has found many young people even use TikTok as their search engine.

A number of companies have jumped in and are already producing shoppable videos. Benefit Cosmetics is selling mascara, clay masks and lip balm. Revolve’s videos link to items such as a sparkly crop top for $260 and a $500 bomber jacket.

The new capabilities also arrive at a moment when Shein and Temu are proving young consumers, who are TikTok’s core users, will adopt new shopping apps. But the challenge for the company goes deeper than building the right product.

“Our data shows that consumers in the US seldom purchase on social media and are not particularly interested in the livestream format,” Forrester, a technology research and advisory firm, stated in a recent report.

TikTok faces a daunting exercise shifting that paradigm. In the UK, where it launched shopping in 2021, it reportedly struggled to gain traction with its emphasis on livestream shopping. It’s debatable whether its approach in the US will be any more persuasive.

Right now, it looks to be populated by a mishmash of merchants, among them a large number of sellers peddling low-cost goods. The listings often have SEO-optimised names like “Funny Halloween Cat Shirt, Cat Halloween Sweatshirt, Ghost Halloween Shirt, Ghost Cat Shirt, Fall Sweatshirt for Women, Ghost Cats Halloween.”

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In the mix are any number of apparent counterfeits. A quick search found one seller offering numerous pairs of sneakers that looked to be unauthorised copies of the Air Jordan 4. COSRX, maker of a snail mucin-based serum popular on the app, recently took to Instagram to post a warning about fakes on TikTok.

TikTok said in a statement that it has policies and processes in place to protect shoppers from counterfeits and uses both technological and manual methods to weed them out. It removes merchants that violate its rules and takes down infringing products.

The issue is one that crops up with any third-party marketplace. Just ask Amazon. But if TikTok can’t rein in the problem and make the app a hospitable place where brands don’t have to worry about their image being tarnished by appearing on it, the company could struggle to attract and keep partners, which wouldn’t make a great experience for customers either.

At the moment, it’s determined to lure merchants and shoppers alike to its corner. The company said it has signed up more than 200,000 sellers, and an executive overseeing the Shop launch in the US told the New York Times it has a “very aggressive” plan to convince users “TikTok is a place for shopping.” It entails offering deals, including during this holiday season, and running ads. The company also told the Times it sees itself more like Amazon or China’s Tmall than Shein or Temu.

If consumers treat it the way they do any of those companies, it will be a win for TikTok. What it doesn’t want is users treating it like other social networks where they aren’t shopping.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

Sarah Burton.
Sarah Burton steps down from her position as creative director of Alexander McQueen. (Getty Images)

Sarah Burton is departing Alexander McQueen. McQueen’s September show during Paris Fashion Week will be her final outing for the house. Her successor is set to be announced “in due course,” the company said. Burton was founder Lee McQueen’s right hand before taking over the creative director role after his death in 2010.

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Birkenstock files for US IPO. The number of shares as well as the expected range of the share price was not included in the filing, though previous reports estimated the brand could be valued at as much as $10 billion.

Ermenegildo Zegna’s first half operating profit jumped 45 percent. The Italian fashion group said its first-half adjusted operating profit grew 45 percent to €120 million ($129 million). Group revenues reached €903 million in the first six months of the year, up by 24 percent, as previously announced in July.

Gabrielle Chanel: Fashion Manifesto exhibition opens at London’s Victoria & Albert Museum. The landmark exhibition and an upcoming Métiers d’Art show in Manchester are part of Chanel’s ‘British moment,’ says Chanel president of fashion Bruno Pavlovsky.

US sales and top spending customers drive sales at Mytheresa. The luxury e-tailer’s North America business grew 40.8 percent in the three months ending June 30 following a ramp-up in marketing investment in the region with special events for clients.

Inditex sees sales and profits rise in the first half of 2023. The parent company of Zara reported a sales increase of 13.5 percent and a 40 percent rise in profits in the first six months of 2023, beating expectations. Inditex also saw its shares rise around 64 percent over the past 12 months.

Luar, Khaite and Tory Burch were named CFDA fashion awards nominees. More nominees include Joseph Altuzarra, Christopher John Rogers, Coach’s Stuart Vevers, Puppets and Puppets’ Carly Mark, Colm Dillane for KidSuper, The Row’s Mary-Kate and Ashley Olsen and CFDA chairman, Thom Browne.

Rebel: 30 Years of London Fashion exhibition opens at the Design Museum in London. This week saw the opening of an exhibition looking back at 30 years of British Fashion Council’s NewGen scheme, sponsored by Alexander McQueen and curated by Sarah Mower.

British retailer John Lewis says turnaround delayed by two years. The company made a £57.3 ($71.6 million) loss before tax and exceptional items in the six months to July 29. That was a 14 percent improvement from the same period last year on sales that rose 2 percent to £5.8 billion.

KKR raises stake in Indian billionaire Ambani’s Reliance Retail with $250 million. The private equity firm’s follow-on investment translates into an additional equity stake of 0.25 percent in Reliance Retail on a fully-diluted basis, taking KKR’s total equity stake in the Indian company to 1.42 percent, the retailer said in a statement on Monday.

Primark owner AB Foods raises profit outlook again. Shares in the group were up 5 percent in morning trading, extending 2023 gains to 34 percent after it forecast its year to Sept. 16 adjusted operating profit would be “slightly better” than its previous expectation of “moderately ahead” of 2021/22′s £1.435 billion ($1.8 billion).

Tata’s jewellery arm is in talks for $362 million debut rupee bond. India’s biggest jewellery maker plans to use the proceeds to help finance its acquisition of CaratLane Trading Pvt., said the people, who requested anonymity, discussing a private matter.

Blancpain and Swatch collaboration sparks another sales surge. The collaboration debuted Saturday with thousands queuing at stores from Sydney to Tokyo for a chance to buy the timepiece.

Zara finds shoplifters outsmarted its new security system. Zara parent Inditex CEO Oscar García Maceiras unveiled the new technology in March and pledged to roll it out for tests in all Zara stores worldwide over the summer. However, the new technology has run into issues, and staff has raised concerns to management that it may actually make theft easier.

US retail sales and producer prices jump on rising energy costs. The value of total retail purchases increased 0.6 percent from July following downward revisions to the prior two months; Commerce Department data showed Thursday. Excluding gasoline, sales climbed a more modest 0.2 percent.

Christian Cowan to stage a Paris show featuring Sam Smith. The British-born, New York-based designer will not be on the La Fédération de la Haute Couture et de la Mode’s official schedule, which is invitation only. But, the move is intended to lend the designer’s namesake brand — and name — a new sort of credibility.

THE BUSINESS OF BEAUTY

Charlotte Tilbury products.
Charlotte Tilbury owner Puig hires Goldman Sachs and JPMorgan for an IPO. (Courtesy)

Puig hires Goldman Sachs, JPMorgan for an IPO. The family-owned company, which owns brands such as Carolina Herrera, Paco Rabanne and Charlotte Tilbury, could be worth as much as €8 billion ($8.6 billion), according to a report by the Spanish newspaper Expansion earlier on Thursday.

THG shares drop as firm lowers revenue target after £100 million loss. The business formerly known as The Hut Group had a £100 million ($125 million) first-half operating loss. Adjusted earnings were £50.1 million, just above the top end of its guidance, and the company maintained its forecast for full-year EBITDA.

Sephora North America names Artemis Patrick as president, CEO Jean-André Rougeot to retire. Patrick will be the first woman to lead Sephora’s North American business, and in her new role she will oversee the retailer’s stores, e-commerce, marketing, tech and supply chain divisions.

PEOPLE

Parent company Macy’s Inc. taps Olivier Bron as CEO of Bloomingdale’s.
Parent company Macy’s Inc. taps Olivier Bron as CEO of Bloomingdale’s. (Courtesy/Courtesy)

Bloomingdale’s names Olivier Bron as CEO. Bron will fill the top role vacated by Tony Spring earlier this year when he was promoted to president and CEO of Macy’s Inc., Bloomingdale’s parent company. Bron will resume the position in November.

Hearst Magazine tapped Ronak Patel as its senior vice president, general manager of lifestyle group. In this new position at the company, Patel will be responsible for developing and overseeing brand-level consumer strategies that drive innovation, revenue growth and profitability across the company’s lifestyle group, which includes Cosmopolitan and Seventeen.

MEDIA AND TECHNOLOGY

Australian film director Baz Luhrmann, Vogue editor-in-chief Anna Wintour and British Vogue editor-in-chief Edward Enninful attend Vogue World in London.
Australian film director Baz Luhrmann, Vogue editor-in-chief Anna Wintour and British Vogue editor-in-chief Edward Enninful attend Vogue World in London. (Getty Images/Getty Images)

Vogue World touches down in London. The six-act stage show was overseen by Stephen Daldry, the British director behind “Billy Elliot” and “The Crown,” and Vogue’s creative editorial director Mark Guiducci. It showcased Anna Wintour’s power to convene stars from across popular culture and positioned fashion.

EBay launches consignment offering for luxury fashion sellers. EBay will is launching a new fashion consignment service that will connect users with expert sellers to list and sell pre-owned pieces on their behalf.

TikTok launches online shopping in the US. Short-form video platform users in the US will now be able to see videos and livestreams with links to purchase items on their feed, as it offers tools to content creators, brands, and merchants to create shoppable content.

Apple ditches leather for new products. The tech giant said it worked with Nike and Hermès, brands it’s partnered with to sell watch bands, to develop more environmentally friendly options. But Hermès said leather watch straps will still form part of the Apple Watch Hermès collection and be available for sale exclusively in its stores.

Amazon launches supply chain services for stores. The company is offering a new service that will let its 2 million merchant partners deliver inventory directly to physical retail stores and warehouses, the latest push by the e-commerce giant to expand its logistics network beyond serving online shoppers.

Compiled by Sarah Elson.

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