Amazon.com has announced its latest move to counter the growing dominance of TikTok in the e-commerce space. The online giant has partnered with social media platforms to enable direct purchases from apps such as Snapchat and Instagram.
Recently, Amazon struck a deal with Meta Platforms, allowing users to link their Facebook and Instagram accounts to Amazon. This integration enables shoppers to conveniently buy products without leaving the apps.
In a similar vein, Amazon has now reached an arrangement with Snapchat-owner Snap, according to an Amazon spokesperson cited by Reuters.
Premarket trading reflects the positive response to these partnerships. Snap shares were up 4.8% on Tuesday, while Amazon and Meta saw marginal increases of 0.4%.
At first glance, these deals may seem counterintuitive. After all, Amazon, Meta, and Snapchat are competitors vying for advertising dollars and consumer attention. Meta's Facebook already has its own marketplace platform, although it may not attract as many large-scale sellers as Amazon. Moreover, Amazon has its own shoppable content feed, Inspire, which bears a striking resemblance to Instagram.
However, a deeper dive reveals that these partnerships strategically leverage the strengths of both sides to confront the looming threat posed by TikTok, the video-sharing app owned by China's ByteDance.
In an ever-evolving landscape, Amazon is taking proactive steps to maintain its position as a leader in the e-commerce industry. By collaborating with social media platforms, it aims to provide users with seamless shopping experiences and solidify its stronghold in the online marketplace.
TikTok's New E-commerce Platform: Combining Advertising and Sales for Increased Revenue
In a bid to leverage its growing advertising influence into revenue, TikTok unveiled its very own U.S. e-commerce platform this September. This move allows the popular video-sharing app to function as both an advertising and sales channel—a strategic endeavor to maximize efficiency.
While exact financial figures for TikTok remain undisclosed by its parent company, ByteDance, estimates from Insider Intelligence project a remarkable surge in the app's net advertising revenue for 2022, surpassing $9.89 billion. Despite this impressive increase, TikTok is still considered a relatively small player in the industry. For comparison, Meta recorded over $113 billion in advertising revenue in 2022, with Amazon raking in $37.7 billion.
Nevertheless, TikTok's pursuit of market-share gains could potentially lead to substantial revenue and profit in the future. Projections from research firm WARC indicate that global advertising spending is set to exceed $1 trillion next year, marking a momentous milestone. The growth rate is also expected to accelerate, with an 8.2% projected increase in 2024 compared to this year's 4.4%.
Apart from revolutionizing the social media landscape in the U.S., TikTok aspires to make a significant impact in the realm of e-commerce as well. Responding to this competitive landscape, U.S. tech companies are now recalibrating their strategies.