Move over logistics world, there’s a new player in the mix. Social media platform TikTok is setting up fulfillment warehouses, Wall Street Journal reports. This may just make way for TikTok to stand out among e-commerce competitors.
TikTok will take on the complicated task of managing inventory and delivery from various independent merchants who sell goods to TikTok followers.
The social giant also released an e-commerce guide, specifically tailored to help small businesses capitalize on TikTok’s growing platform. The one-page roadmap covers everything from setting up your store’s presence to using TikTok Ads Manager.
‘Fulfilled by TikTok’
The Beijing-based company was launched by ByteDance in 2016, and in just seven years its value grew to $66 billion. It was the most valuable unicorn worldwide in 2022.
In August the company announced the launch of ‘Fulfilled by TikTok’ (FBT) for merchants using the TikTok Shop in the UK to sell on the platform. The FBT program sees TikTok Shop stores pick, pack, and ship a merchants products to the TikTok followers.
A few UK brands have already been testing FBT. These include The Beauty Crop, Nature Spell, and Sumayah.
With FBT, the platform is positioning itself as an engaging social media platform with e-commerce capabilities while leaving logistics to the experts.
Departing from Amazon’s e-commerce model, the social media giant forged partnerships with ShipBob, Flowspace, and Newegg, and others to handle storage and distribution on behalf of TikTok and its merchants.
Merchants can now easily tap into ShipBob’s AI-powered system. They also get access to the company’s network of 50 fulfillment centers.
Meanwhile, Flowspace’s OmniFlow fulfillment management software provides centralized, real-time control of a merchant’s inventory, orders, and shipments. To boost this offering, TikTok integrates apps to power the process, including WebBee, AfterShip, and Pipe17.
It’s all about speed – ultrafast delivery. This is why e-commerce businesses are moving to fulfillment centers. Customers don’t want to wait endlessly for items to arrive at their doorstep. Interestingly, an ECDB report reveals that speed beats price.
Gone are the days when customers are expected to wait 5-7 days for a package to arrive.
By reducing the day delivery window, TikTok is exceeding customer expectations. This ties in with how consumers use social media – from seeing something in their ‘For You’ feed and clicking through to that product, to receiving it just as swiftly.
TikTok in statistics
According to a Business of Apps report, TikTok generated an estimated $4.9 billion in revenue in 2022. It also has 1.3 billion monthly active users in 2023. Countries with the most TikTok users are the US, Indonesia, and Brazil, a Statista report states.
Now that TikTok is supercharging its logistics game, it hopes to smash its 2023 target of $20 billion in online sales – a considerable leap from its 2022 revenue. The goal hinges on leveraging the 17% conversion rate by engaging the 39 million consumers who actively browse products.
The success e-commerce businesses can achieve through TikTok may be next level, as a Millennial would say.
E-commerce fulfillment services market
Grand View Research says the proliferation of electronic commerce and the subsequent rise in the number of online buyers, especially in emerging economies, is anticipated to fuel market growth.
“Fulfillment service centers enable online merchants to outsource services including bundling, warehousing, shipping, and other value-added services, such as return management and urgent parcel service. A fulfillment center is ideal for merchants that do not have robust warehousing capabilities to manage inventory directly and do not want to invest additional efforts in shipping.”
Social media’s role in e-commerce
In rolling out this new venture, TikTok is taking on the likes of Amazon and Walmart, and strategically aligning its strategy with the peak holiday shopping season. This move underscores the transformative power of social media in shaping consumer behavior.
Since TikTok’s social footprint spans billions of active users, Amazon for the first time faces a threat as an e-commerce giant. Amazon’s recent partnership with Meta shows a clear acknowledgement of the emerging competitive landscape.
TikTok’s bold steps into the e-commerce realm reflect a keen understanding of its influential role in today’s digital shopping landscape.
Based on the viral purchases under the hashtag #TikTokMadeMeBuyIt, the social media giant is definitely onto a winner here. With its new business partnerships, the company’s ambitious $20-billion-goal is within reach.