TikTok came into its own in 2022 (photo credit: Solen Feyissa on Unsplash)
TikTok, the hugely popular short-form video site owned by Chinese firm ByteDance, had quite a year in 2022, surpassing 1 billion users worldwide and making itself a force to be reckoned with in advertising, ecommerce and fulfillment, and becoming the latest competitor to Amazon’s dominance.
This comes as TikTok faces opposition from both sides of the aisle in Washington over data security concerns and connections to the Chinese Communist Party, with legislation calling for a national ban and governors in 18 states prohibiting the app’s use by staffers.
As of November, TikTok had an estimated 94 million monthly active users in the U.S., and over 1 billion worldwide. This global figure compares to 2.9 billion on Facebook and 2.2 billion on Instagram. While the company pared back its ad revenue projection late in the year to $10 billion from $12 billion, as did many other tech firms hit by marketing cutbacks, it still more than doubled it from $4 billion last year.
A study sampling 5,000 DTC sellers in Q2 by ecommerce analytics firm Triple Whale found ad spend on TikTok was up 53% from the previous quarter, as brands flock there based on lower costs relative to Facebook and Instagram. Across Triple Whale’s 6,000 clients, year-to-date ad spend on TikTok as of September was 4x what it had been for all of 2021. By comparison, ad spend YTD on Facebook was down 45%.
Even while it’s growing ad revenue rapidly, TikTok is the fifth largest player in the U.S., behind Google, Meta, Amazon and Microsoft/LinkedIn, per Axios.
Another area where TikTok made some noise this year was in ecommerce, with the news in November it was testing a shopping feature that allows U.S. users to make in-app purchases. The feature had previously been tested in the UK and seven Asian countries.
“We’ve seen the positive impact of TikTok Shop, and we’re excited to continue experimenting with this new commerce opportunity to support businesses of all sizes,” a TikTok spokesperson told Semafor, which broke the news.
The month prior, TikTok made waves when it was discovered the company was hiring logistics and supply chain talent to create a global infrastructure to fulfill ecommerce orders, including in the U.S. It also filed for a patent in September for the term “Fulfillment By TikTok Shop,” an echo of Amazon’s massive FBA program.
Cities where the postings are located include 36 in the U.S., from Seattle to Austin to Los Angeles, San Francisco and Mountain View, CA and Washington, D.C. International locales are concentrated in Asia, including Jakarta, Singapore, Kuala Lumpur, Bangkok, Ho Chi Minh City, Madrid, São Paulo, London and Manila.
“Building this out with warehouses and other facilities would enable TikTok to offer an end-to-end solution,” said Neil Saunders, a managing director at consultancy Global Data. “It will provide both an additional revenue stream and improve the quality of the shopping experience for consumers.”
Perhaps feeling the heat from TikTok, Amazon this month launched a feature called Inspire that lets users scroll through short-form videos and hopefully buy stuff from brands. Industry observers, however, weren’t too high on Amazon’s latest venture in a decade of social commerce experiments.
“All the social media platforms tend to copy each other, and Amazon’s a little late to the party,” said Chris McCabe, an ecommerce consultant and former investigation specialist with Amazon. “And I’m not sure the copying Tiktok technique works anywhere.”