TikTok has warned sellers in the US that they’ll have to use its logistics services, taking a page out of Amazon’s playbook.
SellerShipping, the option which allows sellers to arrange their own logistics, will be discontinued on 25 February, according to the email sent to sellers on Monday. This will leave sellers with the choice between TikTok Shop Logistics Services or a list of TikTok-approved providers — the same options provided by Amazon.
‘They want to challenge Amazon’s dominance,’ said Warren Jolly, chief executive officer of agency AdQuadrant. ‘First they removed low quality items from the marketplace, and now they are removing poor shipping quality experiences from the marketplace.’
He added that TikTok isn’t the first to mimic Amazon’s playbook in this way, with Meta making ‘similar moves in earlier days of their platform’.
Entering a low-margin business like fulfilment might seem like a risky proposition when the platform has such a firm foothold in the short-form video space — but Jolly thinks TikTok will see quick returns in profit as well as in customer experience.
‘As logistics continues to scale as a line item on the P&L, TikTok’s absolute margin dollars will benefit at critical mass,’ he said.
Still, forcing sellers to use Fulfilled by TikTok will leave many of the businesses that rely on the platform scrambling to adapt — in particular larger sellers that have their own shipping contracts.
Asked what he thinks of TikTok chances of successfully aping Amazon, Jolly said: ‘The highest out of anyone else’.
‘If product quality and listings improve, it might become more of a shopping destination like Amazon is. Right now, less than 20% of US TikTok users have actually bought on TikTok Shop.’
However, he argued that eradicating friction for shoppers is likely not TikTok’s only motivation.
‘I also think it’s a way to gain access to more data to inform their models,’ he said. ‘I think it will both improve ad performance and will also invite bigger advertisers onto the platform.’
