How the Landscape of Social Media and E-commerce is Changing: The Battle Between Amazon and TikTok

December 6, 2023
6 mins read

TikTok is increasingly encroaching on territories previously reserved for others, extending well beyond the world of social media, though not entirely. Amazon is becoming more aware that without a serious union with social media, it may start to lose ground. Both platforms observe the same trend – Gen Z, a generation determined to redefine reality in almost every aspect.

This dynamic story, where the main roles are played by technological giants, not entirely understood and absolutely unpredictable companies from the Generative AI sector, and primarily young people from Gen Z, is at times like a thrilling action movie. Especially since when it comes to TikTok, the U.S. government and the EU (although the latter targets not only this entity) are not remaining passive. TikTok’s rapid growth, particularly among Generation Z and Millennials, highlights a significant transformation in the way we interact with technology and consume content. This change is not merely a temporary trend, and to underestimate it would be a grave mistake. Soon, the most influential voice will be that of Generation Z, who not only search for content differently, consume it differently, and shop differently, but may also make choices (including political ones) in a completely different way than we might expect. In this narrative, I focus mainly on the USA because, for many reasons, this arena seems the most interesting in this context.

Context:

At some point, someone at TikTok noticed that a significant portion of its users – numbering in the hundreds of millions – not only enjoy the native features of the app but also engage in much more. They search for information that older generations typically look for on Google. They seek recommendations and reviews, often searched by older individuals on e-commerce sites or other websites, and finally, they purchase products recommended by influencers, but only those they trust. This individual decided not to ignore the trend but to meet it head-on, which in this case meant entering the e-commerce field. The immense popularity of TikTok could not escape the attention of authorities, because, despite claims of TikTok being largely a private entity, its alleged connections with the Chinese government have raised warning signals in the USA, partly due to ongoing geopolitical tensions between the USA and China. However, the context seems broader.

Amazon’s Awareness of the Data

People at Amazon are also observing the same data. Not long ago, I had a conversation on LinkedIn with someone who claimed that TikTok can’t become bigger than Amazon or replace it. I responded that it’s indeed hard to believe, but firstly, the purpose of imagination is to create a vision of something we don’t believe can happen (though it does from time to time), and secondly, it’s wise to be cautious with such statements, especially when considering demographics. I know I’m repeating myself, but it’s important to emphasize the habits related to online searching, content consumption, and the customer journey in Generation Z and, to some extent, Millennials, as well as other generations. The most challenging aspect is to combat ingrained habits.

Statista’s Insightful Figures

Let me quote some numbers from Statista: In 2021, when Snapchat was the leader among Gen Z users in the USA, TikTok was right behind with about 37 million users in this demographic. TikTok, known primarily for short video content, has mastered the art of capturing the attention of Generation Z – an achievement that goes beyond mere entertainment. Its model, focused on creating a unique environment for e-commerce and advertising, differs from traditional online retailers.

On the other hand, Amazon’s approach, while extremely effective, is based on a different foundation. As a titan of e-commerce, Amazon focuses on a vast product range, convenience, and a customer-oriented model emphasizing easy access to a wide variety of products, prices, fast delivery, etc. However, Amazon’s engagement largely depends on the intent to purchase, with less emphasis on content-based experiences. This is the exact opposite of TikTok, where impulse plays a significant role, as well as a different way of seeking product information.

This divergence in approach between TikTok and Amazon is key. TikTok’s engagement model utilizes the power of content and community, potentially stimulating impulsive purchases and brand discovery in a way Amazon’s more transactional model cannot. For Gen Z users, who are increasingly seeking authentic, interactive, and social shopping experiences, TikTok’s platform aligns more closely with their preferences.

Contrasting TikTok’s Strategy with Amazon’s E-commerce Dominance

Therefore, when comparing TikTok’s growing user base and engagement strategy with Amazon’s established e-commerce dominance, we’re not just comparing numbers. We’re witnessing a collision of paradigms – one representing the traditional e-commerce model, and the other a new content-driven shopping experience. Here lies the real battle for the hearts, minds, and wallets of Generation Z consumers.

Let’s reiterate. 45 million users this year and nearly 50 million Gen Z users in the USA by 2025 – but these are just estimates. In reality, there’s no certainty about the user numbers each of these platforms will achieve, as too many factors are unpredictable. It’s worth mentioning at least three:

  • The next generation, Alpha, whose oldest members will be 15 in 2025, will have smartphones (with hard-to-predict functionalities) and pocket money, thus individually small but collectively a significant purchasing power.
  • What new apps and platforms will emerge over the next two years? It’s hard to expect that nothing will change, especially with other Chinese platforms like Temu entering the e-commerce fray.
  • The transformative impact of AI on the world, as we can be sure will change it radically.

Back to the numbers. Those 50 million young Americans represent 15% of the total US population. Almost 20% of the voting-eligible population. Recalling past events and accusations related to presidential elections, it’s not surprising that the observation of social media, especially TikTok, may only be intensified.

A Deeper Look into Shopping Preferences:

According to a HubSpot report, “All generations prefer to buy products in-person at a store over any other channel, but this preference significantly decreases with age. Buying through online retailers like Amazon and directly from a company’s website is also popular. Generation Z, millennials, and Generation X are most interested in shopping through social media and a company’s mobile app.”

However, a CGS report reveals something different: “Generation Z is moving away from e-commerce sites like Amazon. Only 37% said they rely on these types of online stores, while 67% of older generations still frequently use such entities.”

Amazon understands this challenge, which is why it has formed close partnerships with Instagram and Snapchat (also Pinterest and Facebook, but that’s another story) to at least try to compete for Gen Z. Of the three most popular social platforms among Generation Z, there is only one that Amazon does not collaborate with. Yes, TikTok.

And if you’re wondering why it’s worth participating in this game for the biggest slice of the e-commerce pie, or in Amazon’s case, maintaining its dominance, consider the following statistics. An expected increase of over 46% in social commerce within 4 years speaks for itself. The country of TikTok’s origin and many cited (and even more uncited) data must have drawn the attention of authorities. And they have.

Legal and Regulatory Environment in the USA and TikTok’s Legal Challenges in the EU

The Trump administration attempted to ban the use of the app, citing national security concerns. In December 2022, President Biden signed regulations prohibiting TikTok on federal government devices. And let’s be honest, it’s not just because watching videos on TikTok can be addictive.

The United States’ response to TikTok’s growth was multifaceted, involving legislative actions such as the DATA Act and the RESTRICT Act, aimed at controlling the influence of foreign technology in the USA. These changes reflect the complexity of balancing national security concerns with the freedom of digital platforms. Data protection regulations seem to be the most accessible, difficult to combat, and the most powerful weapon for anyone, not just the US government, to fight against any online business. But it’s very easy to cross a line whose violation can cause serious frustration among users.

Across the Atlantic, TikTok also faces significant legal challenges in the EU regarding penalties for data privacy violations. These actions underscore global concerns about the company’s data practices, especially regarding the privacy of minors. The United States pays particular attention to this, as these international events can shape the direction of their policy.

Various scenarios can be considered in which the US government maintains continuous regulatory and legislative pressure, for example, through the Federal Trade Commission or the Federal Communications Commission. However, it’s worth recalling what James Lewis, the director of the Strategic Technologies Program at the Center for Strategic and International Studies, said to Politico: “Whenever someone uses the word ban, I know they’re not serious because you can’t ban TikTok,” adding that it would be unconstitutional and restrictive of freedom of speech.”

Conclusion

Observing the rapid development of technology, the blurring lines between social media and e-commerce, the dynamic geopolitical situation (which is not unequivocally perceived by all inhabitants of Western countries), and generational changes, it’s hard not to feel that we are on the threshold of changes whose consequences are difficult to fully predict.

The contrast between TikTok’s content-based engagement model and Amazon’s approach to transactional e-commerce is becoming increasingly clear, highlighting a fundamental shift in how younger generations interact with technology and make purchasing decisions. But also social (who they support and who they don’t) and political decisions (who they vote for and who they don’t).

Viewing it in this light, it’s hard not to feel that Western governments (both in the USA and Western Europe) will have to balance regulations and innovations in a way they may never have had before. And this will affect the entire market. I have the impression that politics and technology (and therefore a large part of the economy) have never influenced each other as much as they do now and will in the coming years.

Ultimately, the future of e-commerce platforms and social media will depend on the choices and preferences of new generations, who wield significant influence through their votes and purchasing power. Undoubtedly, we live in an era of rapid change, perhaps faster than ever before, and it is these changes that will shape the future of digital commerce and global technology policy. However, it’s worth remembering that in nature, everything tends towards balance. On the other hand, the question arises – does AI know this?

Marek Molicki

Marek Molicki, since 1998 in the online industry. Extremely motivated to reach goals. Ideas deliverer, problems solver, finder of new ways, the doer. Social media fan, public speaker, trainer. Constantly looking for new skills to learn. Impossible is nothing, it's only the question of time and being consequent.
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