Snap Joins Amazon's War on TikTokNov 14, 2023
Social media shopping is about to get way more prolific.
According to Reuters, Snap Inc has reached an agreement that will allow Amazon to sell products directly on that platform. The war on TikTok now enters a new phase.
This is the second deal Amazon has inked recently, with the company quietly entering a partnership with Meta a few weeks back that will also allow direct selling on Facebook and Instagram. All of this is in direct response to the purported success of the new TikTok shop feature, where creators on TikTok can sell products directly through videos on their page. While huge numbers of TikTok users have complained that their algorithms have basically just become QVC but for lame products, this reportedly had an outsized revenue lift for TikTok. That can't be confirmed as TikTok isn't a publicly traded company, but clearly, this was enough of a catalyst to get American Big Tech firms working together.
GIVING UP CONTROL
Amazon has actually had success producing QVC-like shows directly on platform to help sell products, so this is honestly a bold move. Amazon has famously tried to control every aspect of their e-commerce experience so they can gather as much data as possible. Allowing for direct sales on other platforms takes Amazon out of the driver's seat a little, but the opportunity must be a pretty big one to make and expand partnerships like this. Product posts like this work better than regular ads because Snapchat and Instagram users are directly incentivized by revenue sharing and a boost in the algorithm in exchange for doing a product review in their own voice and style. Gear up for a lot of exciting new product shilling on your favorite platform, folks.
WHY IT MATTERS
This is a huge move as it opens up a lot of new partnership opportunities for these big tech players. More importantly, the timing of this partnership suggests just how much of a threat TikTok is to U.S. Big Tech. At least from their perspective. In the end, this is a huge lifeline for SNAP as they raised concerns about slowing advertiser growth in their recent earnings call. Now, Shop revenue can readily fill that gap if it catches on amongst SNAP users. SNAP stock rose over 4% on this news while Meta and Amazon stayed relatively flat.