TikTok Shop and Social Commerce Financial Insights

All right, Michelle, thanks for joining me.

0:19 Michelle Barnum Smith

Hey, thanks for having me. It's about dang time, we'll just say that.

0:23 Stephen Brown

Well, this is only episode four, so. And we're recording this on January 20th, so this is really kind of a timely episode, a quick drop episode.

Real quickly, introduce yourself, a little bit about your background.

0:34 Michelle Barnum Smith

Yeah, so I have been, I don't know, I guess in the technology space since the year 2000. So if that doesn't date me, I don't know what will. And specifically in the TikTok Shop, TikTok world since 2021, and TikTok Shop since 2023. So all things new and social commerce oriented.

1:07 Stephen Brown

Yeah, and been around ecommerce for years now, specifically.

So let's hit out the gate. January 20th, let's just talk briefly about the ban. Maybe we'll kind of run through the timeline. There was a bill that was passed a year ago, Congress in April.

1:10 Michelle Barnum Smith

Yeah, in April. Garbage bill, if I might add, that caused all this process problem in the first place, because they tried to ban TikTok by itself with its own law and it didn't pass. And then they bundled it with a Ukraine aid bill and it passed hugely, basically like 98%.

1:52 Michelle Barnum Smith

So I think a lot of the problems with the ban started with the nature of the bill itself. But the good news, ish, depending on where you stand on the issue, despite the court of appeals denying TikTok's appeal early December, and despite the US Supreme Court's denial and upholding of the ban, President Trump has made essentially promises, as of right now, today is the 20th, he was just inaugurated this morning, he made promises that he would apply a 90 day extension to the ban for TikTok.

TikTok went dark on Saturday night at 10:50 Eastern time. I watched it. Like I was on TikTok and I just watched features just fall off, and it was a little eerie, to say the least. And I know we were texting.

2:36 Stephen Brown

And now it's back online, but sort of. It's still not on the app store. I was looking at the app store right before we started recording. It's still not in the Apple. If you go and search for it, they have a little message that says, learn about the ban.

2:48 Michelle Barnum Smith

That it's back, but it's glitchy.

3:00 Stephen Brown

So it's still kind of in limbo, but Trump has signaled that he's going to broker a deal.

And we are not going to talk about the ban. That's all, you could have a whole episode just talking about that. We're here to talk about the opportunity around social commerce, and I want to pick your brain.

3:16 Why TikTok Shop isn't a marketplace

Stephen Brown

Whether or not TikTok is around in 90 days, there's a lot to learn and unpack from TikTok Shop. So let's go there so that this episode doesn't age very rapidly.

So TikTok Shop, like you've presented, I've attended a presentation you've done and it's really interesting. I've got my take, but maybe pitch us, what is unique about TikTok Shop and why has it gotten such interest over the last year?

3:48 Michelle Barnum Smith

Yeah. So a lot of people's confusion around TikTok Shop is thinking that it's just like any other marketplace. And when we think of ecommerce marketplaces, of course the giant comes to mind, which is Amazon. And if we were to compare apples to apples, we would not be comparing TikTok Shop with Amazon. We'd be comparing Amazon with like Walmart.com or eBay or Temu or Shein or some of those.

TikTok is social media meets marketplace, and thus we get the term social commerce. Because you have a platform where people like to hang out. And what I always ask people is, when was the last time you hung out on Amazon? Or when was the last time you hung out for any period of time for fun at like Walmart? Like you don't generally, right? You're in and out. You're there for a solution, and you're there to get your milk if you're at Walmart.

4:46 Michelle Barnum Smith

I think the only retail place that people truly hang out is like Costco. Costco might be the only place, and maybe I'm a nerd, but I like to hang out there. I don't hang out there, but I go there for fun. It used to be date night with me and my husband early in our marriage.

But no, TikTok is first and foremost a place of connection and communication and community building. So people on average spend 90 minutes a day on TikTok, and the power of the algorithm is what sucks you in. It gets to know you and then it serves you content to keep that dopamine hit going, right? And that's what keeps people on the platform, is they're constantly discovering new things to interact with and to learn about or to do or whatever it might be. And now ingratiated into that is new products to discover.

5:40 Michelle Barnum Smith

And on Amazon, generally speaking, people don't discover new products on there. They have something in mind that they are looking for. They go and add it to cart and generally check out and be on their way. It's not a place of discovery. Amazon typically is not a place of discovery. So those are kind of the two different things, and why we're not talking apples to apples when we compare TikTok Shop with Amazon.

We also can't compare apples to apples between TikTok and Meta, such as Instagram, Facebook, X, YouTube. Because those are social platforms, once again, where people hang out, but generally they're not the place that people check out. It may be a place of discovery, and essentially the influencer economy really truly began with the likes of Instagram. But it's not where people discover and execute a purchase. Usually that is, go to the link in my bio, and you hunt around for a while to find the product that they were referring to. You experience all this friction, right? And there's lots of drop-off that happens between the discovery and the purchase. And that's where the beauty of TikTok Shop really kind of comes in.

7:03 Removing the friction, and getting started

Stephen Brown

Well, that's what I think is so interesting about it, is how they've removed the friction. If you look at something like Instagram or YouTube, it's like, here's an ad, now I've got to bounce out to the Shopify store or whatever is the platform that we're using. And TikTok has basically made that transaction all in one place, which really streamlines that friction. That's what's really interesting.

7:32 Stephen Brown

On top of that, what you're saying earlier, TikTok, from research, I'm looking at an old report, it's the number one social media platform up until, looks like 54. 18 to 54, that's where the most time is being spent of all the social media platforms. So it's got a lot of attention, it's a frictionless experience.

Take us through a little bit of that frictionlessness. How does that work?

7:55 Michelle Barnum Smith

Yeah, I timed it once. I timed going from discovery to checkout back to scrolling, and it was 15 seconds from the time that I saw a product that I wanted to purchase, clicked on the product detail page, went to checkout and then back to scrolling. And I wasn't even trying to go fast. I was just like, I'm just curious how fast is this. 15 seconds.

8:22 Michelle Barnum Smith

Comparatively, doing that same process on Instagram took a minimum of 90 seconds. And that was with me really trying to complete a purchase. If I had been annoyed like I truly typically am, when I have to go and hunt around and really be committed to finding that product, I would have dropped off over and over and over again. They would have lost my sale over and over.

8:50 Stephen Brown

So what is TikTok doing to make that happen? How is it that they're frictionless?

8:57 Michelle Barnum Smith

Yeah, so Shop itself is integrated directly within the platform. So there are a couple of different ways that people can discover. First and foremost is just video showing up in your feed. TikTok is a video dominant platform, so you're already there watching videos. And so then product videos pop up, there's a little orange shopping cart.

Well, let's ask you the question, Stephen. Didn't you just tell me that you completed your first TikTok purchase?

9:22 Stephen Brown

Yeah, I did it. I did a test. I've been kind of anti-TikTok, but I got on for some research.

Yeah, it was pretty seamless. I mean, it was a pretty seamless experience, to input some stuff for the first time. I'm assuming going forward it'd be even faster. But yeah, there's no bouncing to a Shopify store, a third party website. It's all in product.

9:48 Michelle Barnum Smith

Let me ask you emotionally. Emotionally, did you at any point feel like, skeezed out, or like, what is this, how does this work? Like what was the emotional gauge there?

9:59 Stephen Brown

I went straight to shop, because I have not been on TikTok for, there's a long litany of reasons why I don't spend time on there. And so I went straight to the shop instead of waiting for ads to come up, and I was just searching around.

It felt a little bit cheap to me, to be perfectly honest. So I had to search around before I found a product. I was like, okay, this looks like something legit. But I assume that's just an early stage. You don't see a lot of these big brands on TikTok Shop at this point, is that fair?

But in terms of the checkout experience, it was very slick.

10:35 Stephen Brown

And I want to kind of walk through, so are people like, is TikTok holding the inventory? How are they making this happen? When a seller sets up on TikTok, how is it that they are able to make that streamlined experience?

11:02 Michelle Barnum Smith

Yeah, so let me kind of back up and explain that I help ecommerce sellers expand to TikTok Shop. That's my main thing. I do that through education, I do that through consulting. We also have managed services, but we're a little bit more restricted on that side of things and who we take on.

So from that perspective, most of the time I'm not talking sellers into selling on TikTok, I'm teaching them how to expand. They're already selling in various marketplaces, whether that's their own website or Amazon, and they just want to now take advantage of that more top of funnel traffic with TikTok. So that's the perspective in which I look at this, and that's the audience that I typically speak to.

11:54 Michelle Barnum Smith

So when we're talking about doing so, the easiest mechanism to use is your own inventory and to use seller shipping. Generally you're not going to start off by sending inventory into anywhere.

TikTok does have Fulfilled by TikTok. That was released in June, July of last year, but it still is technically in beta. They are expanding and they are opening that up, but you have to earn the right to be in FBT, meaning at least $20,000 in sales, and through a relatively short probationary period of 30, 60, 90 days and 500 orders. So once you meet that kind of criteria, then you can send inventory into FBT. But you don't start there.

And especially with Amazon sellers, you can just hook up either in Shopify as well, whatever, whether you're using a 3PL or Amazon to fulfill your current orders through your current channels, those same channels can be utilized to fulfill TikTok orders as well. It makes it very easy.

12:46 Stephen Brown

So I can connect my Shopify store to TikTok and it talks to it and orders are processed there.

12:52 Michelle Barnum Smith

Yep. And then whatever 3PL is connected to Shopify, or if you have Shopify connected to Amazon for inventory fulfillment, that's how all that information is passed through and the orders are automatically sent out.

13:05 Stephen Brown

So this is the magic, in my opinion, is the fact that they've basically taken a lot of the complexity of buying on a social media platform and just streamlined it and made it really easy. Like you can just buy and then go back to doom scrolling, right?

13:26 Michelle Barnum Smith

Entertainment, connection, dopamine hits, yes.

13:29 Stephen Brown

How long has TikTok Shop been around?

13:32 Michelle Barnum Smith

So it's been in general availability since September of 2023 in the United States. Previous to that, it's been in the UK since end of 22. It's in Thailand, Indonesia, Philippines. It's been in other marketplaces. This version of TikTok doesn't actually truly exist in China. The closest, I guess, would be Douyin.

13:58 Stephen Brown

They've got an alternate app. TikTok was actually Musical.ly, right? It was that app that the kids used to make dance videos, and then ByteDance bought it and rebranded it to TikTok.

14:10 Michelle Barnum Smith

Yep. So in some way, shape or form TikTok's been around for a while, but TikTok Shop itself.

14:16 Stephen Brown

It's fairly new.

14:19 The numbers, and a viral stockout

Stephen Brown

So let's talk some numbers. What are you seeing? I've seen some dismissal of TikTok, it's not that big. Give us some numbers about how much you're seeing being sold on TikTok. What is the revenue opportunity that you've seen?

14:29 Michelle Barnum Smith

Yeah. I mean, since general availability in 2023, it's responsible for $80 billion in GMV, gross merchandise value revenue. It's also responsible for over $8 billion in operational spending as well, just to operate TikTok in the United States. There are over 7,000 employees, offices in most of the major metros. And so TikTok has invested heavily, ByteDance has invested heavily in TikTok being in the United States. But also, as far as the revenue that's generated, is over $80 billion since then. So that's no small number. No small number, guys.

15:22 Stephen Brown

Yeah, that's a starting point.

What are you seeing when brands go on? Have you worked with anybody that's just starting on TikTok, or is it usually, I'm saying that's the only platform they've sold on? I'm assuming when you're working with somebody they've been on Amazon, they've been on Shopify.

15:44 Michelle Barnum Smith

No, I've only worked with sellers who already have inventory, who already have products that they are selling.

15:50 Stephen Brown

Got you. What are you seeing for their revenue uplift from TikTok Shop? I mean, it's only been around a little over a year, but what are you seeing? Is it 5% of revenues is coming out of TikTok, 10%?

15:58 Michelle Barnum Smith

Yeah, I mean, generally it depends. It depends on the product itself. Not every product is going to be TikTok-able. There has to be something interesting about it to sell it on the platform.

But let's say if we're comparing somebody's Amazon brand performance to TikTok brand performance, we're going to see probably like 10 to 15% additional coming from TikTok. And what we also are not counting in that is TikTok's lift, halo effect, spillover effect into its other channels such as Amazon. It's huge.

16:40 Stephen Brown

I heard about that. Why do you think that is? Why is there a halo effect? What's your thesis there?

16:46 Michelle Barnum Smith

Well, because people prefer to check out on Amazon.

16:49 Stephen Brown

Okay, so they see it on TikTok and they go back to Amazon where they're more comfortable. Interesting.

16:53 Michelle Barnum Smith

Right. So it's interesting because TikTok has a propensity towards virality. And so if we have a viral event, we absolutely see that similar spike in Amazon sales every single time.

17:10 Stephen Brown

And what's the uplift you're seeing in Amazon? So you're getting 10% additional sales on TikTok, are you seeing a step function on Amazon as well?

17:21 Michelle Barnum Smith

Yeah, absolutely. And obviously it can vary quite a bit. I mean, it's to the point of it being problematic. Forecasting for TikTok can be extremely problematic if you're doing well.

So for example, I had a seller who has a couple of viral products on TikTok. They do very well, they sell very well. He also sells them on Amazon. He had a product that was just kind of a status quo product. It was chugging along on TikTok just fine. And going into Q4 he did his kind of standard order based on previous performance. And then he had a viral event with that, where it's a post that was posted like November 2nd. It hit on the weekend before Black Friday, Cyber Monday, and sold out on all platforms.

18:22 Michelle Barnum Smith

So he sold out on TikTok, he sold out on Amazon, and went into Q4 without that product. Plus obviously, as an Amazon seller, you are punished for stocking out. Yeah, it's a huge problem for sure.

18:35 Stephen Brown

Going out of stock. Why is that? Is that due to the influencer model of TikTok that causes that?

18:45 Michelle Barnum Smith

The virality? No. There's a, how to go viral on TikTok, that's its own podcast for another day, honestly. And your guess is as good as mine on any given Wednesday, because the algorithm is constantly shifting. And let's be fair, there is a whole lot of organic manipulation that happens by real people on the backend. We have relationships internally and they'll tell us, we're going to push this product. We're like, okay.

19:20 Michelle Barnum Smith

Right, let me just say the seller is now back in stock. It's January 20th. He went out of stock, he missed basically December and January, but he's back in stock. His product is highly seasonal, it's a fishing product.

And already sales are, that post that performed so well for him is performing well again. It's kind of not at that same viral level, but it picks up. The algorithm's like, you were relevant before, you're back in stock now, you're relevant again. And so you're going to see that kind of uplift. And with advertising that helps as well. But that post is going to live on and be functional for a very long time for that brand.

20:07 What makes a product TikTok-able

Stephen Brown

There are two things that you've talked about I want to go down. The first one is TikTok-able products. What products work well? What have you seen work well on TikTok, and what products do not?

20:21 Michelle Barnum Smith

Yeah, I mean, I have a whole training about this. I call it the five keys to TikTok-ability. But the core three comes down to demonstrability. Does your product demonstrate well? Is there something that's going to catch somebody's attention really quick within that half a second when somebody's scrolling, that's going to be like, what is that?

20:49 Michelle Barnum Smith

And I tell people, as they're doing product selection for their brand, specifically if they're doing product selection for TikTok, if they're wandering around the Canton Fair or they're wandering around on Alibaba and something is like, what is that, that should be like a flashing light to them. A green flag, we'll say, insane like, hey, that could be TikTok-able, because it stops them. Just like, what is that? Or is that something different? There's something about it, right? So demonstrability plays a huge factor.

21:17 Michelle Barnum Smith

Does it solve a problem, and is it easy for you to identify what that problem is upfront? You might think that that's along the same lines of demonstrability, but it's not. There's that, that's cool effect, but there's also that I need that factor, right? Like, I need that, that solves something for me.

And then price point. TikTok is very price sensitive. So kind of the sweet spot is between $20 and $50.

21:54 Stephen Brown

Do you think that's a factor of the age of the consumers that are on TikTok, or do you think that's just.

22:00 Michelle Barnum Smith

Has to do with emotion. So we're talking about top of funnel discovery here and interruption marketing.

I tell people it's kind of like, you're watching the big game and a pizza commercial comes on, and the cheese is gooey and stretchy and the pepperoni is crisp and bubbly and all these things, right? You're feeling an emotion. Now, your kitchen is just right there.

22:26 Stephen Brown

You're like, I'm hungry.

22:30 Michelle Barnum Smith

You could go and make yourself a peanut butter sandwich. Is that going to satisfy the emotion?

22:37 Stephen Brown

Not as much as a good cheesy pizza.

22:40 Michelle Barnum Smith

Right. You're going to want to take action, and more likely than not you're going to want to take action based on what you saw and who created that emotion. It's about kind of satiating that desire. Now, if the pizza then says, yours today for $5 and we'll be there in 10 minutes, you're probably going to convert, right? And you're like, heck yeah, I am.

23:01 Stephen Brown

Yeah. So is it impulse purchases? Is that what it is?

23:08 Michelle Barnum Smith

Yes, that's what we're getting at, is that impulse. It's the, I need this, I've got to have it kind of thing.

And as soon as price plays a factor of creating friction, then you have people who start to shop. And we don't want shopping, we want buying, right? We want discovery and checkout. We don't want, I want to weigh my options and maybe I'll go to Amazon and see what my different options are.

23:33 Michelle Barnum Smith

So price, and there are elements of conversion that can definitely help. But when people are like, I'm not going to be profitable if I sell on TikTok over a certain price point, what I told them was, look, you can have your retail price be whatever you want it to be, but you need to factor in what I call the three converting keys.

The first is free shipping. You need to have some sort of free shipping offer. You need to have some sort of strikethrough or discount that you're running. And on top of that you need a coupon. You need to be running something that is actionable on the part of the customer, to claim this coupon code, use this promo code, something that sweetens the deal.

24:20 Michelle Barnum Smith

And all these things, people are like, oh my gosh, I'm not going to be profitable on your platform. And I'm like, listen, set your price whatever you want. Your retail price, you can pull out of the sky, I don't care what it is. Retail price to me is a number that is created backwards. Know your fee structure. Build in this pricing model. Build in your affiliate commissions. Build in ad costs. And then price your product, whatever you need it to be, to be able to have those factors play in as well. Because that is what is going to help you with conversions, and once somebody discovers, actually converts.

25:05 Fees, advertising, and the creator economy

Stephen Brown

I want to take apart a little bit of what you just said, the fee structures. So everybody knows that Amazon is squeezing the heck out of sellers. How does TikTok Shop compare in terms of fee structures?

25:19 Michelle Barnum Smith

Yeah, so the first 90 days when a seller is just starting on the platform, their referral fee is like 2%. You have a 2% referral fee in the first 90 days. After that it goes up to whatever it currently is. For a long time it was 6%, I know they have plans to go up to 8%. And then if you're using FBT, Fulfilled by TikTok, their shipping platform, there are fees there as well, but not anywhere close to what Amazon is charging.

25:53 Stephen Brown

What about advertising? Are you paying for advertising, or is it just the algorithm feeding up your ad?

25:58 Michelle Barnum Smith

You can pay for advertising, and I recommend you do. But it's not the same, once again, if we're talking apples to apples, it's not PPC style advertising. It's more meta style advertising, like discovery-based, interruption-based advertising that you would do on Instagram or Facebook.

26:13 Stephen Brown

And what are you seeing as a percentage of revenue on TikTok Shop for advertising?

26:20 Michelle Barnum Smith

We don't speak in those terms. It's not a TACoS or an ACoS scenario, it's an ROI and a ROAS based scenario. And most of the time TikTok's ads are based on an ROI target.

If I were to show you TikTok's ad platform today, it would look a lot like Meta's business manager or Facebook ads manager structure. So you have to kind of flip. Once again, we're not speaking Amazon marketplace to marketplace terms, we're talking more like Meta, if you're running Shopify ads or something like that.

26:58 Michelle Barnum Smith

So I've seen ROIs all across the board, but you can adjust them based on the performance of your content.

I like to say, get a lot of content out there. TikTok is content voracious. You can't just show up with five videos and expect, no. Like TikTok, you need to show up with like 50 videos a month between branded content or creator content. But for a lot of brands that feel that way, where you're like, well, guess what? That's what the creator economy is.

27:36 Michelle Barnum Smith

And that's the beauty, that's the true beauty of TikTok and where social commerce really brings to bear. Because working with influencers previously was like this pedestal peasant scenario, right? Brands would go and beg these influencers like, please, can I have the opportunity to work with you, please? And these creators would deign to make you a video or two for $2,500 or something like that. And then you were left with, did it do something?

28:04 Michelle Barnum Smith

How do I measure any value in this? Especially if we're talking Amazon sellers, where Amazon does not share data and is not allowing you to have any kind of attribution. The brand referral links are absolute crap, and there are no closed loop systems.

With TikTok, TikTok has flipped the script. So it is very much an even playing field between brands and creators. And it turned it into a joint venture relationship, where creators, I mean, they're affiliates, they get commission from selling products, and if they perform well they earn more. So it kind of creates this natural drive in them to find brands to work with and to work hard for them, and vice versa.

28:50 Michelle Barnum Smith

It's easy for brands to see the high performing creators. We're not making decisions based on vanity metrics like followers. In fact, follower count really has very little influence on reach on TikTok. Every single video on TikTok has the same opportunity to get out there. And the goal isn't necessarily to go viral, but to hit and to convert.

So when we're sorting through affiliates, we're really looking at their GMV history, to see what kind of sales they've generated, and making our decisions based on that and who we're working with. So it's really kind of flattened that from the pedestal peasant kind of scenario to joint venture relationships. And that's the beauty of social commerce in action that TikTok has created.

29:49 Stephen Brown

I want to go a little bit deeper on this, because this is what economically gets me really interested.

The old model, I go pay somebody who's got a million followers, I have no idea what the impact is, I just had to pay them a boatload of money. With TikTok Shop, from what I understand, and correct me if I'm wrong, it's more like direct affiliate marketing. When they've sold something they get paid, when you get paid.

30:08 Stephen Brown

And to take it a step further, isn't it true that you can see what their sales histories are as you're curating those? So it's transparent. And do they get to see what the brand's sales are as well?

So the transparency, this is what I love from a financial standpoint, is they've created a more equitable platform for influencers. And gone is this, I want to see this spread to all the social media platforms, because this legacy model just doesn't make economic sense.

30:39 Michelle Barnum Smith

It doesn't. And the beauty of it as well is that creators want this model on the other platforms too. The problem is the other platforms don't really play well with other marketplaces. Amazon and Meta are trying this kind of integrated relationship. It's such garbage from a user experience standpoint. Instagram is just rolling out their Instagram influencers program that's native integrations to Shopify, like your website, those types of things. But it still doesn't have the true closed loop systems that TikTok has natively, and what really empowers that kind of feedback loop system.

31:24 Michelle Barnum Smith

Because obviously there's the level of coolness of being able to see how an affiliate is performing. But what's really crazy is that when you have a product that just takes off, we call it the affiliate snowball effect. Because all of a sudden you go from trying to talk affiliates into representing your brand, going through and getting your samples and creating content, to now affiliates are banging down your door because they see this as a viral product, a high performing product, a product that they want to help represent. So then you start getting a ton of organic interest in your brand just happening on its own.

32:04 Michelle Barnum Smith

And TikTok just released a cool feature called refundable samples. So instead of, and this is not something that if you're just getting started would apply to you, this would be best after you have a product that's performing well. But they have to make at least, they buy the product, and then they have to make at least three sales to receive a refund on their purchase.

So no more does the business have to fund the samples and seeding a bunch of samples. Now these creators are like, I was going to buy it and I'm going to create some content around it and try to earn some sales so I can get that money back. So it's even better. The system that started out really great, and now it's even better. It's really inspiring, for sure.

33:00 Stephen Brown

Do you think this model is going to spread? I mean, there are multiple aspects of TikTok Shop, but do you think this model is going to spread into Meta and YouTube? What are your thoughts?

I mean, Zuckerberg's the biggest copycat there is in social media, right?

33:13 Michelle Barnum Smith

Yes, they would be like, YouTube already has one. But here's the problem, is the trust aspect. People hate Meta. People hate Zuckerberg, right? And why I asked you what your emotional reaction was to shopping on TikTok and checking out on TikTok, is because every time I try to do a native checkout, because technically this has been around on Meta properties for a while, through a Shopify catalog upload integration between Meta and Shopify, but the ick factor is so intense. I would rather just buy on the brand's website than check out through Meta and its properties. And it's notorious, people just hate Facebook.

33:57 Michelle Barnum Smith

YouTube lends itself to long form content, which means not phone-based, but maybe TV-based watching. I know I watch YouTube predominantly on the big screen, not the little screen, right?

34:20 Stephen Brown

But you do have YouTube Shorts.

34:24 Michelle Barnum Smith

Yeah, YouTube Shorts, which is its own crazy world. But the integrated YouTube shop aspect of it is not, like, it's there, but it's not predominant.

34:32 Stephen Brown

It's not seamless.

34:37 Michelle Barnum Smith

TikTok really made a switch from being a social media platform to a shopping platform very quickly. It was like, hey, yeah, you can still find great recipes and follow cool creators and all these things, but y'all are here to buy, by the way. Here's some shoppable posts. And lives. Lives are huge on TikTok, because live shopping is huge in China.

35:00 Stephen Brown

Let's talk about live shopping. Here's a great analogy I heard a few weeks ago. TikTok is like QVC plus Netflix plus Amazon, right? So the QVC part is the live shopping. Live shopping has been around for decades, QVC and Home Shopping Network and stuff. I saw kind of a push on Facebook a couple of years ago, but I don't see it anymore. But it's huge in Asia.

And what are you seeing? Is this a wave of the future? Are we going to see live shopping?

35:40 Michelle Barnum Smith

Live shopping's never gone away. Live shopping has never gone away anywhere. It's always, but it hasn't been necessarily a predominant category of buying, we'll say, for people. I know brands that all they did, that is their main thing, is live selling on Facebook. That's all they do, and they make grundles of money doing it.

So it's not that it necessarily went away, it just kind of pulled back from the way that most US mainstream consumers buy, and especially younger generations, right?

36:19 Michelle Barnum Smith

The Gen X, the Gen Y, Millennials, maybe there's some dabbling. Definitely the older generations are more exposed to live shopping. HSN and QVC and even like the old school infomercials, right? We're used to that, or at least experienced it. And so it's not foreign in the sense of like, what's this?

But now it's introducing whole new generations to live shopping and live buying, and kind of that back and forth that happens live between the sellers and the buyers. It's all very interesting how it's playing out. And sometimes I personally am like a Xennial, I'm like a 1980s girl, and so there's part of me that recognizes it for what it is and is also kind of icked by it, right? Like I'm like, this is weird.

37:08 Stephen Brown

Do you see brands leaning into that in the US, or is it still kind of in the early stages?

37:16 Michelle Barnum Smith

Yeah, because TikTok is very much promoting it and pushing it and pushing sellers to do it, and you get all sorts of benefits for doing it. I personally don't know any brands, me personally, or worked with any brands that have just knocked it out of the park with live selling.

37:40 Michelle Barnum Smith

And I don't necessarily recommend it to my brands, because I would rather invest in these creator relationships that have posts that can live on, right? And through advertising continue to, yeah, absolutely evergreen, versus like a one and done event. So to me personally, I'm like, okay, these are two strategies that need to be separated, for a brand and live selling.

38:06 Michelle Barnum Smith

But I've also known of and heard of brands that do very, very well. I think a good example of this is a brand local to us here in Utah called Just Ingredients. They have really killed it on TikTok Shop with live selling. They have done just massive amounts of sales with TikTok Shop through live selling. But is it for everybody? Not so much.

So my recommendation to most brands, if they're interested in live selling, is to work with a live selling agency, where all they do is have hosts in studios where you can send your products to them and have them represent your products, as opposed to you building out. I think this is the problem, is most brands think like, oh my gosh, I've got to have this like, you know.

39:04 Stephen Brown

Yeah. TikTok's about authenticity.

39:28 Michelle Barnum Smith

One of the things that I tell people from a content production standpoint, when I say, hey, at least 50 posts a month, and the color drains out of their face, low production, this is the beauty of it. It doesn't have to be this high production Instagram post or reel or something like that. So it's all about the authenticity. And the TikTok audience can smell inauthenticity a mile away, and it doesn't resonate with them anyway. So that's the beauty of it, for sure.

39:36 Predictions and wrap up

Stephen Brown

All right, I want to wrap things up with a couple of quick questions. We're going to do the crystal ball. I'm not going to hold you to these predictions, and if you're listening, you shouldn't hold us to them either.

Is TikTok around in 90 days?

40:10 Michelle Barnum Smith

Yes. And I think that the way that the deal is structured is actually for the best, because a 50-50 split means that the algorithm has the highest chance of staying with the platform, versus a full divestiture. The algorithm stays with China and does not stay with TikTok.

40:30 Stephen Brown

And just to elaborate what you're referring to, is Trump came out and said he wants a 50% ownership by United States entities, and that that's going to be how he's going to keep it around in the United States.

All right, next question. Will Meta and Google replicate TikTok Shop in the next, let's give them 24 months. Do you think you're going to see comparable experiences on those two in the next two years?

40:55 Michelle Barnum Smith

Meta's already started. They just rolled out a new feature that has been on TikTok for a while, and they rolled it out the night the ban went live.

41:05 Stephen Brown

Interesting. What was that feature?

41:06 Michelle Barnum Smith

It's the thoughts, a little bubble that's on your stories, or on your profile. We'll just say that, on your profile.

41:10 Stephen Brown

Okay. But do you think they're going to have a TikTok Shop? So you think they're going to replicate what's going on here in some fashion?

41:23 Michelle Barnum Smith

They're going to. They are leaning, Instagram influencers is, I think it's live, and that's based on Shopify integrations. So that's kind of one of the missing pieces that Meta hasn't had previously, is that closed loop system. Instead of the pedestal peasant scenario, the joint venture more style business model between affiliates and brands.

41:45 Stephen Brown

Maybe that brings up my last question. Do you think the traditional affiliate model, the influencer model, goes away, where you're just throwing money at somebody with a bunch of followers, and this new model, do you think this is going to become the future?

42:07 Michelle Barnum Smith

Yeah, absolutely. There's always going to be some sort of brand deal scenario with large content creators whose sole focus is entertainment. There's always going to be some level of brand deals that happen at that level. But I think the everyday creator who wants to monetize, it's not going to be about building your followers and having crazy videos, it's going to be about shoppable posts and shoppable content.

42:39 Stephen Brown

Awesome. If somebody wanted to connect with you, Michelle, what's the best way to do it?

42:42 Michelle Barnum Smith

LinkedIn is a great way to do it. You can also email me at michelle@ttshopsellers.com.

42:48 Stephen Brown

Awesome. Thanks for joining me on the episode, and go TikTok.

42:53 Michelle Barnum Smith

That's right.