Amazon, Walmart face a challenge from TikTok

While Target offers customers a retail experience, Walmart and Amazon are more just places to shop. Yes, both brands have loyal customer bases, but that's more a function of their pricing and technology.

People like to visit Target (TGT) - Get Free Report just to hang out. The retailer has become sort of the new mall where younger customers especially stop by to browse, maybe get a drink or snack at Starbucks, and generally just look around the store.

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There's a level of cool that Target has captured that Walmart has never had and Amazon (AMZN) - Get Free Report can't really match because it offers a digital experience. You go to Walmart or visit Amazon.com because you need something and want to buy it at a decent price.

The brand experience is efficient. There's no emotional connection and certainly nothing entertaining. TikTok, however, has a devoted following that spends hours at a time scrolling through content.

Now, the social media site wants to become a store by integrating commerce into its feed. That's not a unique idea, Meta's (META) - Get Free Report Facebook and Instagram, have tried it to to varying degrees, but TikTok has captured a unique customer base that may be willing to shop in a completely different way.

TikTok tries to become a place to shop

Commerce has been sort of a holy grail for social media sites. Facebook has built a big business around advertising, but every major social media platform has struggled to sell items directly to customers. 

That's largely because people looking to be entertained or connect with their friends, probably aren't also planning to buy anything. TikTok hopes to leverage its platform's strong engagement with its customer base into actual sales. Statista data suggests two-thirds of U.S. teens aged 18 to 19 use it.

"TikTok Shop empowers brands and creators to connect with highly-engaged customers based on their interests, and it combines the power of community, creativity, and commerce to deliver a seamless shopping experience," the company shared this past week in a press release.

Basically, the social media platform will integrate a shopping cart and payment platform into its feed. So, in theory, if you watch someone demonstrate some makeup tips, you would be able to buy the products shown directly on TikTok.

"TikTok Shop will now bring shoppable videos and live streams directly to For You feeds across the country – and give brands, merchants, and creators the tools to sell directly through shoppable content on the TikTok app, the company added.

The question, and it's a big one, is whether people watching TikTok videos actually want this.

Streaming and selling have not worked

Amazon has tried QVC-like shopping shows and Instagram has made various efforts to empower influencers to sell items. Whether TikTok, which has a younger customer base that may not readily have a credit card available remains a major question, 

TikTok plans to offer a store, so customers can literally browse products and it will offer sellers fulfillment through its own operation. Creators will also have access to affiliate programs so they can "monetize their creativity by sharing products in short videos and livestreams," according to the social media company. 

The company, which has faced a U.S. ban because of fears of how it handles data is also trying to assure potential shopping customers that their information will be safe.

"From discovery to purchase, TikTok is committed to providing a safe and secure environment that allows our community to shop with confidence. We empower people to seamlessly shop with a range of features, including product reviews, reporting tools, and easy returns and refunds," the company said.

TikTok stores data for its U.S. operations in the United States. 

That has not stopped various states from pursuing action against the company which began under ByteDance, a company based in China.

TikTok's users, however, have largely ignored those concerns, and data security issues likely won't dictate whether the company becomes a viable player in the shopping space. That question is much more dependent upon whether its loyal customer base actually wants to interrupt their experience by making a purchase.