Shares of Amazon.com (AMZN 1.66%) tumbled 3% out of the gate Thursday, before clawing back half their losses later in the morning. As of 10:30 a.m. ET, Amazon stock remains down 1.5%.
You can blame TikTok for that.
NASDAQ: AMZN
Key Data Points
TikTok could threaten Amazon's e-commerce business
TikTok parent company ByteDance Ltd., you see, is starting to horn in on Amazon's dominant e-commerce business in the U.S., as reported on Bloomberg last night. TikTok currently sells less than $2 billion per year in merchandise in the U.S. -- a tiny fraction of Amazon's $554 billion in annual sales. But TikTok aims to grow its e-commerce business "tenfold," according to the news agency.
Placing ads on scrollers' feeds to encourage "impulse buying" could lift TikTok to $17.5 billion in sales in 2024. And granted, even hitting that number would mean TikTok's e-commerce business is only 3% the size of Amazon's. But it would also mean TikTok is growing at 1,000% per year. Meanwhile, according to data from S&P Global Market Intelligence, Amazon's sales averaged only 20% growth over the last five years.
That's how tiny TikTok might pose a real danger to Amazon's e-commerce business.
Not so fast, Tex
And yet ... is this story even true? Buried deep within Bloomberg's article is a disclaimer from TikTok itself, which states: "The speculated U.S. merchandise sales figures represented by Bloomberg are inaccurate."
And yet, TikTok didn't clarify how inaccurate Bloomberg's report was -- whether Bloomberg had misplaced a decimal, for example, or was entirely wrong about TikTok's plans to sell stuff in the U.S., or somewhere in between. So there seems to be some confusion here about exactly how big a threat TikTok poses to Amazon.
What is clear is that "TikTok Shop is one of the fastest-growing features for the Beijing-based, closely held company," says Bloomberg, and that it has helped ByteDance grow into a powerful force in social media, with $200 billion in market cap and $110 billion in annual sales from all sources -- sales growing at 30% per year.
So maybe TikTok's not growing 50 times faster than Amazon, but it's still growing faster than Amazon, period. And with TikTok Shop apparently charging commissions on its sales that are barely half of what Amazon charges its Marketplace customers, chances are good that TikTok Shop is only going to get bigger in the future.
