I’ve been thinking a lot about what TikTok can tell us about the future of e-commerce, and potentially the economy more broadly.
While inflation and supply chain woes plague many businesses, a brief ‘08 financial crisis’ history lesson provides us with hints as to what lies ahead, and how Tiktok fits within the puzzle.
Following the GFC of ’08, we witnessed an important speed-to-market shift.
A flurry of e-commerce start-ups were able to build and scale cost-effectively.
By 2012, the barriers that historically made starting a business very costly—such as expensive traditional marketing and custom technology infrastructure—were crumbling, allowing commerce to rapidly evolve.
Online-first companies such as Warby Parker, Casper, Dollar Shave Club, IPSY and Birchbox, a FemTec Health Company, and others burst onto the scene with similar foundational approaches to building their businesses.
Each company exploited the increasing abundance of open-source or otherwise readily available technology to build momentum.
Consider just the simple task of creating a website that could power online transactions. Rather than having to build from scratch, market entrants were launching online stores on platforms like Magento, WooCommerce (WordPress), and Shopify at a fraction of the cost of their predecessors.
At the same time, other solutions to tackle automated email, customer service, and D2C logistics provided a set of cost-effective tools that completely changed the economics of an online start-up.
And once the business infrastructure was in place, attracting customers was not only cost-effective but incredibly scalable thanks to cheap CpC and CpM rates on Facebook and Google.
Plenty of brands capitalized.
With newly acquired capabilities to “stack” one solution on top of the next, the agile D2C universe was in bloom.
Yet, here we are 10 years later – with an eerily similar set of circumstances. Market disruption, and another economic ‘correction’ in motion.
Zooming in, business fundamentals are being squeezed from all sides, and marketing once again, is expensive thanks to platform saturation and maturation. In other words, our definition of ‘traditional marketing’ is no longer radio, TV, and print – it’s Facebook and Google.
We’re experiencing another reset, similar to 2008-2010.
But, as history explains, great companies are born during downturns. Moreover, great technology will emerge to support those companies who are hell-bent on finding solutions during rough times.
And, those companies will find cost-effective ways of building their businesses, acquiring customers wherever they are, and shift marketing dollars accordingly.
This time around, however, Tiktok is playing the role of Facebook circa 2010, while Facebook is playing the role of ‘radio, TV, Print’ – or if you prefer, ‘traditional marketing’ on its way out.