The e-commerce clock is TikToking …

Social media giant taps into FOMO — the Fear of Missing Out

What do 57-year-olds do when their daughters send them TikToks? Ignore them, mostly. I’m interested in short, mostly inane videos to about the same degree that I am interested in exfoliating creams, Taylor Swift and growing a man bun.

But, in 2012, as Facebook continued its quest to take over the social media world, a college administrator invited me into the executive suite to answer but one question: What’s next? What platform should college administrators be keeping an eye on before it — like YikYak before it — unsettles notions of privacy, interpersonal communication and anonymous, sometimes harassing speech?

My answer: TikTok.

While TikTok’s rise took longer than I expected, there’s little question that it is the platform of choice for high schoolers and, in the past four years, college students, as well. Of course, people of all ages use it mostly to amuse, share memes and earn street cred and, as a result, “influencer” status. Increasingly, though, they are using it to shop, buy and sell.

A quick search of headlines relating to TikTok and e-commerce turned up early leads on what must be a huge push into several different businesses and industries by the social media company, which is notably Chinese-owned, a country of origin that put TikTok on former President Trump’s blacklist. More recently, FCC commissioner Brendan Carr has called for an outright ban on TikTok because of data privacy and security concerns. From privacy and data perspectives, TikTok should be on all its users’ watch lists, because U.S. law can’t necessarily protect them.

Fear of Missing Out

Most notable among these headlines, at least to me, appeared at SupplyChainDive and describes a hiring frenzy for TikTok’s startup global order fulfillment centers, a frenzy that began the first of last month. (Searching the big job sites isn’t a bad way to surveil your competitors to track their next move. What are the new skills sets they are hiring?) This pits TikTok against Amazon, and it signals a multi-faceted strategy to help users to deploy video to move product.

Already, the company has amassed a robust database of user preferences, tastes and interests, and it’s growing this database by doing what Facebook taught tech to do: Covertly scouring the web to track wish lists and shopping carts. According to another report, TikTok claims that it is able to determine whether a user is likely to buy anything. Anything!

Social commerce is a market valued at more than $700 million, according to Statista, a space crowded with heavyweights such as Alphabet, Meta and Amazon. TikTok brings to this volatile mix an emphasis on virality, which for e-commerce means the fear of missing out (FOMO). The TikTok generation is highly susceptible to this fear, and it is this fear that fuels the fast growth of everything from product drops to pop-up shops to limited edition sales.

It’s gotta be the shoes

I’m familiar with FOMO and the power of the product drop. For the Air Jordan retro 3s, the UNC edition in powder blue, the previously mentioned 57-year-old had to download a merchant’s app, register for a raffle, enter the raffle in hopes of “winning” an appointment at the merchant’s brick-and-mortar store to maybe get the opportunity to drop down $250 for a pair of kicks. This 57-year-old did all of these things … and still lost out.

OK, now he’s angry, which is a form of inspiration. He hit the after market, had to drop down $350, but he got his shoes.

FOMO, or viral commerce, is here in a big way, and it is engendered, fed and manipulated online. This is the social commerce aspect of it, and this is why TikTok cannot be ignored.

Releasing limited-edition items in small numbers (“small batches” in the bourbon industry) and doing so at a particular time on a well-publicized date can be done on — or offline, of course. But social media can best create and nurture the FOMO. It’s working in skateboards, pajamas and play clothes, and even pizza. I subscribe to Talia di Napoli so we can jump on the Italian company’s limited-edition pies that sell out faster than it takes to make a pie.

Behavioral experts tell us that “drops” provide the elements of surprise and scarcity that lead to excitement, urgency and action. They work even better in combination with boredom, which is why so many product categories benefited from them during Covid, including and especially my own experience with the retro 3s. (It also explains why social commerce has temporarily flattened out in terms of growth.) I couldn’t leave the house, so you could be sure I would hunt, kill and deliver home my quarry! “They will be mine. Oh, yes. They will be mine.”

Drops also transform a decision that otherwise can be postponed indefinitely into an impulse purchase, which makes them an appealing possibility in home furnishings. They decrease overhead. They keep demand high, often even generating a healthy secondary or after market.

And they support premium pricing. Because they are socially driven, drops create buzz, grab attention and foster conversation.

Live, love and skate on

One of the more intriguing examples of the drop phenomenon is Bear Walker in Daphne, Alabama, who produces 250 skateboards per collection and no more, no matter how high demand might be. Walker’s new collections come out one at a time about every six weeks, which builds scarcity, maximizes planning and inventory control, and makes each and every one of those 250 boards special, even collectible, even bucket-list collectible. Heck, I want one, and I don’t even do skateboarding.

Walker’s drops sometimes sell out in 45 minutes, according to the description in the New York Times. Consumers have even learned hacks, such as refreshing the webpage to avoid being perceived as a bot. (Noted!)

Circling back to TikTok, the app’s social commerce strategy looks to combine global fulfillment with another Facebook play, which is coaching merchants on how to use the platform to catch the attention of those merchants’ would-be customers.

This past summer, TikTok started up an educational small business program called “Follow Me.” In June, the company began testing a Shop feed to spotlight products and sellers. And in August, the company partnered with Shopify to allow that site’s merchants to add a shopping tab to their profiles.

TikTok has also developed tools to allow brands to create, run and monitor ad campaigns on the platform, yet another playbook page from Facebook.

With an estimated 750 million monthly users, TikTok should not be ignored, not even by a 57-year-old ridiculously not skateboarding in retro 3s. And not by home furnishings retailers and distributors with very reasonable fears of missing out.