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This literature review worked to identify the history of e-commerce and commonalities between those who use popular e-commerce platforms. While e-commerce has existed since the introduction of the internet, embedding e-commerce in social media platforms is a new structure. It also helps to explain the importance of e-commerce from the perspective of a brand, as well as the way brands use e-commerce to raise brand awareness. It will further explain how brands use social media to target audiences based on their audience's consumption styles. To conclude, this research will discuss how TikTok Shop protects its users from scams and working with third party vendors.
E-Commerce is not a new idea, but companies are exploring new avenues to build their platforms.
Online shopping has gained traction mostly in the past 10 years, with online shopping accounting for 14.7% of all total retail sales during the second fiscal quarter of 2023 (U.S. Department of Commerce, 2023). Recently, TikTok joined the e-commerce trend by adding their own online shopping feature within their app platform, TikTok Shop. Rather than physically examining the product, shoppers use online reviews to judge its benefits, with 40% of adults ages 18-25 purchasing a product after watching someone review it online (Laningham, 2022). This creates room for more user generated content from shoppers globally and promotes users to engage in conversation online about products to build relationships with the brands they are purchasing from.
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Companies are thriving on TikTok from using organic marketing.
A live demonstration of products from The Ordinary.
Photo from TIkTok
As of the beginning of 2023, there were 1.53 billion users on TikTok (Geyser, 2023). A large portion of those users are a part of Generation Z, making up about 44% (Lebow, 2023). With about 220,000 brands on TikTok Shop as of September 2023, TikTok has made it easy to shop online. However, they call for urgency by offering limited time deals, leaving very little time between viewing a product and making a purchase decision. Those who view a product online first are more likely to have a positive connection with a product after viewing it online first (Neumann, et al., 2023). Influencers are able to make QVC style pitches about products (Maheshwari, 2023) which gets pushed into TikTok's algorithm to identify relevant audiences (Geyser, 2023).
Personality traits affect the way people make purchase decisions.
Observing others' habits on social media can change the way someone makes decsions to purchase products (Wilska et al., 2023). Generation Z has made this transition to follow their peers advice online rather than traditional advertisements. TikTok especially has led to the change in behavior in this generation, as it has been what they have come to know to be reliable when it comes to deciding whether to purchase. According to Wilska (2023) this can lead to people, particularly among younger generations becoming more materialistic. Furthermore, Neumann (2021) explains those who experience the fear of missing out to have a stronger purchase intention after encountering a product online.
Kylie Cosmetics on TikTok Shop
Photo from The Industry Beauty
Lawmakers, among others are questioning how safe TikTok is for users in the U.S.
TikTok CEO Shou Zi Chew addressing Congress in March, 2023
Photo from AP News
Despite TikTok’s extreme and growing popularity, United States government officials have begun to examine the risks of using TikTok’s platform for U.S. citizens. Using big data to target specific groups of people with advertisements has been used by large corporations like Meta, and Apple Health (Hader & Amiri, 2023). Advertising and marketing sectors use an ever expanding database of information about specific individuals’ demographics, online browsing habits, purchase patterns, and media consumption (Beauvisage et al., 2023, p. 3). Source credibility, including trustworthiness is important to consumers when they make purchases (Chiu & Ho, 2023, p. 3). With the allegations coming out against TikTok, it is possible that this could drive users against using the platform.
The Gaps
The Gaps
While conducting prior research around this topic, there was no information found regarding how consumers interact with small businesses on e-commerce platforms. In the findings, one piece that stood out is how different ages are influenced by other online users, as Laningham (2022) explains that three out of four adults ages 18-25 rely on online reviews before purchasing. This research will focus on the driving forces internally and externally to TikTok that entice users to make purchases. There are large brands such as Fenty Beauty, Stanley, and PacSun (Hunter & Kelly, 2023) that are on TikTok Shop, but wonder if small businesses are receiving the same attention with this new feature. One of the main objectives will be to gain insight about shopping behaviors of TikTok Shop users and determine whether they encounter a greater number of small businesses compared to shopping outside of the app.
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