Ecommerce continues to climb to new heights in the U.S., where recently released figures for Q4 2023 show that sales reached nearly $325 billion. But America looks set for an ecommerce war. Having spent a whopping $3 billion on online advertising in the U.S. in 2023, China’s Temu is hoping that its online advertising blitz can help it establish a foothold in what is traditionally Amazon’s territory.
It’s not just Temu either. Shein also is investing large sums in U.S. advertising campaigns, signaling that this trans-Pacific ecommerce battle is only just beginning. And with TikTok already growing in confidence in the U.S. market — recently raising its fees for TikTok Shop sellers in the U.S. — Amazon is facing competition to remain the number one ecommerce player.
Amazon is Prepared to Fight ‘Anywhere’
Fortunately, Amazon has a powerful ace up its sleeve as it seeks to counter its Chinese rivals. Amazon Anywhere enables consumers to discover and purchase products within an app or content such as video and even games. It’s being rolled out in conjunction with compatriot brands Meta and Snap and is already having an impact: Snap’s partnership with Amazon to enable in-app shopping helped to boost Snap’s share price by 7.4%.
When it comes to in-app shopping, China’s TikTok is setting the pace. It’s created expectations for an entire generation of consumers by making video an interactive experience rather than a passive one. Not only can users engage with the videos they see, but they can buy from them too. TikTok also is facilitating these transactions within its platform — it quite literally owns the checkout. With more than 100 million U.S. users, TikTok is in the perfect position to dominate the American ecommerce market.
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So the battle lines have been drawn, and how this Sino-American rivalry plays out will be fascinating to watch, but the most interesting thing about it is how it will drive innovation in the ecommerce space.
The Rise of Commerce Media
The new consumer behaviors driven by TikTok and Amazon mark a paradigm shift in ecommerce. Now, through commerce-enabled media, every experience can be shoppable. Consumers have switched to an always-shopping mindset where they expect to be able to buy items that they see right there and then.
As a result of this, ecommerce platforms need to react to the change in consumer behavior. To do so, they must create experiences that cater to these expectations, and that means integrating the checkout within the content.
Consumers are no longer prepared to endure the friction of a convoluted conversion journey. The days when they click on an ad, only to then have to go through several different processes to get to the item they wanted to buy, and then check out, are fast disappearing. Instead, they are demanding in-stream shopping functionality, enabled by interactive video ad units. Rather than consumers clicking on an ad then being directed to an ecommerce platform to complete the purchase in several stages, the purchases are made seamlessly within the ad.
This off-platform capability will transform the way ecommerce works. By enabling purchases to happen at the moment of inspiration, all ecommerce businesses can collapse the sales funnel and drive conversions while providing a much better consumer experience.
And through commerce media, retailers can improve the consumer experience even further. Interactive video offers them the chance not just to insert checkouts into the ad unit but to offer other in-stream features too. For example, they can offer consumers a choice of items to look at, add additional information about the products that can be revealed through a single tap or click and introduce other elements to engage the user. In addition to boosting engagement, these elements can uncover deep insights about consumer behavior that retailers can use to their benefit.
Takeaway: 2024 will be the Year of Commerce Media
While the likes of Temu, TikTok, Amazon and Snap battle it out for control of the valuable U.S. ecommerce market, the wider implications of this contest are being realized in powerful innovation that ultimately brings great benefits to the consumer.
It’s up to ecommerce platforms to recognize the changes in consumer behavior that TikTok and Amazon’s innovations have driven and ensure that they use this to their advantage, rather than fight against it. The commerce media opportunity will truly come to the fore in 2024, and the smart players will be grabbing this chance with both hands.
Nick Morgan is the CEO and Founder of Vudoo. An entrepreneur and technology professional, he has over 15 years of experience in digital marketing services and was an early adopter and champion for ecommerce in the early 2000s. Through his extensive experience delivering digital transformation across public and private sectors (Tefal, Invictus Games, Leica), Morgan has channeled his knowledge into developing Vudoo as an enterprise product with global applications.
