June 20, 2024
LOVELAND, CO – What are the benefits and limitations of TikTok Shop? In part two (check out part one) of our conversation with Paul Baron, founder and CEO of Influx Catalysts, Loveland, Colo, we explore the TikTok phenomenon, plus a bit more about the differences between influencers and creators.
Prosper Show: What are your thoughts on Biden signing the TikTok “sell-or-ban” legislation?
Baron: I have mixed emotions, but I’m not that concerned. If TikTok gets banned, something will take its place. There’s Flip.shop right now, for example. Flip is just product ads.
Prosper Show: How does the entertainment and the shopping sync up on TikTok / TikTok Shop?
Baron: It’s all attention-based, and the algorithm is based on what you feed it in terms of attention. TikTok is looking at things that are going to get people to stop what they’re doing long enough to ‘like’ it, at a bare minimum. That’s the lowest lift. Other levels of engagement are sharing, favoriting, and commenting. I think the biggest weight is probably getting comments, because it takes the most time. From the brand perspective, and the creator perspective, I want to see lots of shares, favorites, and comments.
Prosper Show: How quickly can you gauge the success of a TikTok video?
Baron: You can tell if a video that you’re making is going to go viral within the first few minutes of posting—if it gets more than 1,000 views, a bunch of comments, and a bunch of shares.
Prosper Show: What makes TikTok Shop so appealing?
Baron: What makes TikTok Shop really exciting is the affiliate center, and that’s where agencies like mine come in. There are a lot of people who just don’t know what they don’t know. They don’t know how to find creators. They don’t know how to talk to them. They don’t know what to say. They don’t know what to expect. They don’t know what rates to set and they don’t know how to rank their products on TikTok, or what the pricing should be. They don’t know how to run deals, what deals are, or how to get coupons.
Prosper Show: Why are Chinese sellers doing so well?
Baron: Chinese sellers have been in the social selling scene—live selling—for years, so they’ve got a leg up on us.
Prosper Show: What’s the biggest challenge facing U.S.-based e-commerce sales?
Baron: The biggest challenge is competing with the commoditization that’s happening with online platforms courting Chinese sellers.
Prosper Show: What can be done?
Baron: When it comes to competing, America needs to be willing to go back to what works, namely making good products. Spend the time to develop something unique—not just a blue widget when everybody else’s is red. We must look at real products that are different, with actual brand stories. The brand needs to stand for something, more than just making money.
Prosper Show: What types of creators help to build that brand story?
Baron: I want to work with somebody who has built a real following of people who like their content. These people have shoppable videos on TikTok Shop, for example. I don’t want to work with people who only promote products. Generally speaking, those people don’t really have good followings, or they don’t really have followings of people who care. They are relying on their video to go viral, and make money off of that video.
Prosper Show: Does success on Amazon translate to TikTok Shop?
Baron: Just because you have a successful product on Amazon doesn’t mean it’s going to be successful on TikTok. Granted if you have a ton of social proof, and you do sell well on Amazon, it could be successful—but it doesn’t guarantee that it will.
Prosper Show: How does the TikTok mindset differ from other platforms?
Baron: Facebook is kind of connecting and following your friends—seeing their life updates. TikTok is little short viral clips where everybody is trying to do something and follow the trend. It’s an entertainment platform at its core. People are there to be entertained. They are not there to shop. I’d have to look at more numbers than my small data set, but of the creators who are producing content that converts—it converts anywhere from half a percent to one percent at the highest. Let’s say out of one thousand product views, you get like two sales. It’s significantly different from Amazon. On Amazon, if your product detail pages aren’t converting at something like 20 percent, you’re not doing a good job.
Prosper Show: What are the numbers for ‘normal’ e-commerce?
Baron: Normal e-commerce, on a website for example, has an average conversion rate of about two percent. It’s still low, but it is a lot lower on TikTok. It’s just the nature of the beast that people mostly aren’t there to buy. There are some people who are using it [TikTok] as a product discovery platform, but most people do not.
Prosper Show: We chatted a bit about this in part one of our interview, but talk about the differences between creators and influencers.
Baron: When I think of influencers and creators in general, I prefer working with people who consider themselves creators. Creators like to create. If you consider yourself an influencer, your job is selling stuff on social media to make money, which is a different frame of mind. You’re coming at it from a different angle, so it’s nuanced.
Prosper Show: What are some misconceptions about influencer marketing?
Baron: Misconceptions in general with influencer marketing are that it’s like advertising, and that you can just track all your spend. You can’t. Another misconception is that you’re going to see positive ROI immediately and you’re going to be able to track sales immediately. People look at it as a silver bullet to solve their marketing problems. They don’t really understand how much work it takes. For most Amazon sellers, you can’t just get into it.
Prosper Show: Why is that?
Baron: Many Amazon sellers are in the business of selling highly commoditized products with no real story or reason to buy from them. It’s just another dog leash that’s exactly like 25 other dog leashes. So why should I buy from you? You need to have a great story that might go viral on its own—such as why you started the company, or how you started it. Did you actually invent the product or did you just use Helium 10 and find a super sick deal?
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