In a move that’s sure to excite investors and shoppers alike, Amazon.com Inc AMZN is making waves by teaming up with social media giants TikTok and Pinterest.
According to BofA analyst Justin Post, these platforms will soon allow users to buy products directly from Amazon without leaving their apps. The new partnerships aim to leverage Amazon's shoppable ads, marking a significant step forward in digital commerce integration.
TikTok, Pinterest Get ‘Shoppable’
Amazon has long been a pioneer in e-commerce, and this latest venture into social media is a testament to its innovative strategies. Post highlights that the collaboration with TikTok and Pinterest means users can link their Amazon profiles to their social media accounts, accessing real-time pricing, shipping options, and Prime eligibility.
This development is part of Amazon’s broader strategy to enhance advertising ROI, potentially adding $1 billion in gross merchandise value (GMV) through a 20% improvement in returns, according to Post.
Read Also: Amazon Vs. Temu, Shein, TikTok Shop: Who’s Winning The US E-Commerce Battle?
Easing TikTok Shop Concerns
While TikTok’s own eCommerce platform, TikTok Shop, has been expanding rapidly, integrating Amazon shopping directly into TikTok could provide a competitive edge.
Post notes that by tapping into TikTok’s vast user base, Amazon is positioned to counteract investor concerns about competition from TikTok Shop. As TikTok Shop’s GMV now accounts for 2.2% of Amazon’s U.S. sales, this strategic alliance might help Amazon regain some lost ground, Post adds.
Big Opportunities, Big Numbers
Post maintains a Buy rating on Amazon, setting a price target of $210, which indicates a 26.7% upside. With TikTok projected to capture 3.5% of the $300 billion U.S. digital ad market in 2024, and Pinterest holding a 1% share, Amazon's expanded presence on these platforms signifies a significant growth opportunity, Post suggests.
He estimates that if Amazon allocates roughly 5% of its $10 billion annual online ad budget to these collaborations, the potential for $1 billion in additional GMV could be transformative.
Slow and Steady Wins The Race
Though the ramp-up may be gradual, the expansion into TikTok and Pinterest reveals Amazon’s confidence in maximizing social media returns.
By continuing to test innovative ad types, Amazon's expansion underscores its commitment to staying ahead in the ever-evolving digital landscape, Post says.
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