John Lawson of Pass The Mic – Fulfillment by TikTok Would be a Positive for Growing Number of Creators Looking to Sell Merch

Ecommerce expert John “ColderIce” Lawson and I recently transitioned our Watching Amazon show/podcast into Pass the Mic.  The new name doesn’t mean we’ve grown tired of, well, watching Amazon, as we still plan to do plenty of that with all the things the company is into.  But by rebranding it as PTM it allows us to broaden the topics and companies we can dive into, and of course TikTok is a great example of that.

In fact, there have been a few recent reports of TikTok potentially following in Amazon’s footsteps by building out their own fulfillment centers and capabilities in order to support the growing digital commerce of creators using their video platform.   And though there haven’t been any formal announcements that this is happening, it got us to thinking if TikTok could really pull this off.  And if they did what would be the potential impact for creators and small retailers trying to reach the billion-plus monthly visitors to the platform.  Or why would TikTok fare better than Shopify who tried to build their fulfillment capabilities only to fail fast.

John and I went round and round on this one, as the thought of the fastest growing video platform taking on such a huge infrastructure project is intriguing. And we probably came away with more questions than answers.

Below is an edited transcript of a portion of our conversation.  Click on the embedded SoundCloud player to hear the full conversation.

You Ready for FBT (Fulfillment by TikTok)?

Brent Leary: What do you think of this news about TikTok potentially building fulfillment centers?  Could they be a real competitor to Amazon?

John Lawson: I don’t think they have to be a competitor to Amazon. I do think that they could be the definition of social commerce. I think that is an opening that Facebook has failed miserably at. Instagram has tried. Pinterest has tried. Right? But I’m seeing from a lot of people that have e-commerce businesses and doing ads on TikTok, that TikTok is actually driving buyers to their independent website. Let’s see if they can harness that and put in … because I mean basically what are they trying to do? They’re really just trying to ensure that their customer, their user, gets their products.

Brent Leary: Like Amazon, if they can control the fulfillment and order process of their TikTok creators to run their shops and fulfill orders that take place… If they can do that, they’re not trying to take over the world, they’re just trying to maintain control over the ecosystem that they’ve built basically.

John Lawson: That’s all they need to do.

Brent Leary: TikTok is like a runaway freight train of sorts. I think the hardest thing for these social networks to do is to go from being social platforms where people really don’t go there to shop, to being able to handle commerce and also now being able to handle fulfillment.

John Lawson: But if you really think about it, this is not the place you go to seek to connect with your friends and family, but it’s where you go to be served content.

Brent Leary: Yeah. But the original reason you go to TikTok is not to buy something like with Amazon.

John Lawson:  No. Bro, see, I think there are people now that are going there not necessarily to buy per se, but they are going there to research product.

Brent Leary: To research product really?

John Lawson:  Yeah, research product and discover product. I definitely think that because there’s a lot of influencers over there that are doing TikToks about different products or how to prepare foods. Things like that. They’re going there to be informed and if there’s a product in the mix, they’re buying it.

Brent Leary: Just like Amazon, you get to a certain point where if you want control over the customer experience, if UPS messes up on Valentine’s Day, people don’t go to UPS. They come to us because that’s where they ordered the stuff from. That’s the problem for TikTok so you want to have all of that.

All Sellers Aren’t on Amazon

John Lawson: The other thing, too, all of their people are not necessarily Amazon sellers or don’t have stores and don’t have the wherewithal to be on that platform.

Brent Leary: Right now, TikTok’s algorithm is geared towards serving up videos to people the algorithm thinks would be interested in. How can that algorithm be tweaked to not only serve up videos for people to watch, but things that they may want to buy? Because if they can do that, now you really got something.

John Lawson: Well, I think they’re already doing that. That’s why people are seeing good results on their advertising.

What about YouYube?

Brent Leary: YouTube allows, whatever you call them, creators influencers, whatever, they allow them to cultivate a community. TikTok isn’t doing that. TikTok is still algorithmic focused. You’ll see what TikTok wants you to see… and our buddy, JB’s son said it so well. He uses TikTok to create new audience members. He cultivates and builds a community for engagement over on YouTube.

TikTok, it feels like they need to do something more on that end of it but I also do like this fulfillment angle too. It’s like fulfillment is more transactional if you don’t have the community component that allows you to build a real relationship.

Prospect of FBT is exciting

John Lawson: This is a rumor so there’s nothing concrete. But I find it exciting because I think there is a lot of “there” there, and so many others have tried and failed to make a buzz and I think TikTok might be one of the ones that could win this game.

Brent Leary: I still look at YouTube as one that should win because look at all the connecting pieces that Google has on top of YouTube and they allow their folks to build real communities, though.

John Lawson: I don’t know. I mean the ability to advertise a product on YouTube, you can actually have a scroll bar with your products on there. People can order directly.

Brent Leary: But that’s just the advertising element. I’m talking about the actual community engagement element. That’s the thing I think TikTok is missing the most. It’s not allowing their creator to build that kind of community.

John Lawson: But Amazon doesn’t let you do that.

Crossing the business model chasm

Brent Leary: But Amazon is a shop first thing. Their business model is business. The first business model for any of these social platforms has not been to go have people buy something on the platform. That’s why I think Facebook has always struggled with this.

John Lawson: So maybe that is the problem. Maybe because people come there to do the community thing and that becomes a detractor from the community thing when you’re marketing and advertising all the time.

Brent Leary: I never go to Facebook because I want to get hit up by ads and buy something.

John Lawson: Exactly. But neither do we watch a game or anything because you want to be hit with advertising.

Brent Leary: Well, we’re conditioned for that.

John Lawson: Right. That’s what I’m saying. So maybe TikTok is already a little condition for you to see stuff that you’re not subscribed to necessarily.

Brent Leary: Yeah. But like I said, if you’re the creator, and I’ll just keep going back to Jeb the Boxsmith, because he just said it so eloquent – TikTok drives me new viewers, but YouTube is where he can do longer form videos and build out a community. Then he also talked about how he used Discord and even Twitch. I mean I guess you got to figure out the optimal mix for all this stuff.

John Lawson: But the mix between building community and selling goods. Everybody’s not good at both.

Fulfillment ain’t easy, ask Google

Brent Leary: Right. But that’s why I’m like why isn’t YouTube doing some kind of fulfillment thing? Because they have their own stuff. Look, Google’s got Google Pay.

John Lawson: They tried, bro. They tried.

Brent Leary: Yeah, but they didn’t try in conjunction with letting the creators do that on their … I mean you can sell your merch, I guess. You can do some kind of direct e-commerce on your YouTube channel but you can’t go like full bore. You’re not doing a whole lot of crazy stuff.

John Lawson: But I’m saying they did try. They tried product delivery, they tried warehousing consumer products.

Brent Leary: It’s a hard business. That’s why I’m-

John Lawson: It is a hard business and they’re like, “Screw that. We don’t need all that.”

How long would it take?

Brent Leary: That’s why you got to wonder will TikTok do you think … Like you said, it’s not completely a hundred percent, but if they say, “Yeah, we’re announcing TikTok fulfillment and we’re going to help our millions of creators sell stuff from the platform and we are going to make sure it gets to people,” how much chance do you give them of actually pulling that off? Because fulfillment is probably the hardest thing for these businesses to try to do.

John Lawson: It’s a slim chance.

Brent Leary: Amazon, I have to say one thing that people really overlook. Amazon built a complete distribution shipping network in five years?

John Lawson: No.

Brent Leary: Is it longer?

John Lawson: They’ve been doing this ever since they’ve sold their first book.

Brent Leary: I’m talking about the actual being able to go from somebody who pushes a button on a website to buy something to them delivering. No hands other than Amazon hands touching it until it gets to the person’s hands.

John Lawson: Yeah. Well, it’s been more than five years.

Brent Leary: Well, maybe, but because there’s an air component, there’s a boat component, there’s a truck component. That’s hard for most companies that aren’t in that business solely to replicate.

John Lawson: Yeah, and to put that amount of money behind it.

Brent Leary: That’s why I don’t know.

John Lawson: Even Amazon is stumbling a little bit there.

Brent Leary: But that even proves the point even more. Even they are stumbling.

John Lawson: Right.

Brent Leary: That’s a really complex thing.

John Lawson: Very complex.

Brent Leary: And when it’s not your sole business, and when your sole business has been serving up videos, to go from serving up videos with algorithms to that, uh-huh. I don’t know, man. That’s a tough one to do.

John Lawson: It is. But if they do this, they have something up their sleeve. I don’t know.

Brent Leary: Well, yeah, if they do that, yeah.

China adds complexity

John Lawson: They are a Chinese company. So I mean they have other resources.

Brent Leary: But that raises another point too. Last year I guess we had that big thing. Well, TikTok is owned by ByteDance, the Chinese company. They got the servers. They can see all the data. So what’s going to happen if they start doing fulfillment?

John Lawson: I think there will be pretty … They’ll have a lot of routes here in the US if they can do it.

Brent Leary: That’s complexity on top of complexity on top of complexity.

John Lawson: For some reason, though, I’m not negative on the idea. Matter of fact, I was more negative on the idea for Shopify than I am for these guys, which I can’t even tell you-

Brent Leary: Really?

John Lawson:  … I can’t tell you why.

Brent Leary: Yeah. I would’ve thought Shopify would’ve had a much better handle on fulfillment.

John Lawson: They have zero handle on fulfillment.

Brent Leary: Well, what do you think of video, social video and fulfillment expertise?


John Lawson: I don’t know. I don’t know why. I’m just trying to compare. When I heard Shopify do it, I was like, “Oh, that ain’t going to work. Oh my God, that’s the worst idea.” Where this one, I’m kind of like, “Oh, that’s kind of exciting. Let’s see what happens.”

Brent Leary: I think you’re caught up in the hype.

John Lawson: Maybe. Could be.

Brent Leary: Because you like TikTok. You’re doing TikTok.

John Lawson:  No, I’m not. I tested TikTok. I’m not a TikTok … No, I don’t. I’m not a two-minute kind of or one-minute video kind of guy. I watch long format stuff. Matter of fact, I’m almost at the point where I’m like, “Dude, I don’t even know if I need cable anymore. I just need to subscribe to YouTube.”

Brent Leary: Oh, you mean like … Well, I YouTube TV.

TikTok Advertising

John Lawson: I have a lot of T-shirt people and one of them is just having a ball with the advertising on TikTok. It’s amazing.

Brent Leary: Really? Are they working with an influencer or are they just doing their own videos?

John Lawson: No, they’re doing their own videos. She gave me some of the insight, but then the deal was at first it was all organic, but then she started doing ads and now the ads are really, really performing.

However, we looked at the customer value of a TikTok person and it was about 27% lower than the value of a Google customer.

Brent Leary: So anyway, yeah. I’m really … This TikTok advertising, I-

John Lawson: So you’re not bullish on it at all?

Brent Leary: On TikTok advertising? Absolutely. On fulfillment, I’m not. Thank you.

John Lawson: You’re not, okay.

Big investment and commitment needed

Brent Leary: Not on the fulfillment because that’s just a whole other animal. That is a beast of an animal. And like you said, let’s say they announce it. How many years will it take for them to actually be able to pull it off? Remember years ago when we were sitting at the Panera Bread in that one quarter where Amazon said, “We’re going to invest $800 million in our fulfillment,” and their stock price took this deep, huge hit and we were like, “That’s a smart move.” [inaudible 00:16:08].

John Lawson: Yeah. It was like they’re building the infrastructure.

Brent Leary: How much is it going to cost TikTok to do that? It’s probably like a 10-year difference possibly in starting this from where Amazon did it to where they do it.

John Lawson: Two years? But they’re already working on it now. So it’ll be within that. It’ll be by the end of this … It’ll be within a year or about a year.

TikTok Prime?

Brent Leary: Are they going to do TikTok Prime membership? I mean there’s so many things. Amazon is-

John Lawson: They don’t have to do all that.

Brent Leary: But if you want a loyalty program, you have to have people sign up for stuff and then be able to shoot them stuff. I mean this is why-

John Lawson: It’s not like they can’t partner with somebody.

Brent Leary: Yeah, but then when you bring in partners, then we have clashes of culture and things don’t work the way we thought they were going to work. Walmart has tried. Boy, have they tried. I mean, who knows? I don’t know, man.

John Lawson: It’s hard.

Brent Leary: I am suspect on the TikTok fulfillment. I love the advertising and I love the e-commerce, and I think it does make sense for them to try the fulfillment, but that’s such a tough business. That’s all I’m saying.

John Lawson: Okay. So it makes sense for them to try.

Brent Leary: It definitely makes sense. To me, it made sense for Shopify. It didn’t work out the right way, but you know.

John Lawson: Yeah, it was horrible.

Brent Leary: Sha, do you think it makes sense for TikTok to try to create their own fulfillment and distribution and shipping network for you, for TikTokker you?

John Lawson: Yeah, for you and your T-shirts.

Would creators want FBT?

Brent Leary: Would you be psyched if TikTok offered you FBT – Fulfillment by TikTok – and you pay a certain amount? You put your stuff with them and let them handle fulfillment, logistics, all that stuff. Would you be more excited about TikTok doing that? Or would you be more excited about Amazon doing that?

John Lawson: Companies like CafePress have been doing this fulfillment thing for years. Well, even before Amazon was doing it. Print on demand is a huge … Maybe they’re thinking more of the print on demand business, TikTok.

Brent Leary: Yeah, if they are very narrow maybe.  Then yeah, maybe they do. If it’s digital 3D printing kind of stuff, not actually moving too much stuff from all around.

John Lawson: I don’t see them doing refrigerators, things like that.

Brent Leary: Maybe there are these narrow instances where it would make sense and they would be able to have a better shot.

John Lawson: I can see that. I can see that.  Not necessarily handling the hard stuff like candy and shampoo bottles and all this kind of stuff, but print on demand, I could see it.

This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it's an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.

Brent Leary Brent Leary is the host of the Small Business Trends One-on-One interview series and co-founder of CRM Essentials LLC, an Atlanta-based CRM advisory firm covering tools and strategies for improving business relationships. Brent is a CRM industry analyst, advisor, author, speaker and award-winning blogger.