Amazon is hopeful that selling its goods through TikTok, Facebook, Instagram and Snapchat will reignite sluggish e-commerce growth as American shoppers pare back spending in a hyper-inflationary environment.
The Seattle-based online retailer held two years of high-stakes negotiations with the CEOs of other tech giants, which culminated in a partnership despite dissent within Amazon’s ranks, according to a report.
Andy Jassy, the CEO of Amazon, met separately with his Meta counterpart Mark Zuckerberg as well as Snap CEO Evan Spiegel and TikTok CEO Shou Zi Chew to discuss the partnership over a period of 24 months, according to The Information.
Before the meetings, however, there was debate inside Amazon as to whether it was wise to collaborate with other sites due to the fear that it would incentivize online shoppers to migrate to those apps and not buy products through the company’s home page, The Information reported.
Amazon’s stock has been trading at more than 3% lower in the last month after it reported slowing online sales growth in the second quarter as consumers seek out cheaper options amid stubborn inflation.
But proponents of the move argued that allowing shoppers to buy goods on Amazon through the social media apps would spur growth in the company’s e-commerce sector.
In November, Amazon rolled out an initiative known as “Project Handshake” — whereby it started to run ads on Meta-owned Facebook, Instagram as well as Snapchat that offered users a way to buy items from Amazon while staying within those apps, according to The Information.
A spokesperson for Amazon dismissed concerns about the traffic erosion, telling The Post that the ads placed on social media apps don’t divert customers from Amazon’s app but instead make it simpler to buy products where they already are.
“Amazon is making it more convenient for customers to shop in social media by expanding in-app shopping,” an Amazon spokesperson told The Post.
Amazon staffers who are working on “Project Handshake” are planning to expand the initiative so that shoppers will be able to find and buy products within videos and artificial intelligence-powered chat bots, the report stated
The Post has sought company from Meta, Snap and TikTok.
The move to sell Amazon products through competitor sites is a radical departure for the online retail giant, whose corporate culture has long promulgated the notion of making the company’s home page the one-stop shop for e-commerce.
Skeptics fear that allowing other apps to serve as a conduit for Amazon shoppers could erode Amazon’s dominance in the e-commerce space.
In the US alone, Amazon accounts for around 40% of all online purchases, according to eMarketer.
The irony of Amazon joining forces with Meta and TikTok is that those companies are also dipping their toes into e-commerce.
TikTok has launched TikTok Shop, which allows users to purchase products directly within the app.
Meta allows users of Facebook and Instagram to set up stores on their pages.
Another possible drawback for Amazon is the risk the newfound partnership poses to its $40 billion-a-year advertising business.
Amazon charges merchants substantial fees to boost the visibility of their products so that shoppers can browse them when typing in a search prompt.
But those ads won’t be visible to users of other apps who buy Amazon products without logging into the site, according to The Information.
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