TikTok and the Age of Discovery
TikTok as a category killer
Facebook (NASDAQ: META) and its limbs have enjoyed relative incumbency for a decade since crushing MySpace, Google+, and others. It has been able to copy features and leverage its superior distribution with Snapchat Stories, etc. until TikTok has come along.
What is Discovery?
TikTok's recommendation algorithm uses data collected from users' interactions, device settings, and usage patterns to personalise video recommendations. A complex machine learning algorithm is used to analyse the data and takes into account various factors such as the video type, hashtags, popularity, and trending. The use of AI allows the algorithm to adapt and improve recommendations over time, and deep learning helps identify patterns and suggest fresh, engaging content.
Overall, both Facebook and Instagram's recommendation algorithm focuses on personalising content for users, but TikTok's algorithm places a heavier emphasis on the content itself and its engagement metrics. For Facebook and Instagram, this can result in less discovery and a feed that's more cluttered with sponsored posts.
The Age of Discovery Dawns in E-commerce:
Shein is a Chinese fast fashion brand that has leveraged a powerful discovery and real-time recommendation engine to barnstorm its way into the lucrative US fast fashion market. Knocking off incumbents like Zara and H&M is no small feat and shows the supremacy of discovery spreading beyond China and beyond social media.
Part of its popularity and speaking to the fusion of discovery social and discovery commerce is its rapid raise to become the dominant shopping haul Hashtag on TikTok:
On the other hand, Amazon (NASDAQ: AMZN) or Zara or pretty much any major western e-commerce experience is a search bar with quick links to products below; no discoverability.
Long live the Age of Discovery.
Never miss an insight
If you're not an existing Livewire subscriber you can sign up to get free access to investment ideas and strategies from Australia's leading investors.
You can follow my profile to stay up to date with other wires as they're published – don't forget to give them a “like”.
Welcome to Livewire, Australia’s most trusted source of investment insights and analysis.
To continue reading this wire and get unlimited access to Livewire, join for free now and become a more informed and confident investor.
2 stocks mentioned
Stew Glynn is the Managing Partner & Co-Founder of TEN13. A co-investment platform that provides sophisticated investors access to exciting private early-stage technology deals.
Please sign in to comment on this wire.