TikToK Launches Logistics Service: Makes Sense?

TikToK Launches Logistics Service: Makes Sense?

Time Stamp: August 21, 2023 11:21 AM
Source Node: 2226187

Way back in October 2014, I asked “Do Facebook And Twitter Need A Logistics Strategy?” Here’s what I wrote at the time:

Do Facebook and Twitter (as well as Pinterest and others looking to get more involved in e-commerce) need to take the extra step [beyond providing a “Buy” button”] and facilitate order fulfillment and final delivery too?

I believe they do, either directly or via partnerships, because what happens after the “buy” button is clicked – the logistics of e-commerce — matters more today, and is more complex, than ever before. Simply put, e-commerce no longer exists in a vacuum; it is part of the broader omni-channel retail experience, where new fulfillment models such as ship-from-store, same-day delivery, and order online/pick-up-at-store are becoming increasingly important for both retailers and consumers. The “buy” button will become (or is already) a commodity, whereas logistics is the new battleground for differentiation, innovation, and winning the customer.

TikTok wasn’t around at the time (it was launched in 2016), but a couple of weeks ago, the company launched “’Fulfilled by TikTok’ in the UK.” Here is an excerpt from the press release:

FBT is a logistics offering available in the UK where TikTok Shop stores, picks, packs and then ships merchants’ products to the TikTok community. It is designed to help free merchants from time-consuming logistics via a simple, fast and affordable solution, so they can focus on important aspects of their business such as marketing, content and product development. 

Is every company a logistics company? 

Maybe “every company” is too broad a statement, but I believe competing on logistics is strategically important for many companies, especially those competing in the B2C e-commerce space. See my posts “The Ongoing Convergence Of Logistics And Commerce” and “Retailers Offering 3PL Services: What Is Going On?” for more on this topic.

(That said, there are exceptions, like Shopify which exited the logistics business and sold its Shopify Logistics assets to Flexport this past May.)

As I’ve written many times before, the main reason why this convergence is happening is simple: customers are looking for Simplicity-as-a-Service — that is, they are looking for partners, regardless of what you label them, that can help them achieve their desired outcomes in an ever-changing business environment with less time, effort, cost, risk, and resources.

This is not only true for merchants, but for startups making products too. This was a key point raised by Tom Friedman, an angel investor, in a May 2013 Talking Logistics episode. In Tom’s experience working with startups, specifically those making physical products, many entrepreneurs are very knowledgeable about engineering and product development, but they lack the skills and expertise in one critical area to scale their companies: logistics and supply chain management.

One of the hurdles startups of physical products have faced historically is getting support from third-party logistics companies. Simply put, 3PLs have been reluctant to work with startups because of the relatively high risk and low revenue opportunity upfront. Here’s what I wrote back in 2013 that I believe still holds true today:

[What] needs to change is the way third party logistics companies (3PLs) view startups and entrepreneurs. Simply put, 3PLs need to be more forward-thinking — they need to think more like investors and not just focus on the short-term risks and revenue opportunities.

Before meeting with an angel investor, entrepreneurs should meet with a forward-thinking 3PL first. If you can get the 3PL to effectively invest its time, resources, and assets in your business (via a Vested Outsourcing agreement, for example, where the risks the 3PL takes upfront are balanced with the rewards later on), then you have a partner at your side that can address whatever supply chain and logistics related concerns an angel investor might have.

And here’s what I’m suggesting to 3PLs: Be forward thinking if an entrepreneur knocks on your door. If an opportunity looks promising, find a creative way to partner with the entrepreneur, where you minimize the upfront costs and risks for him (or her), while maximizing your longer term profit potential.

What do you think? Do social media companies like TikTok, Facebook, and Twitter (now X) need a logistics strategy? Can 3PLs do a better job of supporting startup companies, especially those that make physical products? Post a comment and share your perspective.

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