$Shopify Inc(SHOP.US)$ rallied Tuesday, after the company announced a deal with TikTok that will let businesses create digital storefronts and give consumers the ability to buy products directly through the social media app for the first time.
Shopify shares rallied 4.9% to $1,553.78 in afternoon trading Tuesday.
The deal with Shopify marks a significant step for TikTok's efforts to generate revenue from the social commerce behavior already occurring on its platform. Creators and influencers that use the app to post short-form video content already tout specific items in their videos, but don't currently have a direct storefront to hawk products they mention."By enabling new in-app shopping experiences and product discovery on TikTok for the first time, Shopify is powering the creator economy on one of the fastest-growing social and entertainment platforms in the world," Shopify President Harley Finkelstein said.
While previously, users could purchase products through ads on the platform, Shopify said the pilot program will allow TikTok users to add a tab to their TikTok profile and link to products within their posts. The shops will roll out to all merchants in the fall, the company said.
As part of the pilot program, Kylie Jenner has launched a storefront for her Kylie Cosmetics skin-care brand. Jenner's personal TikTok account has more than 30 million followers, and the brand has roughly two million followers.
Rival social network $Facebook Inc(FB.US)$ has seen significant success with its social commerce efforts, and its efforts to build out tools across the core platform and Instagram have met with success. As Barron's recently highlighted, Facebook has 1.2 million active shops, where small- and medium-size businesses can tap into its enormous social network. Shopify also has deals with Facebook.
Creators that will likely power most sales through TikTok's new deals are increasingly important to big platforms, too. On Monday, $Alphabet Inc-CL A(GOOGL.US)$ YouTube disclosed that it had paid creators $30 billion over the past three years. And for its part, Facebook said it planned to spend $1 billion on creator payments. TikTok has said it will spend hundreds of millions on creator payments.
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(END) Dow Jones Newswires
August 24, 2021 14:14 ET (18:14 GMT)
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