#225 TikTok is NOT Amazon’s Replacement… It’s a Demand Engine (The Halo Effect Explained)

Hey there, I hope you are having an amazing day. I'm honored you're spending a few precious moments with me while driving to work, chilling out, working out, or chilling like a villain, or whatever it is you're doing while you're listening to me here today. So look, I just got back from a very cold ride on a tractor where I have about half a mile of road I needed to plow. We got about 12 to 14 inches of snow out here, and it's super cold in the mountains of Ozarks here. And they're talking about additional weather nonsense, so that should be a lot of fun. So while I'm hanging out here with my family near the fire, kind of warming up, While I'm sipping some coffee and reflecting on the week, I thought I'd talk about a channel I know creates excitement, fear, and apprehension in many of you. It does me too. So let's leave the bad things about its culture to another podcast and to tell the parents to start controlling your children's access. So let me ask you guys a question. Does what happened on TikTok stay on TikTok? So when it comes to stupid viral twerking dances, it's probably a good thing if it does stay there. But I'm sure you've heard a lot of noise lately about TikTok Shop, the 411, the scuttlebutt. And depending upon who you're listening to, TikTok is either a next core pillar of your e-commerce business or just another optional channel you can bolt onto your existing strategy. Now, TikTok recently made some major changes that included giving access— US-based accounts now access to US-based businesses, meaning they switched the whole thing over. Now that situation with China has changed, we got that notification on our accounts this week. Maybe you did too. And from what I'm hearing, there's a lot of change in the algorithm that is also happening as that switch occurred. And we'll see if that's good or bad. And TikTok even decided to make a major change in the way it wants you to handle shipping, which threw us into a bit of tizzy this week while we figured out how to handle their requirement changes for shipping and Fulfilled by TikTok, FBT, which is coming up in February. I think we've got it under control. So there's a mistake most sellers make today on TikTok, right? What I mean by that is folks are sleeping on it. And for those of you who are listening, that makes you an early adopter, so congrats. But people are trying to decide whether TikTok Shop works by looking at TikTok Shop alone. That's like judging a billboard by how many people bought something while standing next to it. That totally misses the point. TikTok's real job isn't about replacement of Amazon or Shopify. It really never was. It's to create demand. That's its job. All right. Demand capture platform is Amazon. The demand creation platform is TikTok. Okay. And for the first time, we actually see where that demand goes after it leaves the platform. And that's what I'm gonna break down here today. So for those of you who are new, my name is Neil. Welcome to the High Voltage Business Builders Weekend Review. And if you're Here, welcome. We're gonna break down what's actually happening in the world of ecommerce so you can function like an operator, not just a seller. All right, let's get into it. What we're talking about is the halo effect, and it's now provable. And for a long time, operators, agencies, and brands have talked about something called the TikTok effect, the ecommerce halo effect. And that's the idea that not just TikTok, but other channels don't just drive sales to their original platform location, TikTok shop, Shopify seller, but also push buyers and shoppers to Amazon, Shopify, brand websites, and other locations. And most people had this idea, but they didn't have an idea or really data to back it up. So we had conjectures, we have estimations, that kind of stuff. And when you can't prove something, it's hard to justify spending more. And that's a recipe for disaster, right? And tick up over there is you'll see maybe bad ROAS and the numbers don't seem to line up correctly, even if you're making sales. And that's a questionable thing as to whether or not you keep going. But here's the wonderful news. TikTok has finally rolled out what they're calling offsite performance analysis. And this is important. So let's slow down for a second and let's break this down. TikTok is now officially measuring purchases that happen off TikTok Shop, specifically on Shopify, by users who viewed or clicked TikTok e-commerce before buying. Very cool. So in other words, TikTok is officially saying people who see products on TikTok, they don't always buy on TikTok, but TikTok still influences the purchase. And I know this is not trivial. All right. Early account-level data shows roughly 10 to 15% of TikTok-driven revenue is happening off the platform. Revenue that would be completely invisible if we looked only at TikTok Shop GMV, right? And so we don't just measure GMV. And with this new thing, it lines up almost perfectly with what third-party measurement platforms have been saying for a while. Obviously, the best part is we can track it now. And if we can't measure it, we can't scale it, right? So independent studies show that roughly 1/3 of TikTok's influence on e-commerce sales happens outside of TikTok, especially on Amazon and direct-to-consumer channels. So when people say TikTok doesn't convert, what they usually mean is TikTok isn't converting while I'm looking at it. And that's what we call the halo effect. So real account data does show off-platform revenue. I've talked about this before, and we've been able to measure it somewhere between 10 to 20% based on the monthly spend. of additional channels as to whether or not we can track that back to a channel like Amazon or Shopify. But in real terms, Shopify in the account itself, weekly data showed roughly $12,000 in TikTok Shop GMV. And on top of that, that about $1,400 in Shopify revenue can be directly attributed to TikTok exposure. So that's about 11% of TikTok-driven revenue happening off platform. And here's the most important part. That's $1,400 that would not show up anywhere if you had only looked at TikTok Shop reporting. So you zoom over that time and it starts to compound once you zoom out, right? So over an 8-week window, including Black Friday, that same account showed roughly $130,000 in TikTok Shop GMV and over $10,000 in Shopify revenue still traced back to the TikTok content. So these are the kind of use cases that confirms that Amazon and DTC do get a lift. Now, before anyone says, okay, Neil, that's Shopify, what about Amazon? Great question, right? Third-party measurement platforms have been tracking this for a while. Their data lines up almost perfectly with what TikTok is showing internally, which is kind of cool. That means we were really close to being over the target. This just verifies actual data, which is obviously most important. And independent studies show that roughly 33% of TikTok's influence on Amazon sales happen off of TikTok. That's huge. That's about one-third of TikTok demand is invisible if you're only looking at it from in-app conversions. So when those other off-platform conversions are included, TikTok's real return on ad spend is about 20% higher than TikTok's own dashboard reports. And this is why so many operators feel like TikTok works even when the numbers don't make sense on paper. And that's how you should see it as an operator. As a seller, you're gonna give up, and that is not TikTok underperforming. And that's where you guys can make a mistake. And that's the last-click attribution, right? Meaning it does a terrible job measuring discovery platforms And this is where search closes demand, social creates it, which is a totally different job and a different measurement problem. So why does that matter right now? And this brings us to what matters right now, not in 6 months from now, not because your competitors are thinking about it, because you need to be taking action on it. TikTok is doubling down. It recently launched another initiative called Project Horizon, which is designed to bring 6 and 7-figure brands deeper into the TikTok shop. Not small experimental sellers, not viral one-off products, brands that are already selling on Amazon and Shopify and have significant history. That tells you something. TikTok understands its value multiplies when brands already have downstream infrastructure in place. That's fulfillment, customer trust, and existing demand capture. So TikTok doesn't need to replace Amazon, it just needs to feed it. And if you're still sitting on the fence about whether TikTok is worth it, you're late to the party. All right, serious operators aren't debating whether it matters anymore, they're figuring out how to use it correctly And I'm hoping that some of the information you're getting today will help you understand where it is going. So real quick, guys, if you're thinking about moving a new business forward, if you've been wondering about not theory, not hype, but cash flow margins, systems, what the heck to sell and how to sell it, email me directly or go to voltage dm dot com. Email me at neil at voltage dm dot com. Go take our quiz, the Pathfinder quiz, to see what you need to do or where you need to go. It's free. I even have twenty five hundred in bonuses. With implementation, a 6-figure implementation kit you get for free to start looking at the processes, the strategy. There's a guideline book. We have a small GPT version of our Greenlight process that you guys can go check out, which might help you in either your discover, build, or optimize phase. If you want to go faster, hit me up. So one update over the last few weeks helps me explain why TikTok's e-commerce push is speeding up. Now they finalized a major agreement. I mentioned this earlier that resolves a longstanding US regulatory concern of ownership data security. And literally a time in which there was going to be a ban. You guys might have saw this craziness where, you know, Trump and they were going back and forth and ban, no ban, yes ban, no ban, right? It basically means TikTok is moving out of that wait-and-see phase and into a major adoption for advertisers, which is cool. So for a while, uncertainty kept us larger brands from being cautious. You know, do we go, do we go hard? Is it going to get banned? Do we, are we going to waste time? So now this joint venture, you know, LLC USDS is in place. It's finalized. Now larger brands can justify deeper investment, and that's the opportunity. And when that traffic craters and demand comes all at the same time, that's when the halo effect is going to start scaling, right? This is very important. I want you to understand this. It's you being in place before that wave comes, and it's coming very fast, right? You're smaller, you can pivot, you're agile. Those larger corporations will take a little bit longer, but once they do come on, it's going to lift. You know, a rising tide lifts all boats, right? So what does this mean for operators? Let me pause. Okay, this means that if you're listening to this and thinking, does this explain why TikTok never really fit an attribution model? That's probably a good realization because TikTok shouldn't be evaluated like Meta or Google or Amazon or any other channel. It shouldn't be judged purely by the last click checkout data. All right, TikTok is a discovery engine. It's very important you understand that, and discovery doesn't convert on command, it compounds. Okay, discovery doesn't convert on command, it compounds. And this is where operators separate themselves from casual sellers. Operators understand demand flow and casual sellers chase dashboards. Guys, do not chase dashboards, okay? If you're running TikTok like it's just another checkout channel, you will underinvest, you'll turn it off too early, and you're gonna miss what it's actually doing for your business. Smart operators won't miss on that, and that's your opportunity to get it right. And if you need help making sense of this and what's inside of it, that's exactly what we do inside Voltage with builders. We help them with systems, attribution, cash flow, margin clarity, and other things. And if you're serious about a real e-commerce business, not a side hustle or an experiment, but a business in the system that actually holds up, this part is for you. Amazon rewards preparation, not experimentation. Same goes with TikTok. And if you want to help get started the right way, it's exactly what we are about to tell you in our new program, our latest program, From Voltage and Cayman Data called Dominate. Dominate is a 12-week cohort. It's phase 1 of a business building process to help you get to your first product launch, 25 sales a day, using our 5x5 product launch process in our Greenlight System. It's not a course, it's not recorded content you watch on your own, it's a live structured implementation process. I'm only taking 10 people who are qualified over 12 weeks live on Zoom to do that with us for 12 weeks Heads down. That's discovery of the product. We'll help you validate that validation of the product to ensure you choose the right one that's most profitable. That's the launch execution phase and the launch optimization phase. So you're not guessing, you're not trying to crowdsource answers, you're not going to YouTube University, you're not leaning on bleeding cash, you're not looking at growth hacks, which are actually building real guidance, real accountability, and one-on-one interaction with a small group environment to get to your first 25 sales a day. And that's when everything changes. That's the point where momentum exits. That's where ads start to behave differently in the platforms. That's where cash flow becomes predictable. And then you move to phase 2. Phase 2 is where you move out the additional 9 months after the cohort to move your 5x5 product launch into a real brand, real platform, multiple products, multiple channels like Walmart or TikTok, Shopify, et cetera, to take more than 25 sales a day. That is really just the benchmark of the 12-week accelerator. You guys want to check that out if you're interested in building that over the 12 weeks and expanding into phase 2 over 12 months and go for a goal of $100K in net profits starting with your first 25 sales a day with a guarantee that we'll keep helping you until you get there. Okay, text the word interested to me personally at 417-765-0412. That's interested to 417-765-0412 or email me directly if you're not in the US at neil@voltage dm.com with interested in the subject line. Talk about the 10 spots. This is invite only. Yes, there is an investment. Yes, you're gonna have to put in the work, 2 to 3 hours a week minimum, and live training while we implement together. You'll also get 4 free months of the Cayman Data Platform, a full product development platform and suite we've used for all of our product launches. Full ASIN 360 course is included in that to help you expand beyond additional support beyond the 12 weeks. We're not gonna leave you alone. Got more than $177,000 in value. I'm even gonna help take you to Walmart. Because we work with them out of Bentonville and we'll help you launch your first successful product into Walmart too. That's 2 platforms. And as an NSI Plus partner with Amazon, we will help you with growth teams and account managers on Amazon and the same thing with Walmart, all part of that cohort. All right, if that's interested for you, remember, go to interested keyword to me, text it, it's 417-765-0412. All right, let's bring this home. TikTok is not a buzzword anymore, guys. It's the halo effect. You need to measure it. You need to consider it. You need to validate it through other platforms, Amazon and Shopify. You need to understand that the behavior tells us it's not only going to get bigger and that TikTok isn't stealing sales from Amazon or Shopify, it's feeding them. It's amplifying them. It's making them more holistic, okay, in your entire business model. And it increases the valuation of your company as you open these additional channels. That's extremely important. And the operators who understand that will allocate capital differently. You'll forecast more accurately and you will build businesses that actually hold up as platforms get less forgiving. We've talked about that on the last podcast. So here's the bottom line. If you treat TikTok like a side quest, it's gonna feel frustrating. If you treat it like a demand engine, it becomes powerful. In this episode, if it helped you understand what's really happening with TikTok and e-commerce right now, the halo effect, and someone you know has been confused, or maybe you are about the numbers and are ready to write off the entire thing, there's an option to come hang out with us, guys. If you need consulting and you want to work on an existing brand and you want to grow and scale that brand faster and you want to work with us under a consulting performance-driven model where I put $10,000 of my own skin in the game for operators who show up and take this seriously, those of you who are already working a business that you want to grow, scale, and create more profitability with the exit in mind, Then text keyword profit to me at 417-765-0412. That's keyword profit to 765-0412. The goal there is to work with you directly on consulting for an existing business and really help that grow up. So guys, hopefully personally, you know, send out information to me, ask questions, comment. You know, if you're enjoying this, leave us a review on Apple Podcasts. If you are outside the United States or maybe in Canada or whatever, you guys check out the websites. There's other ways to connect with us and our team. And even book a no-pressure discovery call to see which of these options makes sense for you. As always, I appreciate you hanging out with me. Hope you found some value from today's episode. Go out, share, like, smash the subscribe button, give somebody this episode who needs to hear it. And most importantly, as always, your opportunity begins with the end of your excuses. So get out there and do something imperfect. Something perfect will happen along the way. See you on the next episode. Let me ask you this. If you're serious about building an e-commerce business starting on Amazon FBA, what if myself and my team worked with you one-on-one to execute the steps outlined in the podcast while helping you discover what the heck to sell, how to make sure it's profitable, and how to successfully launch a brand. Plus, how to do it under a consulting plus performance-driven model where I put a $10,000 skin-in-the-game guarantee for those that show up and are serious about building a real business done with us. If yes, text keyword profit to +1-417-413-4209. That's 1-417-413-4209. And I will personally respond with a few simple questions. If you're not in the US or Canada, Please visit voltage dm dot com. That's voltage dm dot com. Click get started and book a no-pressure discovery call with me or a member of my team to learn more about the Business Builders one-on-one coaching and mentoring for CEOs, entrepreneurs, and those looking to build an empire or retire using the power of e-commerce. Once again, thank you for listening, and be sure to tune in next week for a brand new episode of the High Voltage Business Builders Podcast.