While a possible ban over the social media platform approaches, TikTok Shop has been making a push to capture Gen Z’s dollars and take share away from e-commerce competitors.
In early December, TikTok filed an emergency motion for an injunction to stop the ban ahead of Jan. 19. Per the court, if Chinese parent company ByteDance doesn’t sell TikTok before the deadline, the app will likely be illegal in the U.S. The Supreme Court later in December agreed to listen to TikTok’s challenge to a federal law that may ban the app.
This comes as the app grows in popularity, particularly with consumers. Per research conducted by TikTok, 70% of users say they discover recent brands and products on the platform and 83% report TikTok playing a task in user’s purchase decisions. The company also reports that three in 4 users are more likely to buy something while using TikTok.
Even before the shopping feature launched in the U.S. in 2023, brands were already leveraging TikTok to reach consumers, especially young people.
The platform began to introduce its own sales events, just like those of Amazon, Walmart and Target. Its summer sales promotion Deals for you Days became a recurring event for the platform with U.S. shoppers spending an average of $52 during the sale.
Michael Maloof, head of promoting at Earnest Analytics, said in an interview that shopping on TikTok is becoming much more promotional and in competition with other big retailers’ well-known seasonal sales.
“To give a very good idea of the framework we’re working with, with TikTok Shop almost everyone already has it,” Maloof said. “It’s beginning to turn into very promotional and matching the promotion cycles of massive e-commerce retailers and that they’ve done a extremely good job of getting people from the platform to also shop.”
TikTok Shop has continued to expand its e-commerce approach by partnering with Real Authentication, launching a pre-owned luxury category in the U.K. and introducing an accelerator program for women and LGBTQIA+ owned businesses. And on Black Friday, TikTok Shop drew greater than $100 million in single-day sales, tripling results from the previous 12 months.
Although the app’s future stays uncertain, brands, influencers and shoppers stand to learn from engaging with TikTok Shop.
TikTok’s impact for brands
Legacy corporations like Maybelline, Gap, Pizza Hut and Amazon have leaned into TikTok with a purpose to capitalize on the social platform’s growing influence on consumers.
E.l.f. Cosmetics was the first brand featured in TikTok Shop’s Super Brand Day sales event. For a complete day, TikTok put the cosmetics brand front and center on the shopping platform. With the announcement, the brand debuted a brand new product, its Power Grip Dewy Setting Spray and an original song. The cosmetics brand also held a sale on TikTok Shop for the day, where customers could earn a free Power Grip Primer mini upon spending $15.
Courtesy of TikTok, E.l.f. Beauty
“E.l.f. has thrived on TikTok Shop by creatively engaging with our community and constructing exciting, culturally relevant moments,” Nico Le Bourgeois, head of TikTok Shop’s U.S. Operations, said in a press release.
Nike similarly has been working with TikTok. The athletics retailer released the “Future Lab” pack and tapped a preferred football creator (@ben) to initiate the campaign with a branded hashtag challenge called #MagicBoots. Fans were invited to point out off their best football tricks, wearing their Nike shoes for a probability to win a pair from the recent drop.
In six days, Nike’s TikTok profile gained 215,000 followers, in accordance with a case study from TikTok on the campaign.
TikTok also ran a live challenge page for 60 days, in-feed ads and a brand takeover from Nike. The hashtag was capable of be seen on the Discover page’s trending hashtag list. The campaign ended up with over 317 million views total and 160,000 user entries.
“When you get the creative, Creator and ad placement strategy right, you may generate huge awareness on TikTok, at a rapid pace,” TikTok said in the case study.
What influencers stand to realize from the platform
TikTok Shop has also created recent opportunities for content creators. TikTok Shop created an associates program for the app’s influencers. The program is a commission-based relationship between brands and the creators who promote items. The TikTok for Business associates program connects agencies, strategic partners and content creators with merchants.
Nearly three in five Gen Z consumers say they trust recommendations by local or micro-influencers, per a survey by Mavely. Over 1 / 4 of U.S. consumers, majority Gen Z, who responded to the survey reported buying a present directly based on an influencer’s recommendations.
TikTok Shop merchants can even opt-in to permit TikTok to handle product storage, picking, packing and shipping. TikTok supports third-party payment platforms, like PayPal, for checkout.
Popcorn brand Like Air, which was founded in 2020, previously sold its products exclusively at Kroger and Albertsons. Now, the company uses TikTok Shop to sell its single serve bags in exclusive flavors and hosts monthly flavor drops.
Courtesy of Like Air
The company recruited influencer duo @rebekahandsara to host live shopping events on TikTok for Like Air. Each week, the two go live to drop giveaways, discounts and get a feel for what customers want next from the company. This influences the flavors Like Air introduces monthly and what retailers carry the brand.
“We hired them to be full-time members of the Like Air team to essentially construct out our TikTok,” Allison Lin, Like Air’s co-founder, said in an interview. “So we have decided that we see TikTok as the future. It’s as if it is a future way to retail the product.”
Lin noted a New York Times article that recently compared TikTok Shop to QVC for the digital era due to all the live shopping events that occur on the platform.
For Like Air, Lin said TikTok Shop is the quickest path to market. Upon developing a brand new flavor, she said it might take about six months to a 12 months before reaching retail shelves. With TikTok Shop, Like Air can create a brand new flavor and sell it in a matter of weeks.
“It’s a extremely great way to remain engaged with our audience,” Lin said. “They provide you with different ideas all the time and once we’re asking what recent flavor should we come out with. We’re really capable of turn around and say, ‘We listened to what you wanted, and we’re serving it as much as you next month versus you having to attend a very good six months, a 12 months, even 12 months and a half, to see it on retail shelves.’”
Gen Z favors TikTok Shop
TikTok Shop is increasingly becoming a source of inspiration for gifting, especially with younger generations.
Over half of U.S. Gen Z shoppers said they planned on checking off a majority of their holiday shopping list through TikTok Shop, in accordance with an August report by Fiverr. Nearly 54% of Gen Z shoppers will find all of their gifts on the platform.
TikTok Shop had the largest influence (34%) on gift-finding for Gen Z in comparison with influencers’ recommendations (25%) and generative AI search (14%), in accordance with Fiverr’s report.
ICSC data also indicates that 85% of Gen Z consumers said social media is impacting their buying decisions, with almost half of respondents naming TikTok and Instagram as having the most influence over their purchases.
TikTok Shop continues to have a significant hold on Gen Z’s spending power. Earnest Analytics reports that Gen Z adults from ages 18 to 24 are about thrice more more likely to spend on TikTok Shop in comparison with the average shopper. In February 2024, over 81% of TikTok Shop sales got here from existing customers, up from 64% in November 2023.
The growing popularity of TikTok Shop and the platform’s ability to quickly adapt to changing trends is driving younger consumers to return, in accordance with Maloof.
TikTok Shop is “excellent at keeping people coming back and that must be because individuals are already on TikTok Shop daily,” Maloof said.
TikTok Shop is winning over loyal Temu and Shein shoppers
Temu and Shein can have found competition in TikTok Shop and this season’s sales results post-holiday will show the true impact of this overlap. Among popular e-commerce platforms, Shein and Temu share the highest percentage of customers with TikTok Shop. The overlap is the highest of any fast fashion or general apparel brand, per an Earnest Analytics report released in April.
“Every minute you spend on the platform is one other minute you are potentially going to be sold something.”
Michael Maloof
Head of promoting at Earnest Analytics
Temu, known for its ultra-cheap prices, safety concerns and controversial use of the de minimis exemption, has grown popular amongst budget-conscious customers and their ability to make “haul” purchases, consisting of many items for a low price. TikTok Shop shares 25% of its customers with Temu, alongside H&M (20%), Etsy (17%), EBay (14%) and Amazon (12%). Despite U.S. consumers’ privacy concerns with Temu, its low prices have kept customers coming back.
Another retailer facing similar legal and privacy repute challenges, Shein has customer overlap with TikTok. Around 28% of Shein customers also purchased from TikTok Shop. TikTok’s advantage? Its ability to entertain, influence and make customers feel they’re getting the lowest price, per Maloof.
“Temu is an app you open with the intent to buy,” Maloof said. “People don’t necessarily open TikTok to purchase, they open it for entertainment, they usually stay to purchase. And the time that individuals are spending on TikTok Shop is growing, and that is really more necessary because every minute you spend on the platform is one other minute you are potentially going to be sold something.”
The app continues to point out that customers usually tend to return to TikTok Shop than with every other platform. Per Earnest Analytics bank card data, over 27% of TikTok Shop users returned to purchase in only five months after their first purchase. This retention rate leads other e-commerce platforms corresponding to Temu (20%), Shein (10%) and Etsy (8%).
Users are already on TikTok for pleasure so a small purchase, or just a few adding up over time, is normal for an app that mixes entertainment and commerce, something Temu and Shein don’t do, per Maloof.
TikTok “could stop getting downloads tomorrow they usually still have loads of room to grow TikTok Shop sales amongst existing customers, which is huge,” Maloof said. “Temu downloads have slowed down and so have their checkouts. … TikTok Shop is just a very different model, and I believe that they have lots of runway still.”
Correction: This article has been updated to correct attribution for an interview. Retail Dive spoke with Allison Lin, the co-founder of Like Air.
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