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 be illegal in the U.S. The Supreme Court later in December agreed to hear TikTok’s challenge to a federal law that would 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 new brands and products on the platform and 83% report TikTok playing a role in user’s purchase decisions. The company also reports that three in four users are 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, similar to 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 marketing at Earnest Analytics, said in an interview that shopping on TikTok is becoming far more promotional and in competition with other big retailers’ well-known seasonal sales.
“To give a good idea of the framework we’re working with, with TikTok Shop almost everyone already has it,” Maloof said. “It’s starting to become very promotional and matching the promotion cycles of big e-commerce retailers and that they’ve done a really 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 more than $100 million in single-day sales, tripling results from the previous year.
Although the app’s future remains uncertain, brands, influencers and shoppers stand to benefit from engaging with TikTok Shop.
TikTok’s impact for brands
Legacy companies like Maybelline, Gap, Pizza Hut and Amazon have leaned into TikTok in order 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 an entire day, TikTok put the cosmetics brand front and center on the shopping platform. With the announcement, the brand debuted a 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 building exciting, culturally relevant moments,” Nico Le Bourgeois, head of TikTok Shop’s U.S. Operations, said in a statement.
Nike similarly has been working with TikTok. The athletics retailer released the “Future Lab” pack and tapped a popular football creator (@ben) to initiate the campaign with a branded hashtag challenge called #MagicBoots. Fans were invited to show off their best football tricks, wearing their Nike shoes for a chance to win a pair from the new drop.
In six days, Nike’s TikTok profile gained 215,000 followers, according to 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 able to 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 can generate huge awareness on TikTok, at a rapid pace,” TikTok said in the case study.
What influencers stand to gain from the platform
TikTok Shop has also created new opportunities for content creators. TikTok Shop created an affiliate 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 affiliate 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 a quarter of U.S. consumers, majority Gen Z, who responded to the survey reported buying a gift directly based on an influencer’s recommendations.
TikTok Shop merchants can also opt-in to allow 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 really build out our TikTok,” Jaclyn Amaro, Like Air’s co-founder, said in an interview. “So we’ve decided that we see TikTok as the future. It’s as if it’s a future way to retail the product.”
Amaro noted a New York Times article that recently compared TikTok Shop to QVC for the digital era because of all the live shopping events that occur on the platform.
For Like Air, Amaro said TikTok Shop is the quickest route to market. Upon developing a new flavor, she said it can take about six months to a year before reaching retail shelves. With TikTok Shop, Like Air can create a new flavor and sell it in a matter of weeks.
“It’s a really great way to stay engaged with our audience,” Amaro said. “They come up with different ideas all the time and when we’re asking what new flavor should we come out with. We’re really able to turn around and say, ‘We listened to what you wanted, and we’re serving it up to you next month versus you having to wait a good six months, a year, even year 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, according to 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 compared to influencers’ recommendations (25%) and generative AI search (14%), according to 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 major hold on Gen Z’s spending power. Earnest Analytics reports that Gen Z adults from ages 18 to 24 are about three times more likely to spend on TikTok Shop compared to the average shopper. In February 2024, over 81% of TikTok Shop sales came 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, according to Maloof.
TikTok Shop is “very good at keeping people coming back and that has to be because people are already on TikTok Shop every day,” Maloof said.
TikTok Shop is winning over loyal Temu and Shein shoppers
Temu and Shein may 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 another minute you’re potentially going to be sold something.”
Michael Maloof
Head of marketing at Earnest Analytics
Temu, known for its ultra-cheap prices, safety concerns and controversial use of the de minimis exemption, has grown popular among 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 reputation 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 shop,” Maloof said. “People don’t necessarily open TikTok to buy, they open it for entertainment, and they stay to buy. And the time that people are spending on TikTok Shop is growing, and that’s really more important because every minute you spend on the platform is another minute you’re potentially going to be sold something.”
The app continues to show that customers are more likely to return to TikTok Shop than with any other platform. Per Earnest Analytics credit card data, over 27% of TikTok Shop users returned to buy in just five months after their first purchase. This retention rate leads other e-commerce platforms such as Temu (20%), Shein (10%) and Etsy (8%).
Users are already on TikTok for pleasure so a small purchase, or a few adding up over time, is normal for an app that combines entertainment and commerce, something Temu and Shein don’t do, per Maloof.
TikTok “could stop getting downloads tomorrow and they still have plenty of room to grow TikTok Shop sales among existing customers, which is huge,” Maloof said. “Temu downloads have slowed down and so have their checkouts. … TikTok Shop is just a completely different model, and I think that they’ve got a lot of runway still.”
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