Since it started in September 2023, more than 11% of American homes have bought stuff from TikTok Shop. This info comes from a report by Earnest Analytics. They checked credit card info to find out about TikTok Shop users.
Here are five things we found out about how TikTok Shop is doing and what it means for brands:
1) TikTok is boosting sales through social commerce
TikTok Shop is leading the way in selling stuff through social media. In February 2024, it made 68.1% of all the money from social shopping, according to the report. Whatnot, another app for live shopping, got 31% of the money. But Instagram Checkout, Facebook Shop, and Flip App together only got less than 1%.
People aren’t just using TikTok for ideas; they’re buying things too.
- The report didn’t look at Facebook Marketplace, where lots of people search for used stuff. Because of this, Facebook is ahead in social buyers. We predict that 64.6 million Americans will buy something from Facebook this year, while 40.7 million will do so on TikTok.
- TikTok Shop wants you to buy things right there on the app. But Facebook and Instagram are moving away from letting you buy stuff directly on their platforms. Instead, they’re using ads to send you to other places to finish your purchase.
2) TikTok Shop makes sure customers return
Stat : In February 2024, 81.3% of TikTok Shop sales were from customers who had bought before, which is more than the 64% in November 2023, as per Earnest Analytics.
- Shortly after starting, TikTok Shop got flooded with fake stuff and low-quality products. This worried many brands because they thought it might make shoppers lose trust in TikTok and make the government look into it more.
- While TikTok hasn’t convinced the US government, TikTok Shop has won over consumers, attracting more repeat buyers as time goes on.
3) Gen Z shoppers prefer TikTok for shopping
The report says that Gen Z adults aged 18 to 24 are 3.2 times more likely to buy something on TikTok Shop than the overall adult population.
While it’s not unexpected, it confirms what we’ve been saying: Brands must be on TikTok to connect with Gen Z.
However, it’s not the sole avenue to reach younger shoppers. Our Gen Z’s Path to Purchase report indicates that Instagram, retailer websites, and even physical stores are also part of how Gen Z shops. This suggests that brands should have a presence across all platforms to ensure success.
4) TikTok Shop users buy from discount and fast-fashion brands too
In the year ending February 2024, TikTok Shop customers spent 26% of their apparel budget at off-price department stores and 11% on fast fashion. In comparison, non-TikTok shoppers spent 24% and 7% respectively.
TikTok Shop users care about prices, just like everyone else.
- To counter increasing shopping expenses, the primary step taken by digital shoppers in the US is searching for discounts and coupons, as revealed by a December 2023 survey conducted by Intelligence Node in collaboration with Dynata.
- To distinguish themselves on TikTok Shop, brands could offer unique discounts. They could also explore teaming up with off-price retailers such as T.J.Maxx or Burlington to integrate a physical aspect into their approach.
5) Shein and Temu show the most significant customer overlap with TikTok Shop
Stat – In its initial months, approximately 28% of Shein customers also made purchases at TikTok Shop, marking one of the highest overlaps among fast-fashion or general apparel brands. Likewise, 25% of Temu’s customers and 17% of Etsy customers shop through TikTok Shop, with 14% from Ebay and 12% from Amazon.
Competition is intensifying among retail platforms.
- Between Temu’s launch in September 2022 and January 2024, Amazon saw a decrease of 2.6 million daily active users, while Temu gained 51.4 million users in the same period, according to data from The Wall Street Journal, as reported by Forbes.
- If TikTok gets banned, there’s one fewer marketplace vying for consumer spending. But it also means one fewer platform for merchants to expand their reach and diversify their sales.
