Key takeaways:
- TikTok Shop aims for a $17.5 billion expansion in 2024
- This viral makeup brand’s TikTok Shop strategy led to a 106% sales increase and a quadrupled following
- Despite TikTok Shop’s growth, there remains a trust gap with Gen Z consumers that needs bridging
“TikTok Shop”—say it, and you’ve got everyone’s attention. Love it or dread it, 2024 is shaping up to be the year of the TikTok Shop takeover, sending brands into a FOMO-induced spiral. Bloomberg dropped the bomb early January: TikTok’s gunning to supercharge its US TikTok Shop venture, aiming for a jaw-dropping $17.5 billion in 2024. That’s not just ambitious; it’s a clear signal to giants like Amazon and fellow Chinese powerhouses Temu and SHEIN that there’s a new player in town.
But what’s TikTok’s ace? A massively popular social platform, where viral videos aren’t just for lolz—they’re the new storefronts. As we take you down the rabbit hole of how TikTok Shop is rewriting the e-commerce playbook, a word of caution: despite its breakthroughs, it might not quite hit the mark as much as you think.
A natural step for TikTok
We’ve said it before and we’ll say it again for the people in the back: e-commerce is a natural step for TikTok, which has already opened online marketplaces in Southeast Asia and the UK. In September 2023, the company launched the US version of TikTok Shop—an effort to combine the ease of shopping on Amazon with the product discovery afforded by social media platforms like Instagram.
It’s a goal that has long eluded its competitors. Meta struggles to convert users on Facebook and Instagram, mostly serving as digital billboards. Amazon has tried various strategies to persuade shoppers to hang out and seek inspiration, including clumsy attempts to copy the Home Shopping Network. But most shoppers search for a product, buy it and then leave.
Meanwhile, TikTok brings considerable assets to its e-commerce effort. The average US TikTok user spends 33 hours a month on the app, compared with 1.4 hours for Amazon, according to Data.ai research. In November 2023, which included Black Friday and Cyber Monday, more than 5 million new customers bought something through the TikTok Shop, a TikTok spokesperson says.
Although it should be noted that, for now, Amazon remains the dominant e-commerce player, its US market share has plateaued at roughly 38%, giving rivals an opening to snatch customers and hobble its growth. In a sign of how seriously Amazon is taking TikTok, the company cut deals with Pinterest, Meta and Snapchat that let their users buy products via Amazon ads without leaving the apps.
TikTok has also employed artificial intelligence (AI) to scan videos, identify items, and direct users to buy similar products through its TikTok Shop. While the app previously allowed creators to tag products in videos as part of its affiliate programme, this new feature currently occurs without notifying the creator—and without the promise of a commission on sales their video helps drive.
The arrival of shopping buttons on regular TikTok videos shows how deeply the company is integrating e-commerce into the app’s overall user experience. In other words, TikTok has been on an all-out blitz in recent months to make shopping take off, and it’s certainly not going to stop come 2024.
Made by Mitchell’s TikTok Shop success story
In 2020, makeup artist Mitchell Halliday launched Made by Mitchell (MBM), a brand that quickly became synonymous with bold, innovative colour combinations and a deep commitment to self-expression and community building within the makeup world. After joining the app in 2020, by March 2022, MBM embraced TikTok Shop, leveraging the platform to significantly grow its revenue and follower base.
With a solid fanbase on other social media platforms, MBM’s move to TikTok Shop aimed at broadening its reach, particularly targeting the ultra-engaged #BeautyTok community eager for fresh, trending looks. Collaborating closely with TikTok, MBM crafted a launch strategy centred on diversity and inclusion. This involved partnering with top TikTok creators for exclusive content, bespoke bundles and discounts, alongside behind-the-scenes (BTS) live streams directly from the brand’s headquarters. Mitchell’s direct involvement in these collabs and his knack for engaging content also played a pivotal role in the strategy’s success.
The results were nothing short of impressive. MBM’s focused campaign led to a 106% increase in sales, while its engaging TikTok—marked by viral content and bundles that sold like hotcakes—racked up over 10.5 million impressions across its live sessions.
Within just three months, MBM’s following on the platform quadrupled, a testament to the brand’s successful penetration into TikTok’s beauty community and its ability to resonate with a younger, diverse audience.
But you’d be a fool to think that Made By Mitchell would stop there once it had a taste of what TikTok Shop can do. After reaching an impressive follower milestone of 500K, MBM leveraged the moment and launched targeted flash sales to create buzz surrounding its boldest campaign yet.
With the Barbie movie premiere coinciding with its campaign, MBM capitalised on this cultural trend with a “Barbie Bundle” showcasing how to create a Barbie-inspired look in Shoppable LIVEs and Shoppable Short Videos.
MBM also implemented a data-driven approach to its merchandise selection, which involved running targeted sales on popular products to amplify their virality and drive sales. The campaign’s impact was monumental, running from 17 July to 24 July 2023 and achieving a staggering $2 million in Gross Merchandise Value (GMV) within just a week.
This major win shows just how well MBM’s mix of quick sales, great content, team-ups with relevant influencers, tapping into what’s popular, and clever product picks really worked, bringing in mind-boggling results.
Balancing booming potential with brand challenges on TikTok Shop
In recent research conducted by SCREENSHOT on our Early Majority—a dynamic group of over 6,000 Gen Z individuals—we’ve gathered insightful data on young adults aged 18-24 from the US, Brazil, Europe, the Middle East and Africa (EMEA), and Asia Pacific, focusing on their interaction with TikTok Shop. This exploration offers a clear view of the platform’s current standing and the perceptions surrounding it.
Among those surveyed, 16.7% have actively purchased from TikTok Shop, indicating a 45% higher engagement compared to the average index. However, 24.2% have yet to engage with TikTok Shop, and an equal percentage have browsed without making a purchase, marking a 60% increase over the average. When asked about the motivation behind their purchases, affordability emerged as a key driver for 9.7% of respondents. Other factors include discount codes, the novelty of the TikTok Shop experience, targeted advertisements, and positive reviews.
Looking into the sources of these purchases, 4.5% ventured into brands they found on TikTok Shop, while 4.2% chose sellers discovered on the platform. Recommendations by content creators influenced 2.7% of the purchases, underscoring the app’s role in brand discovery and influencer impact.
Yet, clear challenges are still on the horizon for the platform and the brands that wish to use it to their advantage. SCREENSHOT data reveals that a notable number of Gen Zers haven’t engaged with TikTok Shop, citing reasons ranging from lack of awareness to a general reluctance to purchase from social media.
Concerns about product quality and authenticity also reared their ugly head, with 7.2% expressing hesitancy. This sentiment is even more pronounced in the US, UK, and Brazil, where concerns about quality and trust in sellers both stand at 7.9%, highlighting awareness of TikTok Shop but reservations about its current offerings.
Sure, this data sheds light on TikTok Shop’s burgeoning presence and its potential as a powerful tool for brands. That being said, it also highlights the necessity for TikTok Shop to address concerns regarding product quality and authenticity to fully leverage its influence among Gen Z consumers.
