When thinking of online shopping giants, Amazon or more recently, Shein and Temu, are often the first companies to come to mind. However, in a rather surprising twist, a social media platform appears to holding its own in the highly concentrated online retail sector.
TikTok Shop is doing incredibly well for itself despite only being launched two years ago, in 2023. And when you consider the overwhelming growth in popularity of TikTok as a social media platform, it can just very well take over the likes of Temu or Amazon in the e-commerce game.
TikTok Shop redefining online retail
This social media rooted e-commerce platform appears to have taken all of the good bits from other styles of e-commerce platforms and melded it together into a new, optimized shopping experience which an astounding volume of reach.
First launched in 2023, the U.S. operations of TikTok Shop rapidly gained traction, and according to Capital One Shopping, the platform has now “attracted 47 million shoppers to the platform, who spend on average $32 million every day.”
When visiting the TikTok Shop site, shoppers are welcomed by confoundingly low price points that rival that of Temu, coupled with the in-app convenience of “social shopping” as found on other social media platforms like Facebook marketplace or Instagram.
In 2024 alone, it has been estimated that the platform welcomed 11.9 million U.S. buyers. This places them ahead of big ticket names like Amazon and Pinterest comparably for the same period, as per Emarketer.
What makes this platform stand out further is its design. Unlike Instagram, who takes the user to an external website when completing a purchase, TikTik Shop allows for the transaction to be completed within the app, making for a more convenient experience.
“All these companies should be real nervous because TikTok Shop starts from this huge strength of customer retention,” Jason Goldberg, chief commerce strategy officer at Publicis Groupe, a marketing firm, explained.
How does TikTok Shop work?
Anyone who uses TikTok as a social media platform knows how fine tuned the algorithm is. In the same way that content is suggested to users, TikTok uses the same algorithm system to recommend products to users. As such, advertisements are presented to the user based on the content that they engage with, not just based on their previous purchases.
“Every time you look at something, every time you pause on something, every time you click or swipe on something, that’s cutting code in the background on this algorithm and making it smarter,” claimed Richard Crone, founder of Crone Consulting, an e-commerce firm.
The term “shoppertainment” has been coined by retail experts when speaking of this amalgamation of shopping and entertainment. The resulting effects of this style of e-commerce platform has also invented an entirely new career format that has been benefitting social media influencers like Lexi Rosenenstein.
“People don’t realize that you can have 5,000 followers and monetize your content on TikTok and TikTok Shop and make this a career,” Rosenstein said.
Rosentein is currently the top beauty product seller for the app in the U.S., and as a TikTok affiliate, Rosenstein has managed to grow her follow count to a whopping 70,000. She has cited live shopping on TikTok as the contributor to her large following.
TikTok Shop at risk of leaving the U.S.
Last April, Congress passed a law that required China’s ByteDance to sell the U.S. operations of TikTok to an American company and if the platform was not transferred to American hands, the app would be banned in the States. The law was passed after concerns were raised that TikTok and its ties to China posed a threat to national security — an accusation that has been denied by China.
In January, the app was down for a brief period of a few hours ahead of the initial deadline for the sale. However, President Trump then issued an executive order that gave TikTok a 75 day extension to find a buyer. ByteDance now has till April 5 to find an alternate U.S. buyer, however, no buyer has been announced to date.