TikTok is ready to buy. One in three of the company’s US job openings are for e-commerce jobs, according to its hiring portal. It is still offering big discounts for first-time customers, almost a year after its business unit, Store, was launched. And it includes influencers, live salespeople, and others to boost sales.
The company seems determined to get the stores going. However the feature, which allows users to buy products such as curling irons and battery packs through videos, livestreams, and a dedicated business tab, has angered some users who are lamenting TikTok’s pivot away from the program. a dance and comedy video to go shopping.
Fortunately for TikTok, the Store’s intervention isn’t driving away users. But questions remain: Right TikTok is betting its future on stores, and will it make enough money from the Shop to justify its excessive presence on the app?
From discussions with e-commerce analysts, partners of the TikTok Store, sellers and manufacturers, it is clear that the Store is growing slowly in the US and is driving good sales for other brands. But third-party data and testimony from Mabankele’s partners show a mixed picture for its first six months of the year. It is by no means a runaway success.
First, the good news: Consumers are spending more on TikTok than they did at the beginning of the year. On average, US users who shopped the TikTok Shop spent about $67 between June and mid-July, compared to about $54 during the four-week period in January, according to data from Earnest Analytics, a research firm that tracks credit and debit card transactions.
Another bright spot of TikTok is user retention. Since its launch, it has had a higher repeat purchase rate than every major e-commerce platform except Amazon, according to Earnest data. TikTok Shop is also showing strong growth in regions outside the US that have embraced social shopping more, such as Southeast Asia. However, its future success in the US is not a foregone conclusion.
Order tracking platform Route saw the number of global orders on TikTok Shop grow by a modest 35% between January and June. Shein’s command volume rose 63% over the same period, by comparison.
And the TikTok app has some challenges that it needs to overcome in order to become a competitive e-commerce player.
For one, product sales on TikTok often rely on viral videos from influencers, which are unlikely. That makes the platform a tough sell for big brands looking to predict potential revenue. For small marketers who made big bucks after getting into a few videos, the good times didn’t last. That can be confusing.
“It’s almost impossible to stand out with a true brand story,” one seller, who saw the most sales through the TikTok Shop last April during its beta period, said Business Insider. “It’s really overcrowded.”
TikTok’s methods do not guarantee sales on TikTok either. Users sometimes click to buy products they see in a video elsewhere instead of browsing through TikTok’s shopping cart, store partners told BI.
“It’s not really a platform for people who think, ‘I’m going to come here and make a lot of sales,'” said Nicole Rechtszaid, co-founder of social media firm Ghost Agency, TikTok. . Retail customer. “It’s for people who are more creative, who are willing to deviate and adapt and try things and fail and rebuild and use new parts and grow from there.”
What works for the TikTok Store
Timely marketing and sales campaigns have fueled the growth of the TikTok Store this year, agency sources told BI.
Its ongoing discounts for both buyers and sellers help drive first-time sales and repeat purchases. And, in July, the company ran a Deals for You Days promotion that coincided with Amazon’s Prime Day event, leading to billions of video views with its campaign hashtag. Beauty brands such as L’Oréal Paris, Maybelline New York, and NYX Professional Makeup participated, a TikTok spokesperson told BI.
Producers and marketers have also found success in live streaming, with Canvas Beauty’s Stormi Steele and streamer Mandys Pena each crossing $1 million in sales from livestreams in the past two months, the spokesperson said.
“The most exciting place right now with our customers has been to buy direct,” Rechtszaid said. “We’re at a point where every week we get about five to 10 different requests from brands that want to launch TikTok Shop Live.”
Direct shopping could be a huge opportunity for TikTok in America if it follows the same trend as Asian apps where consumers and influencers have embraced the format. TikTok’s sister app in China, Douyin, is set to hit $200 billion in sales by 2022, The Information reports. TikTok has recruited a small group of third-party coaches to help creators improve their performances.
TikTok Live has become an e-commerce hub for all kinds of retailers, including former luxury retailer What Goes Around Comes Around, which has a streaming studio in its store . Dan Whateley.
“TikTok is leading the way, and the consumer is starting to watch it,” even if those videos don’t appear on your For You page, said Julian Reis, founder and CEO of e-commerce. TikTok Shop partner SuperOrdinary.
Big store deals coming up
While new formats like the promise of a retail show and customer retention have been strong this year, keeping retailers around (and attracting new, bigger brands) could be TikTok’s biggest challenge. the first, industry sources told BI.
Sales on TikTok often happen in viral spurts, similar to how non-commercial videos happen on the app. These strange times may increase demand, but they do not guarantee long-term income.
“Just because a product goes viral doesn’t mean the entire brand is going to be viral,” Reis said. “What we’re seeing is that product is going to go viral and it’s going to sell millions of dollars and the rest of the brand is going to fall behind.”
TikTok’s advertising discounts, which drive sales, have also drawn criticism from other brands, Reis said.
Reis said: “Brands may have complained about TikTok’s prices being too low. “But what it did was create new consumer behavior and it was intentional.”
Ironically, the exclusion or ban of the US for TikTok also creates problems for the company as it tries to attract new customers.
“We saw a lot of sellers sign up to start using TikTok Shop as soon as it launched, but we saw a drop in the number of new sellers,” Route CEO Michael Yamartino told BI. “For many of them, knowing that it’s a young person who can leave is so scary that they’re still waiting to see it.”
For smaller, more flexible brands, it might still be worth trying out in store, even if TikTok’s future in America is still uncertain. The main issue of being a modern product in the app can change the life of small businesses, even if the weakness passes quickly.
But no one should bet on mass transit as a business strategy.
Rechtszaid said: “To this day I still receive questions about the ban. “We encourage all our customers to use TikTok as a great generator of brand awareness and the sale should be considered a huge success for them.”
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