Amazon Sellers and Retailers Flock to TikTok Shop Despite Looming US Ban
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Retailers and Amazon sellers are increasingly turning to TikTok Shop, the video app's e-commerce platform, despite the looming threat of a US ban, reports CNBC. The platform's ability to engage consumers and drive impulse purchases is proving too attractive to ignore, even with uncertainty surrounding TikTok's future in the US.
TikTok Shop, launched in September 2023, allows users to purchase products directly within the app. It has quickly become a popular alternative for retailers seeking to diversify their e-commerce strategies beyond Amazon.
"TikTok Shop launched in September 2023 as a way for users to purchase products without leaving the app, and since then, the China-owned app has emerged as a viable alternative for retailers looking to diversify their e-commerce business from Amazon," CNBC reports.
The platform uses a variety of methods to engage shoppers, including live streams, shoppable posts, and generous discounts. This approach targets the more than 170 million Americans on TikTok who are prone to impulse buying while scrolling through videos.
Retailers of all sizes use TikTok to market a wide variety of products, from beauty items and electronics to health and fitness goods. These retailers often entice customers with significant discounts and fast, free shipping.
One example is Beachwaver, a hair-care company that conducts live streams on TikTok Shop for six to eight hours at a time, offering significant discounts and engaging viewers directly.
"When TikTok Shop was new and people hadn’t used it yet, they would ask, ‘Is this on Amazon yet?’" said Beachwaver CEO Sarah Potempa told CNBC. "Now that it’s been around for a year or so, we’ve done 1.2 million orders.”
TikTok Shop's rapid growth, predicted by market research firm ecommerceDB to more than double its gross merchandise volume (GMV) to $50 billion this year, is attracting not only established retailers but also Amazon sellers. The platform’s lower fees and significant discounts are incentivizing many to expand onto TikTok Shop. TikTok Shop has also attracted talent from Amazon, filling key roles in marketing, creator relations, and operations.
"Every time you scroll, every other scroll is a Shop post, so they’re making a lot of investment to encourage that in-app conversion," said Caila Schwartz, Salesforce’s director of consumer insights and strategy for retail and consumer goods.
Despite the potential for a US ban, many retailers and sellers remain committed to TikTok Shop, emphasizing the current profitability and the platform's unique ability to reach a large audience.
"Whatever the future looks like for TikTok Shop, they’re happy to take that money now and get while the getting’s good,” said Michelle Barnum Smith, who provides consulting services to online businesses.