TikTok Shop Overtakes Sephora and Shein in US Online Shopping Growth
Sign up for ARPU: Stay ahead of the curve on tech news.
TikTok Shop, the relatively new online retail platform launched in September 2023, has surpassed established giants Sephora and Shein in capturing the spending power of US shoppers, according to a new report from Coefficient Capital and The New Consumer's Dan Frommer.
The report, based on 11 surveys of over 3,000 US consumers, reveals that TikTok Shop is quickly gaining traction. Despite being a newcomer, 80% of surveyed Americans who use TikTok at least monthly are aware of the platform, highlighting its rapid penetration into the market.
This growing awareness has propelled TikTok Shop to the top in US consumer spending for the third fiscal quarter, exceeding established players like Sephora, Shein, and Qurate, the report states.
Sephora, a popular online retailer, particularly among younger demographics, generated $10 billion in revenue across North America for its parent company LVMH in 2023. Shein, another major online player, recorded $2 billion in profit for the same year. Qurate Retail Group, which operates multiple retail brands including QVC, reported a 5% decline in revenue but still generated $152 million in operating income during the third quarter.
While TikTok Shop's precise revenue since its launch remains unclear, a March Financial Times report cited sources indicating that TikTok achieved $16 billion in US sales in 2023. TikTok's 2024 economic report stated that the app drove $15 billion in revenue for small businesses in the US.
The consumer trends report highlights that 45% of surveyed Americans purchased "fashion, clothing, and accessories" from TikTok Shop, with beauty and personal care items coming in second at 44%. The platform also sees significant sales in electronics, home goods, food, toys, books, and more.
TikTok's rapid rise in the US social media shopping landscape mirrors the success of its sister app, Douyin, in China, which generates hundreds of billions in sales annually, often through influencer live streams. However, TikTok's future in the US remains uncertain as it faces a potential federal ban in January 2025 due to national security concerns regarding the app's Chinese ownership.
In anticipation of this potential ban, TikTok has launched a "limited-time offer" promotion this week, offering users $50 in TikTok Shop credits for recruiting new users, with a potential to earn up to $350 in total.