The Average TikTok Shopper Is Not Who You Think It Is
TikTok Shop was fully launched in the US in September 2023. The controversial social media platform introduced shoppable videos and LIVE Streams directly to the “For You” pages of users, thus enabling merchants, creators, and brands to engage in direct sales through their content.
The app’s shop features:
In-Feed Video and LIVE shopping: Users can shop tagged products directly from such videos and live events.
Product Showcase: Users can browse product tiles, read reviews, and purchase directly from their favorite brands’ profiles (similar to Instagram Shopping)
Shop Tab: Businesses can display their products on the marketplace, enabling customers to easily find, filter and sort products. Product recommendations and shoppable content will also be featured in this tab, and customers will be able to manager their orders within the same space.
Affiliate program: The program connects Creators and Sellers alike, and facilitates opportunities for commision-based product marketing and sales. This makes the monetization of content creation much more effortless, and sellers can customise affiliate programs to better match their requirements. This is just one of the several partner integrations offered b TikTok Shop.
Shop Ads: Shoppable ads
FBTT: FBTT is the new FBA. Vendors can choose to let TikTok do fulfillment for them, streamlining operations and logistics for them.
Secure Checkout: Third party payment platforms are easily available to simplify commercial activities within the app.
Last year, TikTok was close to reaching USD 20 billion in global gross merchandise value sales. Southeast Asia accounted for most of the sales in 2023, and with its TikTok Shop counterpart in the US, the social media platform seeks to grow its e-commerce platform tenfold, aiming for USD 17.5 billion in sales in 2024.
WATCH
“Bloomberg has learned that TikTok aims to grow the size of its US e-commerce business tenfold to as much as $17.5 billion. Alex Barinka reports.”
Source: Bloomberg
It remains to be seen if this sales goal will ever be achieved, especially considering the sell or else threat that looms over TikTok these days.
Having established the importance of TikTok as an ecommerce platform, let’s dig a little deeper as to who the Average TikTok Shop User is, you might be surprised!
Despite having faced strong backlash for commercializing the social media platform, over 5 million people made purchases on the app during Black Friday and Cyber Monday, and by February this year, the Shop had the same number of active users as Shein, and, according to credit card analysis data, increasingly taking sales from the ultra-fast fashion e-tailer. However, this growth spurt came at a cost, with TikTok shop reportedly losing more than USD 500 million in 2023 alone.
QUICK FACTS ON THE TIKTOK SHOP AND ITS USERS
9% of US Households made purchases on the app in 2023
Millennials and Gen Xers account for 25% and 22% of the app’s sales, respectively. Interestingly, 18–24-year-olds accounted for only 7% of the sales transactions taking place on the TikTok Shop.
Whether they like it or not, the TikTok Shop resonates more with middle-class Millennials, who frequently shop at Amazon, Etsy, or Old Navy.
Flash Sales are its most popular format
The average consumer spends an average of USD 35 a month, and makes around 1 transaction per month.
Interestingly, TikTok Shop has a pretty high retention rate of 50%, with consumers making a second purchase within 6 to 9 months after their first. Temu, on the other hand, has a retention rate of 42% and Shein’s is 20%.
SALES GROWTH HAS STALLED
In spite of its agressive growth, sales at the TikTok Shop have stalled, which is disappointing considering the high hopes investors had for the app.
