Is Tik-Tok Shop a boon or a bane for retailers?

TikTok Shop’s partnership with CommerceHub leverages the app’s ability to cultivate emerging fashion and shopping trends to promote and sell products to TikTok’s user base. CommerceHub‘s ChannelAdvisor marketplace integration solutions provide TikTok with a streamlined connection for brands to connect to TikTok Shop with advanced onboarding tools and APIs. Additionally, ChannelAdvisor’s digital marketing solutions will generate awareness and engagement capabilities across its network to drive “increased revenue growth opportunities for TikTok”. TikTok Shop stated that it will benefit from CommerceHub’s ability to provide rapid supplier brand onboarding, increasing TikTok’s ability to test new products with new brands quickly and easily while expanding into new categories to further delight their in-app shoppers”. TikTok Shop has quickly gained popularity in the UK despite cultural clashes between TikTok’s Chinese owners and London staff which tainted TikTok Shop’s UK launch in 2021. Reports of burnout and tension between staff and former TikTok head of ecommerce Europe, Joshua Ma, led to an exodus of more than 20 members from the London team. This rocky start was followed by a lack of traction, with the shop operating at a loss and many live streams generating zero sales. However, in February 2023, research by the Retail Technology Show suggested that TikTok became the most-shopped UK social channel, overtaking Instagram and Facebook. The survey of 1,000 UK shoppers stated that users are now making 10 purchases a year on TikTok, compared to nine on Meta channels. Its UK and European sales also rose by 477% in 2022, as it continues to grow its market share of the coveted 18–25-year-old demographic, which is estimated to make up 60% of the social channel’s users. Morton also states that TikTok itself has over 1.9 billion downloads globally and was rated the fourth most popular app in 2019. This indicates a significant user base that retailers can tap into. Additionally, he said that Shopify has also been actively promoting its integration with TikTok. Shopify allows users to create their own online stores and offers various features and solutions for building websites, customising stores, and selling products online or in person. “This integration showcases the increasing importance of TikTok as a sales channel for retailers”. Clothing brand Shein recently utilised TikTok's shoppable ads and influencer marketing to drive traffic and generate sales. Combining engaging content with seamless shopping experiences, Shein tapped into TikTok's vast user base to create new revenue streams. According to a report from Ad Age, companies including apparel brands like PacSun, Revolve, and Willow Boutique, as well as beauty brand KimChi Chic, are now part of this shopping experiment. Users who want to shop for these brands’ products can tap on the shopping bag icon on the brand’s profile to view their catalogues and complete the checkout process without leaving TikTok’s app. Morton said that this platform and feature could actually prove beneficial for retailers. “When working with clients, I find the use of TikTok Shop to be a game-changer in the retail industry. The integration of TikTok Shop with Shopify has made it even more appealing for SMEs with limited resources. It allows them to create engaging and interactive content, showcase products, and drive sales directly within the app. The ability to leverage TikTok's algorithm to reach a highly targeted audience and convert them into customers is fantastic. TikTok Shop has immense potential for revolutionising the way retailers connect with consumers and drive sales,” he said. However, looking at the downside of the app, Morton stated that there are a few shortcomings to consider when using platforms like TikTok Shop for smaller businesses. He said that “competition is fierce”, as many brands are leveraging this feature to reach their audience. This means that standing out and gaining visibility can be challenging. Secondly, he highlighted how the cost of advertising on TikTok can be high, especially for businesses with limited marketing budgets. Additionally, he said that the target audience on TikTok may not align with the target market of every small business, as the platform tends to attract a younger demographic. Lastly, maintaining a consistent and engaging presence on TikTok requires time, resources, and creative content production, which can be demanding for smaller businesses with limited resources. Despite the shortcomings, Morton said that he has noticed a growing trend of consumers in the UK using platforms like TikTok Shop for shopping purposes. According to the Retail Technology Show survey, purchase rates are even higher for Gen Z, with the poll showing this demographic makes an average of 19 purchases through the TikTok platform every year—almost double that made by the average UK shopper. This compares to 18 purchases on Instagram and 15 purchases this demographic makes on Facebook. He says, “The convenience, personalised recommendations, and interactive nature of these platforms can be appealing to consumers. Additionally, the integration of social media and e-commerce allows for a seamless shopping experience.” Morton adds that the huge positive of retailers integrating with platforms like TikTok Shop is that “consumers build huge amounts of trust with these social media apps that they use daily and the influencers they follow on there, so it offers a huge opportunity to become a go-to influencer in different sectors for retailers”. The launch of TikTok Shop has also raised questions about its potential to pose a threat to e-commerce giant Amazon. To this end, Morton says, “Based on my analysis of current trends and market data, I don't believe that TikTok Shop alone can pose a significant threat to established e-commerce giants like Amazon, Shopify, and Facebook Marketplace. While TikTok Shop has been gaining popularity in the UK due to its convenience, personalised recommendations, and integration of social media and e-commerce, these established platforms have a loyal customer base, a strong presence, and significant investments in infrastructure and customer service.” However, he added that the e-commerce landscape is constantly evolving, and new players can emerge as major contenders in the future. It’s all about tech giants collaborating “to create a better, more seamless experience for consumers rather than competing”. “With e-commerce platforms like Shopify already offering TikTok Shop integration, it can only be a positive that consumers are looking for more personalised experiences in this way,” he said. Overall, we can see that TikTok is continuing its push towards making its app a shopping destination by onboarding more brands for its Shop initiative, and Morton believes it is likely that the use of applications like TikTok Shop will continue to grow in popularity among retailers as shopping destinations have been significant, with many consumers turning to these platforms for product discovery and purchasing. He said, “TikTok, with its large user base and engaging content, has the potential to become a popular choice for retailers looking to reach a younger demographic. However, established e-commerce giants like Amazon, Shopify, and Facebook Marketplace still hold a strong position in the market.” But for retailers looking to integrate their business with TikTok, Shop Morton said, “A big social media trend now is ‘TikTok Made Me Buy It’. Everyday users and larger influencers have been sharing content around purchases they’ve made because of TikTok. Often the content is comedic as some of the purchases are unnecessary, but because of this trend, some smaller online sellers have seen huge waves of sales overnight and products selling out instantly. If retailers can get on top of trends, it’s a fantastic opportunity to generate extra revenue, especially in the run-up to Christmas.”