At the Waukegan, Illinois, warehouse of her hair-care firm, Sarah Potempa posed in front of her smartphone wearing a sparkling dress and a Santa hat on top of her strikingly pink hair. The moment has come for work.
Potempa is a well-known hairdresser who frequently goes live on TikTok. Potempa livestreams herself packing orders of her popular Beachwaver curling iron for six to eight hours at a time, which she refers to as “the packing show.”
On November 20, the feed had a party vibe, with Potempa stopping sometimes to dance to 50 Cent’s “In Da Club” between delivering orders. For the more than 1,000 TikTok viewers who regularly watch Potempa’s performances, this is a combination of buying and entertainment.
Beachwaver is one of several merchants that are swarming to TikTok Shop, the video app’s buying platform. Since its September 2023 launch, TikTok Shop—a Chinese software that allows users to buy things without ever leaving the app—has been a competitive option for companies wishing to expand their e-commerce company beyond Amazon.
Retailers of various sizes advertise a wide variety of goods, including treadmills, detox teas, phone chargers, cosmetics palettes, and more, through a special Shop page. Retailers on TikTok usually provide free delivery within a few days along with hefty promotions. Shoppable posts, which resemble regular videos but are actually advertisements for goods offered in TikTok Shop, are commonly seen in the “For You” tab, which is the platform’s primary video feed. Users may buy things from such posts without ever leaving their For You feed.
Customers rush to place an order on Potempa’s show in order to receive a 50% discount on Beachwaver items, complimentary accessories like lipsticks or face washes, and the opportunity to hear Potempa read their username aloud while she packs their purchase on TV.
“People would ask, ‘Is this on Amazon yet?’ when TikTok Shop was new and they hadn’t used it yet.” said in an interview with Potempa. “People would ask me things like, ‘Can I buy it somewhere else?'” After a year or two of operation, we have completed 1.2 million orders.
TikTok, which is owned by ByteDance, has already established itself as a dominant force in advertising. With TikTok Shop, the firm has been attempting to establish an additional source of income through online sales.
Among others, the firm has drawn in brands including Crocs, PacSun, and Nike. The more than 170 million Americans who use TikTok to browse videos and make impulsive purchases are the target audience for those shops. There are others besides these.
With the promise of cheap fees and big discounts on TikTok-funded items, Amazon merchants are also being encouraged to test out the service. In addition to vendors, the business has recruited expertise from Amazon to fill important positions for TikTok Shop in categories including operations, marketing, creative partnerships, and brand safety.
According to market research firm ecommerceDB, TikTok Shop has become a “massive e-commerce machine” in the 15 months since its start. According to EcommerceDB, TikTok Shop’s gross merchandise volume—the total amount of goods sold on its marketplace—will more than quadruple this year, reaching $50 billion. Even while that is less than Amazon’s projected $757 billion in 2024 GMV, TikTok Shop is still growing.
“They’re investing heavily to encourage that in-app conversion because every other scroll is a Shop post,” stated Caila Schwartz, director of consumer analytics and strategy for retail and consumer products at Salesforce.
In a statement, Amazon spokesperson Mira Dix told CNBC that merchants are using the platform “more than ever before” and seeing increased success. According to Dix, the firm offers extra services to merchants, such fulfillment, which is “an average of 70% less” expensive than similar two-day delivery options.
“We strive to innovate on behalf of our selling partners and support their growth and success across all of their sales channels because they are extremely important to Amazon,” Dix stated. Sarah Potempa, CEO of Beachwaver, does livestreams on TikTok Shop several times a week.
Imminent due date
The timing of TikTok’s e-commerce effort is risky for the business.
A law passed by President Joe Biden in April mandates that ByteDance sell TikTok by January 19. App stores and internet hosting providers would not be allowed to distribute the app if TikTok doesn’t sever its relationship with its parent firm. This would be equivalent to a statewide ban in the United States. TikTok has filed a lawsuit to stop the action.
Donald Trump, the incoming president, may save TikTok from a possible ban in the US. Trump changed his mind after attempting to impose a TikTok ban during his first term in office, admitting in a March interview with CNBC’s “Squawk Box” that “there’s a lot of good and there’s a lot of bad” with the app.
Around the time of his meeting with billionaire Jeff Yass, a significant ByteDance investor, Trump shifted his stance. TikTok has mostly been doing business as usual as the January deadline draws closer.
At a Manhattan event in October, TikTok Shop executives presented their marketplace as a destination for Christmas shopping to social media influencers and company owners. Since its September 2023 launch, users have purchased hundreds of millions of items on the e-commerce site, according to Nico Le Bourgeois, head of U.S. operations for TikTok Shop. Prior to joining TikTok in August 2023, Le Bourgeois worked for Amazon for over nine years in a number of departments, including its third-party marketplace.
Le Bourgeois told CNBC in October that TikTok Shop isn’t attempting to offer “everything to everybody.” He went on to say that TikTok Shop is a marketplace for product discovery that presents “new, cool, interesting” products from both large and small firms.
“You see it, like it, and purchase it. “This isn’t a search,” he declared. “It’s a completely different approach to shopping.”
A corporate representative at the event stated that TikTok Shop isn’t slowing down, but Le Bourgeois declined to comment on the impending TikTok ban.
“The creators and sellers here are using TikTok to make a living,” the spokesman stated. We will continue to be present for that. We have a fantastic opportunity.
“Taking advantage of the heat”
This Christmas shopping season, more Americans are anticipated to use TikTok and other applications with ties to China to purchase gifts.
According to Salesforce, around 63% of Western shoppers intend to make purchases throughout the season using Chinese shopping applications. This includes the fast-fashion brand Cider, Shein, Temu, Alibaba’s AliExpress, and TikTok.
TikTok reported on Saturday that its Black Friday sales in the United States had exceeded $100 million, with the most popular categories being fashion, cosmetics, and home items. Within two hours of coming live on the app, Canvas Beauty, a leading seller of hair care and cosmetics on TikTok Shop, achieved $1 million in sales, according to the business.
Despite the potential for its demise, retailers and sellers, some of whom rely on TikTok for the majority of their online transactions, told CNBC that they are still loyal to the site.
Yay’s Snacks co-founder and COO Rachel Cheng stated that she is not certain that TikTok will disappear under the Trump administration because it doesn’t appear to be the president-elect’s primary focus, despite the fact that it is impossible to ignore the discussion surrounding a possible ban in the United States given the company’s heavy reliance on the platform.
One of the first businesses to sign up for TikTok Shop when it first started was Yay’s Snacks, which produces crispy beef jerky from Cambodia. Former YouTuber Marlin Chan, the creator and CEO of Yay, regularly makes amusing TikTok movies to advertise his snacks, which are made using his grandmother’s original recipe.
One set of videos is a parody of the television program “Undercover Boss.” According to Cheng, the videos helped Yay’s gain tens of thousands of TikTok fans who continue to purchase the jerky.
According to Cheng, Yay’s monthly sales of TikTok peaked at $75,000 in November, accounting for roughly 90% of the company’s entire revenue at one time. If TikTok is banned, Yay’s is ready to switch to Amazon and its own website, but Cheng stated that as long as TikTok is “still here, we’re going to do what we can to stay on top.”
Cheng stated, “We wouldn’t have joined TikTok Shop if we were sitting here worrying about what’s going to happen next.” “We’re taking advantage of the heat.”
Competing with Amazon, Scrub Daddy, who gained popularity on TikTok during the COVID outbreak and has over 4 million followers, is well-known for its sponges fashioned like cheerful faces. According to the app, its best-selling product on TikTok Shop has been bought about 76,000 times, and its most popular video, which shows off its Damp Duster sponge, has had 30 million views. Items returned after purchase are not included in that number.
Aaron Krause, the CEO of Scrub Daddy, claimed that he lost trust in conventional marketing strategies after beginning his career in 2012 with an appearance on “Shark Tank.”
Krause stated, “We did a TV ad, some outdoor billboard ads, and a little bit of radio.” “I only discovered that I was flinging cash in the air.”
The business changed its focus to social media marketing, particularly on Instagram, which proved to be a “pot of gold,” according to Krause. In 2020, Scrub Daddy created a TikTok account and collaborated with influencers, such as Vanesa Amaro, a well-known account with over 5.7 million followers that specializes in housecleaning content, to market its goods. According to Krause, Scrub Daddy sold 30,000 units in a single weekend after Amaro suggested the sponges to her audience.
“With one hysterically crazy video, you can reach millions and millions of views thanks to TikTok’s algorithm,” he claimed.
Retailers and sellers have been urged by TikTok to engage with customers by doing hours-long livestreams several times a week in recent months. Many corporations have either recruited celebrities to host the programs or invested in setting up their own facilities to film them.
Dan Hughes, a former QVC personality, was hired by Scrub Daddy after he was fired from the home shopping network in 2023. Some, such as Beachwaver, have made their CEOs appear on screen.
In October, TikTok Shop was a hot subject at an Amazon seller convention in New York. A crowded group of sellers attended a TikTok Shop workshop on “how to scale your brand,” where e-commerce consultant Rafay MH discussed how brands could generate $8 million to $10 million in sales via TikTok in less than a year.
“Amazon presents a great deal of competition,” MH said. “TikTok offers the chance to get free viewers and sales.” After originally being sluggish to adopt TikTok, many Amazon merchants have embraced the site, according to Michelle Barnum Smith, an online business consultant.
“I was the disheveled gold prospector who would stand on New York street corners and declare, ‘There’s gold in those hills,’ and people would respond, ‘Yeah, sure.'” Barnum Smith stated “But they were like, ‘I have to get on there,’ as soon as they saw their friend or their rival on there.”
Amazon merchants now have “extreme FOMO,” or the fear of missing out, to join TikTok, even if it disappears from the US market next year, according to Barnum Smith.
Barnum Smith stated, “They’re happy to take that money now and get while the going is good, regardless of what the future holds for TikTok Shop.”
