At the Waukegan, Illinois, warehouse of her hair-care business, Sarah Potempa posed in front of her smartphone wearing a glittery dress and a Santa hat on top of her strikingly pink hair. The moment has come for work.
Potempa is a well-known hairstylist who frequently goes live on TikTok. Potempa packs up orders of her popular Beachwaver curling iron for six to eight hours at a time while livestreaming herself, which she refers to as the “packing show.”
In between mailing out orders, Potempa would take breaks to dance to 50 Cent’s “In Da Club,” creating a party vibe during the webcast on November 20. For the more than 1,000 TikTok users 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 shopping platform for the video app. 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 business 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 main video feed. Users can buy things from those posts without ever leaving their For You feed.
Customers compete to place an order on Potempa’s show in order to receive a 50% discount on Beachwaver products, free accessories like lipsticks or face washes, and the opportunity to have Potempa read their username aloud while she packs their purchase on screen.
People used to wonder, “Is this on Amazon yet?” when TikTok Shop was new and hadn’t been utilized yet. stated in an interview by Potempa. I would get inquiries like, “Is there another place where I can buy it?” 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 company has been attempting to establish an additional source of income through online sales. Among others, the company has drawn in brands including Nike, PacSun, and Crocs. 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 them.
With the promise of cheap fees and big discounts on TikTok-funded products, Amazon sellers 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 like operations, marketing, creative partnerships, and brand safety.
According to market research firm ecommerceDB, TikTok Shop has become a huge e-commerce powerhouse 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 double 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 boost that in-app conversion since every other scroll is a Shop post, according to Caila Schwartz, Salesforce’s director of consumer analytics and strategy for retail and consumer products.
In a statement, Amazon spokesperson Mira Dix told CNBC that merchants are using the site more frequently and seeing more success than in the past. According to Dix, the company offers optional services to merchants, like fulfillment, which is typically 70% less expensive than similar two-day delivery options.
According to Dix, Amazon places a great deal of importance on its selling partners, and we strive to innovate on their behalf and help these companies expand and succeed across all of their sales channels.
Sarah Potempa, CEO of Beachwaver, does livestreams on TikTok Shop several times a week.
Looming deadline
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 services 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. TikTokhas filed a lawsuit to stop the action.
Donald Trump, the incoming president, might 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. In a March interview with CNBC’s Squawk Box, he acknowledged that the app has both positive and negative aspects.Around the time of his meeting with billionaire Jeff Yass, a significant ByteDance investor, Trump shifted his stance.
TikTok has mostly been conducting 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 holiday shopping to social media influencers and business owners. Since its September 2023 launch, users have purchased hundreds of millions of items on the e-commerce platform, 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 almost nine years in a number of departments, including its third-party marketplace.
In October, Le Bourgeois told CNBC that TikTok Shop isn’t attempting to sell to everyone. He went on to say that TikTok Shop is a platform for product discovery that highlights fresh, hip, and intriguing products from both large and small firms.
You see it, like it, and purchase it. He answered, “It’s not a search.” It’s a completely new 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.
According to the representative, TikTok is how the producers and dealers here make a living. We will continue to be present for that. We have a fantastic opportunity.
‘Enjoying it while it’s hot’
This holiday 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 from 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 goods. Within two hours of going 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 platform.
As a company that heavily depends on TikTok, it is impossible to ignore the discussion surrounding a possible ban in the United States. However, Rachel Cheng, co-founder and COO of Yay’s Snacks, 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.
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’s, regularly makes amusing TikTok videos to promote his snacks, which are made using his grandmother’s original recipe. A series that mimics the television program Undercover Boss is one of the videos. According to Cheng, the videos helped Yay’s gain tens of thousands of TikTok fans who continue to purchase the jerky.
At one point, TikTok sales comprised nearly 90% of Yay s total revenue, with monthly sales from the app peaking at $75,000 last November, Cheng said. Yay s is prepared to divert to Amazon andits own websiteif TikTok is banned, but as long as TikTok is still here, we re going to do what we can to stay on top, Cheng said.
We wouldn’t have joined TikTok Shop if we were sitting here contemplating our next move, Cheng stated. We’re taking advantage of the heat.
Competing with Amazon
Scrub Daddy, known for its smiley face-shaped sponges, went viral on TikTok during the Covid pandemic and counts more than 4 million followers. Itstop video, a demonstration of its Damp Duster sponge, has 30 million views while its bestselling product on TikTok Shop has been purchased nearly 76,000 times, according to the app. That figure doesn t account for items that have been returned after purchase.
After kicking off in 2012 with an appearance on Shark Tank, Scrub Daddy CEO Aaron Krause said he lost faith in traditional marketing efforts.
We did a TV ad, we did some outdoor ads on billboards, we did a little bit of radio, Krause said. All I found was that I was throwing money into the air.
The company pivoted toward social media marketing, primarily on Instagram, which turned out to be a pot of gold, Krause said. Scrub Daddy set up an account on TikTok in 2020 and worked with influencers to promote its products, includingVanesa Amaro, a popular account for housecleaning content with more than 5.7 million followers. After Amaro recommended the sponges to her viewers, Scrub Daddy sold 30,000 units in one weekend, Krause said.
TikTok s algorithm just allows you to hit millions and millions of views with one hysterically crazy video, he said.
In recent months, TikTok has encouraged retailers and sellers to host hourslong livestreams multiple times per week as a way to connect with shoppers. Many brands have invested in building out their own studios to record the shows or have hired talent to host them.
Scrub Daddy snatched uplongtime QVC host Dan Hughesafter he was laid off from the home shopping company in 2023. Others, like Beachwaver, have turned their CEOs into on-screen talent.
TikTok Shop was a big topic of conversation at a conference for Amazon sellers in New York in October. A session on how to scale your brand with TikTok Shop drew a packed room of sellers who listened to e-commerce strategistRafay MHtalk up the potential for brands to haul in $8 million to $10 million in sales from TikTok in less than a year.
Amazon comes with a ton of competition, MH said. TikTok is the opportunity for free eyeballs and sales.
Many Amazon sellers have embraced TikTok after they were initially slow to join the platform, said Michelle Barnum Smith, who provides consulting services to online businesses.
I was the bedraggled gold miner standing on the street corners of New York, saying There s gold in those hills, and people were like, Yeah, sure, Barnum Smith said But as soon as they started seeing their competition on there, or their buddy on there, they were like, I ve got to get on there.
There s now extreme FOMO, or fear of missing out, among Amazon sellers to join TikTok even if it no longer exists in the U.S. next year, Barnum Smith said.
Whatever the future looks like for TikTok Shop, they re happy to take that money now and get while the getting s good, Barnum Smith said.
Disclosure: CNBC owns the exclusive off-network cable rights to Shark Tank.
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