Ralph Lauren, Olaplex, Ultra Beauty: They are among the highest profile brands in fashion and beauty who have begun selling on TikTok Shop, following such early adapters as Crocs and L’Oreal.
“You want to be where the consumer is, and increasingly, that’s obviously on social media and online,” Olivia Tong, a managing director at Raymond James, told the Wall Street Journal in a recent report on TikTok Shop.
The platform debuted in the U.S. in late 2018 and has surged in popularity ever since. Consumers’ spending on the platform was up 46 percent in the first three months of this year compared with the previous year, the WSJ said, citing research from data provider Consumer Edge.
While TikTop Shop is often perceived as a way to reach younger shoppers, this new data shows that older demographics were the fastest-growing segments early this year, with spending growth by those 45 and older outpacing younger users.
TikTok Shop reported $4.9 billion in U.S. sales during the first quarter, nearly doubling its volume from a year ago, according to e-commerce data provider Charm.io, the Journal reported.
Even with that growth TikTok Shop represented only about 1 percent of overall retail sales and just 3 percent of e-commerce spending in the six months ended March 22, Marshal Cohen, chief retail adviser at market-research firm Circana, told the WSJ. However, he said its share of market could reach 10 percent by 2028. “The consumer clearly has adopted TikTok as one of the few spaces of discovery and brand association,” Cohen said.
The Journal cautioned that the platform still faces a number of obstacles, including political when it comes to its relationship where it started, although it is now operated by a U.S.-based owner.
“Profitability is another sticking point,” the WSJ reported. “Analysts wonder whether TikTok’s culture of impulse buying might require heavy discounting to convert scrollers into customers. Constant promotion could also eat into retailers’ margins more than sales from traditional web storefronts, they said.”
TikTok Shop appears today to have enormous upside potential for brands wanting to use social media to sell. But that potential may eventually peak as it has for previous booming online platforms.