And, what does this mean for Amazon?
In September 2023, TikTok Shop launched in the U.S. Nine months later, the social marketplace is expected to help generate $17.5 billion for the platform. So, who’s buying?
TikTok is great at transforming creative little videos into mass-consumed art, but it’s even better at math.
Take the ratios behind the launch of its TikTok Shop, which enables merchants to sell directly to TikTok users through the app. In September 2023, when the social platform introduced TikTok Shop in the U.S., it counted 150 million viewers here. Also, at that time, roughly 107 million U.S. consumers were shopping across all social commerce sites, according to eMarketer.
See the math? If a fraction of those 107 million social shoppers are on TikTok, they could become TikTok Shop customers. And if so, they could generate billions of dollars in revenue for the platform through the fees it collects from its merchants. Social commerce sales are projected to more than double to $144.5 billion by 2027 from $67 billion in 2023, eMarketer forecasts.
So, who are the buyers on TikTok Shop? Practically thinking, Gen Zers (ages 12 to 27) would seem the logical target. Nearly 45% of TikTok users are in this age group, according to Search Logistics. That’s potentially 75 million e-wallets (of Gen Z or their parents) – because, as of April, TikTok was up to 170 million U.S. users.
But here, the logic of math can be disrupted by ever-changing consumer preferences. Plus, there’s the possible nationwide ban TikTok faces, brought by U.S. lawmakers, if its China-based owner doesn’t sell it by January 2025.
Let’s break it down.
Sizing Up Social Shoppers, In 7 Findings
Regardless of fickle U.S. consumers and the legislative threat of a ban, TikTok remains optimistic about its ecommerce prospects. In 2024, the platform expects its U.S. commerce sales to rise tenfold, to $17.5 billion, Bloomberg has reported (citing familiar sources).
Are all those buyers members of Gen Z? No! The following are what the latest stats reveal.
- Most TikTok shoppers are existing - By February, 81.3% of TikTok Shop purchases were made by existing customers, up from 64% in November 2023, eMarketer reports. This suggests that shoppers have been satisfied enough with their purchases to become repeat buyers, and repeat buyers are turning into regular, loyal customers. This is crucially important to TikTok because the amount each consumer spends annually on social media shopping is expected to nearly double by 2027, to $1,224 from $628 in 2023, eMarketer predicts. TikTok’s recommendation algorithm is likely influencing these purchases. Could a rewards program for TikTok shoppers be next?
- Young Adults are, more likely than average, TikTok shoppers - Adults between the ages of 18 and 24 were 3.2 times more likely than the average consumer to buy something on TikTok Shop in 2023, research by Earnest Analytics shows. Those between the ages of 25 and 34 were 1.8 times more likely. As these consumers age, their app-based purchasing will probably influence where retailers and brands congregate. However, that influence might be taking shape now: Even shoppers in their 40s are more likely to buy things on TikTok Shop than the general population.
- TikTok shoppers are Fast Fashion buyers - When it comes to apparel, lower-priced items sell more quickly on TikTok Shop, further research by Earnest Analytics shows. In the 12-month period ending in February, 11% of TikTok Shop customers bought fast fashion, compared with 7% of the average shopper. TikTok shoppers also spent slightly more of their apparel budgets at off-priced department stores. It shouldn’t surprise us, then, that the value-priced retailers Shein and Temu share the most customers with TikTok Shop – 28% and 25%, respectively. Amazon shares just 12%.
- Still, TikTok Customers will shop Amazon Prime Day - However, one-quarter of daily Amazon shoppers have tried TikTok Shop, according to Capital One Shopping Research. Therefore, TikTok users will probably be comparing deals on TikTok Shop with those of Amazon’s annual Prime Day sales event this July. (Prime counts an estimated 167 million to 173 million members in the U.S.) So, who are Prime Day’s customers? In 2023, 58% of Gen Z and 53% of Millennials shopped the two-day sales bonanza, which generated more than $12.9 billion in sales. Just 40% of Gen X and 37% of Boomers did so.
- Wellness brands do well on TikTok - By the end of 2023, more than 500,000 merchants were selling to U.S. TikTok Shop users, Bloomberg reported in April. That’s more than double the number of merchants since TikTok Shop launched. A lot of these new businesses are brands selling products for the skin, face and body – 81% of TikTok Shop sales in the U.S. are in the beauty and health categories, according to Capital One’s research. E.l.f. Beauty and CosRx skincare joined TikTok Shop in 2024. TikTok could expand its U.S. consumer offerings by providing foreign beauty brands and creators a platform to sell in the U.S. (TikTok sellers pay commission fees to creators who promote their products.)
- TikTok could create a new Gen Z Holiday Channel - In TikTok Shop’s first U.S. holiday shopping season (2023), 5% of all American consumers shopped the site for gifts, Capital One reports. Among those millions of shoppers: 15% of all Gen Z and 8% of Millennials. Based on TikTok Shop’s user growth, the share of U.S. consumers who spend at least part of their holiday budgets on TikTok Shop will be noteworthy in 2024. Retailers, brands, and independent merchants that aren’t testing the platform yet could miss out on this seasonal opportunity.
- U.S. Adults are on TikTok more than YouTube - From 2021 to 2024, American adults have increased the amount of time they spend on TikTok from an average of 45.3 minutes to 58.4 minutes daily, Statista research shows. The added time comes at the expense of YouTube, where adults dedicated an average of 45 minutes in 2021 and 48.7 minutes in 2024. Netflix, meanwhile, has made slow gains – 62 minutes in 2024 from 60.5 minutes in 2021. Other streaming platforms, including Amazon Prime, are probably capturing these minutes, as well. Could Amazon Prime’s video advertisements, introduced in 2024, lead to direct purchases?
Meanwhile, the Ban lurks on TikTok Shop
These seven factors carry relevant influence, considering the elephant in TikTok Shop’s showroom: the possible ban the platform faces here if it’s not sold to a government-approved sponsor byJan. 19, 2025. In May, TikTok owner ByteDance filed a federal lawsuit against the U.S. government to block the action; a group of TikTok creators filed a similar suit soon after.
ByteDance has vowed to keep TikTok Shop going, and is even upping some of the fees it collects from participating merchants, to as much as 8% from 2%, The Information reported in January. The rate by mid-June ranged from 2.5% to 4.3%.
Despite the increase, TikTok apparently expects its 500,000 U.S. sellers to stick with it – some of them filed that lawsuit to block its ban, after all. And TikTok surely expects more sellers (and buyers) to join in, for that matter.
Whoever they are, they should hurry. Tick-tock.
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This article originally appeared in Forbes.
Forbes.com retail contributor Jenn McMillen is nationally renowned as the architect of GameStop’s PowerUp Rewards, and is Founder and Chief Accelerant of Incendio, a firm that builds and fixes marketing, consumer engagement, loyalty and CRM programs. Incendio provides a nimble, flexible and technology-agnostic approach without the big-agency cost structure and is a trusted partner of some of the biggest brands in the U.S.