The possibility of converting brand awareness on Tik Tok into sales as consumers discover and check out products on one platform is high.
In April 2024 TikTok Shop is barely six months old – but already it’s a marketplace to which retailers must pay attention. Due to the number of active users, the app can encourage discovery-based shopping through features such as live shopping events, adverts and affiliate content created by anyone with more than 1,000 followers on the app (5,000 in the US). TikTok Shop therefore provides a substantial sales opportunity for retailers. Its commission-based structure is a win-win for both content creators and retailers, which is undoubtedly helping to propel the popularity of shopping on the platform.
TikTok itself only gained real traction in 2020 at the start of the Covid-19 pandemic, and has since become an incredibly popular and important social platform – signalling the growth potential of its marketplace which launched in the UK and the US in September 2023. GlobalData’s 2023 global survey found that 33.5% of consumers use TikTok (excluding those in China), making it the fourth most used social media app after Facebook, Instagram and YouTube, overtaking X (Twitter).
17.5% of TikTok users globally (excluding China) stated they would shop via social media platforms more frequently in the next three months. This was the the highest of the five major social media platforms (Facebook, Instagram, YouTube, X and TikTok). Although it is unlikely that TikTok Shop will seriously compete with key online marketplaces such as Amazon and eBay anytime soon, it is something to keep an eye on.
There is a significant opportunity for retailers to gain sales by leveraging content they will already be making for their social platforms, creating more spontaneous sales than they would be able to achieve on other marketplaces where browsing is harder. The possibility of converting brand awareness into sales as consumers discover and check out products on one platform could be very high.
But there is some cause for caution on the potential influence of TikTok on retail. The possibility that the app may be banned in the US would change the way retailers there interact with it, and with other social media platforms. GlobalData’s survey found that 40.9% of US consumers stated they will never shop via social media apps and 34.8% of consumers worry about how much of their personal data retailers are holding, echoing the general distrust of these sites in the US among consumers as well as politicians. This makes TikTok a potentially less lucrative option for retailers in the US.
Recent developments and additions within TikTok Shop are helping to quash distrust of the new platform. In April 2024, TikTok UK announced it is partnering with reputable resale players Luxe Collective, Sellier, Sign of the Times, HardlyEverWornIt and Break Archive, helping it take on major luxury resale marketplaces. This enables discovery-based shopping for these brands, while also building user trust in TikTok Shop and helping TikTok gain authenticity and sustainability credentials through association with these brands. This builds on other recently launched categories in the marketplace including fresh flowers and live plants, allowing an increasing number of retailers in different sectors to use the platform.
While social networks have struggled to make an impact in retail, the innovation that TikTok has shown to date means that preparing a TikTok Shop strategy alongside their pre-existing social strategies should be a priority for retailers wanting to capitalise on this rapidly growing platform.
Source from Retail Insight Network
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