US spending on TikTok Shop shoots up as app faces threat of ban, data shows

New York: US TikTok users spent heavily to buy merchandise from a range of vendors on the e-commerce platform TikTok Shop so far this holiday shopping season, according to TikTok estimates and a Reuters analysis of spending patterns measured by data from Facteus.

The patterns show that TikTok Shop, which launched in the US in September 2023, has likely gained market share in e-commerce at a critical moment. TikTok Shop serves as an e-commerce channel for major brands such as e.l.f. Cosmetics, Ninja Kitchen, among other products.

TikTok Shop said in a press release in late November that its sales had reached $100 million on Black Friday, the day after Thanksgiving, when bargain-hunting American consumers spent heavily online. Previously, it said the number of people purchasing goods on TikTok Shop each month had nearly tripled. Reuters could not independently verify its claims.

A US federal appeals court on Friday upheld a law requiring Chinese-based ByteDance to divest TikTok in the US by early next year or face a ban. A ban of the popular short video app, if it happens, could extend to TikTok Shop, too.

"TikTok Shop is a new distribution channel and brands are doing really well on it," said Erik Huberman, CEO of marketing agency Hawke Media, which has clients that sell products through the feature. "Honestly, there isn't an alternative. It will be a lost revenue stream."

Like its rivals Shein and Temu, TikTok Shop showcases merchandise from third-party vendors, some which ship items from China, competing fiercely on price. Each of the platforms have tried to lure more US sellers with lower fees to help with shipping speeds.

Capitalizing on the popularity of the TikTok social media app, TikTok Shop merchants typically use ads and sponsored "influencers" to market their products to TikTok's 170 million US users.

Merchants on TikTok Shop fulfill shoppers' orders directly, sometimes using third-parties or TikTok's e-commerce fulfillment services.

For shoppers like Jasmine Whaley, 31, of York, Pennsylvania, TikTok Shop has provided a new place to find clothes, skin care products and Crocs. She's spent almost $700 on the platform this year after seeing videos from influencers and advertisers about merchandise.

TikTok has "cracked the code" on curating content and products that she likes, Whaley said. Her TikTok Shop orders often are delivered to her more quickly than orders she places on Amazon, she said.

For merchants and influencers, TikTok Shop offers what it calls "LIVE," live-video streams from which shoppers can purchase merchandise directly.

Nico Le Bourgeois, head of US Operations for TikTok Shop, said in a statement to Reuters that the number of Live sessions hosted monthly has nearly tripled over the past year in the US.

According to third-party data firm Facteus, US spending on TikTok Shop exceeded spending on Shein and Temu in the seven days leading up to Cyber Monday, Dec. 2, a heavy online shopping day. Facteus said its data comes from 140 million consumer debit and credit cards representing 7% to 10 per cent of all US spending.