TikTok Shop Overtakes Retail Heavyweights Shein and Sephora: A New Era of Online Commerce

TikTok Shop has remarkably positioned itself in the online retail landscape of the USA, leaving behind established players like Sephora and Shein. A recently published consumer trend study by Coefficient Capital and Dan Frommer from The New Consumer examined how American spending habits could impact various brands. Based on 11 surveys with more than 3,000 American consumers, the study shows that TikTok Shop, which made its US debut in September 2023, has gained a strong market presence. Notably, 80% of surveyed Americans who use TikTok at least once a month are already familiar with TikTok Shop, indicating the retailer's increasing reach. This reach has helped TikTok surpass big names like Sephora, Shein, and Qurate in the US consumer spending race in the third fiscal quarter. While Sephora and Shein are particularly popular among the younger generation, Sephora's parent company LVMH achieved significant success in 2023 with record sales of 10 billion dollars in North America. Shein, on the other hand, recorded profits of 2 billion dollars in the same year. Despite a revenue decline of 5%, Qurate, a major retail giant, managed to generate 152 million dollars in operating income. An investigation by the Financial Times in March cited sources stating that TikTok reached 16 billion dollars in revenue in the USA. However, it remains unclear how much TikTok Shop has achieved since its launch in 2023. In the 2024 fiscal year report, the platform reported bringing revenues of 15 billion dollars to small businesses in the USA. According to the report, 45% of surveyed TikTok users stated that they purchased 'fashion, clothing, and accessories' on TikTok Shop, while beauty and personal care products took second place with 44%. Electronics, household goods, food, toys, and books are also among the purchased items. In recent years, TikTok has established itself as a leader in shopping apps within the social media sector in the USA. ByteDance, TikTok's Chinese parent company, likely aims to replicate the success of its sister app Douyin, which often generates billion-dollar sales through influencer live streams. Nevertheless, TikTok, despite its growing popularity among content creators and consumers, faces a potential ban in the USA next month.