The Rise of Social Commerce: TikTok Shop

Since its launch in September 2023, the TikTok Shop marketplace has emerged as a formidable player, boasting major sales figures and capturing the attention of millions of users worldwide. 

In November, YipitData found that people spent an estimated $363 million on TikTok Shop in the US, up from $260 million in October. That’s a $4 billion annual gross merchandise value run rate, only months after its launch.

So why has TikTok Shop done so well? It’s interesting that as television shopping dwindles in popularity, this new, arguably similar version is thriving. In this article, Propeller will explore how TikTok Shop is transforming eCommerce. Learn about the integration of shopping features directly into its platform and the implications for traditional retailers and eCommerce giants.

What is Social Commerce? 

Social commerce describes the selling of products and services directly through social media. With social commerce, the entire shopping experience happens on the same app. That means customers move from product discovery and research to checkout, all on one platform.

Social commerce has become an unstoppable force, making its mark across all major apps: Instagram, Facebook and now TikTok. The birth and growth of social commerce dates back to the early 2000s, with Yahoo! And Facebook introducing it to the world. 

Facebook launched its marketplace in 2016, and welcomed a new wave of commerce: now known as social commerce. With Facebook Marketplace, brands can list their products and enable shoppable capabilities, making it possible for users to purchase goods directly within the platform.  It has been so successful that in 2024, over 485 million, or 16% of active users on Facebook, log in for the sole purpose of shopping on Facebook Marketplace.

TikTok’s Unique Position

The TikTok algorithm is a proprietary formula that decides which TikTok videos to recommend to each user. No two TikTok users will receive the same combination of TikTok videos on their For You Page, and this is down to a few factors:

• User interactions
• Video information
• Device and account settings

TikTok is a hotspot for viral trends and challenges, and this dynamically increases its impact as a shopping platform. A short video featuring a product can go viral overnight, leading to a sharp increase in demand. This phenomenon has given rise to the “TikTok made me buy it” culture, where users share their experiences with products they discovered on the platform. This, in turn, creates even more user-generated content that advertises an item. From skincare products and fashion items to quirky gadgets, TikTok’s power to create instant trends has fuelled a new era of impulse buying.

TikTok Shop enables sellers to sell products directly on TikTok through in-feed videos, Live videos, and the Showcase tab. Showcase is a feature that allows customers to shop directly from a seller’s or a creator’s account by displaying a shopping bag icon on the profile page of a TikTok account. This allows customers to browse products and shop brands or creator-listed products. You can use TikTok Shop and Showcase:

• As an official TikTok account, where Showcase will display all of your products.
• As a marketing TikTok account, where your showcase will display some or all of a brand’s products.
• As an affiliate TikTok account, where your showcase will display some or all of a brand’s products.

TikTok Shop has changed how people shop and how businesses approach digital marketing and eCommerce. By combining entertainment and shopping in a way that resonates with consumers, it has developed an unstoppable sales model. 

Changing Consumer Behaviour

TikTok Shop has significantly influenced consumer behaviour, particularly among younger demographics who are more engaged with the platform. One of the most noticeable changes is the rise of impulse buying. Unlike traditional ecommerce platforms, where users often shop with specific products in mind, TikTok Shop thrives on spontaneity. 

Short, engaging videos captivate viewers’ attention, making it easy for them to make quick, unplanned purchases directly through the app. This shift is largely fuelled by TikTok’s unique blend of content and commerce, where entertainment transitions into shopping opportunities.

Likes, comments, and shares act as endorsements, making products appear more desirable and trustworthy. When a video featuring a product goes viral, it creates a ripple effect, driving sales through the platform’s algorithm that amplifies popular content. 

Shift from Traditional Retail

TikTok Shop is challenging traditional retail models by offering an interactive shopping experience tied to social media trends. Unlike conventional retail, which often relies on static websites or physical stores, TikTok Shop provides a fluid and engaging environment where content and commerce blend into one. This model allows users to discover products in a context that feels more organic.

Brands are quickly adapting to this shift by integrating TikTok Shop into their core marketing and sales strategies. For many companies, TikTok is no longer just a platform for brand awareness but a vital sales channel. Businesses are investing in creating content that resonates with TikTok’s audience, using trends, challenges, and influencers to drive engagement and sales. 

Data-Driven Marketing 

TikTok’s success in the eCommerce space is heavily influenced by its data-driven approach to content recommendation and personalised shopping experiences. The platform uses sophisticated algorithms to analyse user behaviour, preferences, and engagement patterns, allowing it to deliver highly relevant content to each user. 

For businesses, this data-driven approach opens up new possibilities for personalised marketing. Brands can leverage TikTok’s insights to craft more effective campaigns, targeting users with content that is more likely to convert into sales. This level of personalisation can lead to higher engagement rates, improved customer satisfaction, and ultimately, increased revenue.

If you can’t beat them, join them? Particularly in consumer retail, it seems foolish to miss out on what a lucrative platform TikTok Shop has to offer both its sellers and customers. Here are some of the main challenges we have noticed:

• Competitive Pressure: The rise of TikTok Shop is putting additional pressure on traditional retailers and established ecommerce platforms like Amazon and Shopify. 
• Losing younger demographic: There is a clear shift in Gen Z’s approach to online shopping. If you’re not on TikTok, you’re likely to be losing their attention.
• Marketing struggle: Without a presence on TikTok, it’s likely that companies will miss out on the viral marketing effect of TikTok. 

The best solution to all of the above challenges of course, would be to start a TikTok account for your company, and invest in influencer marketing and UGC to inspire trust in your products. 

In Summary…

TikTok Shop is a truly revolutionary force in the realm of ecommerce. As social commerce continues to grow, the future of retail seems set of a TikTok trajectory. Though its only a matter of time before more competitive apps are created to knock this social media and commerce giant off of its throne. If you’re wondering what to do next with your social media strategy, our team of social media experts can create original campaigns sure to turn heads. Contact us today to learn more about our services.