Why Amazon sellers and retailers are flocking to TikTok Shop despite looming U.S. ban

Sporting a sparkly formal and a Santa chapeau atop her distinctly pinkish hair, Sarah Potempa stood successful beforehand of her smartphone astatine her haircare company's warehouse successful Waukegan, Illinois. It was clip to spell to work. 

Potempa is simply a personage hairstylist who goes unrecorded connected TikTok aggregate times a week. During "the packing show," arsenic she calls it, Potempa unrecorded streams herself arsenic she packs up orders of her viral Beachwaver curling robust for six to 8 hours astatine a time. 

The watercourse connected Nov. 20 had a enactment atmosphere, with Potempa taking breaks to creation to "In da Club" by 50 Cent successful betwixt shipping retired orders. To the much than 1,000 TikTok users who typically tune successful for Potempa's shows, this is amusement and buying each astatine once. 

Beachwaver is portion of a increasing influx of retailers that are flocking to TikTok Shop, the video app's buying service. TikTok Shop launched successful September 2023 arsenic a mode for users to acquisition products without leaving the app, and since then, the China-owned app has emerged arsenic a viable alternate for retailers looking to diversify their e-commerce concern from Amazon. 

Via a dedicated Shop tab, retailers large and tiny beforehand products of each kinds, ranging from eyeshadow palettes, telephone chargers, detox teas, treadmills and more. On TikTok, retailers typically connection generous coupons and escaped transportation wrong a fewer days. Shoppable posts, which look similar mean videos but are ads for products sold successful TikTok Shop, often look successful TikTok's main video feed, known arsenic the "For You" page. Those posts let users to acquisition products without exiting their For You feed.

On Potempa's show, shoppers contention to spot an bid to get a 50% discount connected Beachwaver products and escaped add-ons to their bid similar look washes oregon lipsticks, on with the accidental to person their username work aloud by Potempa portion she packs their bid connected screen.

"When TikTok Shop was caller and radical hadn't utilized it yet, they would ask, 'Is this connected Amazon yet?'" Potempa said successful an interview. "I would get those questions like, 'Can I bargain it determination else?' Now that it's been astir for a twelvemonth oregon so, we've done 1.2 cardinal orders."

ByteDance-owned TikTok has already cemented itself arsenic an advertizing powerhouse, and with TikTok Shop, the institution has been trying to carve retired different gross watercourse done e-commerce. The institution has attracted the likes of Nike, PacSun and Crocs, among others. Those retailers privation to pat into the much than 170 cardinal Americans connected TikTok that store connected impulse arsenic they scroll done videos. 

They aren't the lone ones. 

Amazon sellers are besides being persuaded to effort retired the work with promises of debased fees and steep discounts connected products footed by TikTok. Besides sellers, the institution has besides hired endowment distant from Amazon, filling cardinal roles for TikTok Shop successful areas similar marketing, creator relationships, marque safety, class managers and operations.

In the 15 months since its launch, TikTok Shop has emerged arsenic a "massive e-commerce machine," according to ecommerceDB, a marketplace probe firm. EcommerceDB predicts that TikTok Shop volition much than treble its gross merchandise volume, oregon the dollar worth of items sold connected its marketplace, to $50 cardinal this year. That's a fraction of Amazon's 2024 expected GMV of $757 billion, but nonetheless, TikTok Shop is making strides.

"Every clip you scroll, each different scroll is simply a Shop post, truthful they're making a batch of concern to promote that in-app conversion," said Caila Schwartz, Salesforce's manager of user insights and strategy for retail and user goods.

Amazon spokesperson Mira Dix told CNBC successful a connection that sellers are engaging with its store "more than ever before" and seeing greater success. Dix said the company's services for sellers are optional, specified arsenic fulfillment, which costs "an mean of 70% less" than comparable two-day shipping alternatives.

"Our selling partners are incredibly important to Amazon, and we enactment hard to innovate connected their behalf and enactment the maturation and occurrence of these businesses crossed each of their income channels," Dix said.

TikTok's e-commerce propulsion comes astatine a precarious infinitesimal for the company. 

In April, President Joe Biden signed a law that requires ByteDance to merchantability TikTok by Jan. 19. If TikTok fails to chopped ties with its genitor company, app stores and net hosting services would beryllium prohibited from offering the app, amounting to a nationwide prohibition successful the U.S. TikTok has sued to artifact the measure.

President-elect Donald Trump could rescue TikTok from a imaginable U.S. ban. After trying to instrumentality a TikTok prohibition during his archetypal administration, Trump reversed his stance, acknowledging successful a March interrogation with CNBC's "Squawk Box" that "there's a batch of bully and there's a batch of bad" with the app. Trump changed his presumption astir the clip that helium met with billionaire Jeff Yass, who is simply a large capitalist successful ByteDance.

As the January deadline grows nearer, TikTok has mostly been operating its concern arsenic usual. 

Executives from TikTok Shop pitched its marketplace arsenic a vacation buying destination during an October lawsuit successful Manhattan with concern owners and societal media influencers. Users person shopped hundreds of millions of units connected its e-commerce level since launching September 2023, said Nico Le Bourgeois, TikTok Shop's caput of U.S. operations. Le Bourgeois, who joined TikTok successful August 2023, antecedently spent astir 9 years at Amazon in a assortment of divisions including its third-party marketplace.

TikTok Shop isn't trying to merchantability "everything to everybody," Le Bourgeois told CNBC successful October. TikTok Shop is simply a marketplace for merchandise find that surfaces "new, cool, interesting" items from large and tiny brands, helium added.

"You spot it, you similar it, you bargain it. It's not a search," helium said. "It's a precise antithetic mode of shopping."

Le Bourgeois declined to remark connected the looming TikTok ban, but a institution spokesperson astatine the lawsuit said TikTok Shop isn't slowing down.

"The sellers here, creators, they're gathering their livelihoods connected TikTok," the spokesperson said. "We're going to proceed to amusement up for that. There's a immense accidental for us."

More Americans are expected to crook to TikTok and different China-linked apps for acquisition buying this vacation buying season. 

Roughly 63% of Western consumers program to acquisition from Chinese buying apps during the season, according to Salesforce. That includes TikTok, Alibaba's AliExpress, Shein, Temu and accelerated manner institution Cider.

On Saturday, TikTok said its U.S. Black Friday income topped much than $100 million, with location goods, manner and quality products among the astir fashionable categories. Canvas Beauty, a apical seller of haircare and quality products connected TikTok Shop, deed $1 cardinal successful income wrong 2 hours of going unrecorded connected the app, the institution said.

Retailers and sellers, immoderate of which number TikTok arsenic the lion's stock of their online sales, told CNBC they're sticking with the level contempt the anticipation that it could disappear.

Although it's intolerable to disregard the speech astir a imaginable TikTok prohibition successful the U.S. arsenic a marque that heavy relies connected the platform, Yay's Snacks COO and co-founder Rachel Cheng said she's not convinced that TikTok volition spell distant nether the Trump medication due to the fact that it doesn't look to beryllium the president-elect's main focus.

Yay's Snacks, which makes crispy Cambodian beef jerky, was 1 of the earliest companies to articulation TikTok Shop erstwhile it launched. Yay's CEO and laminitis Marlin Chan, a erstwhile YouTuber, often posts humorous TikTok videos promoting his snacks, which are based connected his grandmother's archetypal recipe. Among the videos is simply a bid that parodies the amusement "Undercover Boss." Those videos helped Yay's amass tens of thousands of TikTok followers, who support buying the jerky, Cheng said.

At 1 point, TikTok income comprised astir 90% of Yay's full revenue, with monthly income from the app peaking astatine $75,000 past November, Cheng said. Yay's is prepared to divert to Amazon and its ain website if TikTok is banned, but arsenic agelong arsenic TikTok is "still here, we're going to bash what we tin to enactment connected top," Cheng said.

"If we were sitting present worrying astir what's next, we would've ne'er gotten connected TikTok Shop," Cheng said. "We're enjoying it portion it's hot."

Scrub Daddy, known for its smiley face-shaped sponges, went viral connected TikTok during the Covid pandemic and counts much than 4 cardinal followers. Its apical video, a objection of its Damp Duster sponge, has 30 cardinal views portion its best-selling merchandise connected TikTok Shop has been purchased astir 76,000 times, according to the app. That fig doesn't relationship for items that person been returned aft purchase.

After kicking disconnected successful 2012 with an quality connected "Shark Tank," Scrub Daddy CEO Aaron Krause said helium mislaid religion successful accepted selling efforts. 

"We did a TV ad, we did immoderate outdoor ads connected billboards, we did a small spot of radio," Krause said. "All I recovered was that I was throwing wealth into the air."

The institution pivoted toward societal media marketing, chiefly connected Instagram, which turned retired to beryllium a "pot of gold," Krause said. Scrub Daddy acceptable up an relationship connected TikTok successful 2020 and worked with influencers to beforehand its products, including Vanessa Amaro, a fashionable relationship for location cleaning contented with much than 5.7 cardinal followers. After Amaro recommended the sponges to her viewers, Scrub Daddy sold 30,000 units successful 1 weekend, Krause said.

TikTok's "algorithm conscionable allows you to deed millions and millions of views with 1 hysterically brainsick video," helium said.

In caller months, TikTok has encouraged retailers and sellers to big hours-long unrecorded streams aggregate times per week arsenic a mode to link with shoppers. Many brands person invested successful gathering retired their ain studios to grounds the shows oregon person hired endowment to big them. 

Scrub Daddy snatched up longtime QVC big Dan Hughes aft helium was laid disconnected from the location buying institution successful 2023. Others, similar Beachwaver, person turned their CEOs into on-screen talent.

TikTok Shop was a large taxable of speech astatine a league for Amazon sellers successful New York successful October. A league connected "how to standard your brand" with TikTok Shop drew a packed country of sellers who listened to e-commerce strategist Rafay MH speech up the imaginable for brands to haul successful $8 cardinal to $10 cardinal dollars successful income from TikTok successful little than a year. 

"Amazon comes with a ton of competition," MH said. "TikTok is the accidental for escaped eyeballs and sales." 

Many Amazon sellers person embraced TikTok aft they were initially dilatory to articulation the platform, said Michelle Barnum Smith, who provides consulting services to online businesses.

"I was the bedraggled golden miner lasting connected the thoroughfare corners of New York, saying 'There's golden successful those hills,' and radical were like, 'Yeah, sure,'" Barnum Smith said "But arsenic soon arsenic they started seeing their contention connected there, oregon their buddy connected there, they were like, 'I've got to get connected there.'"

There's present "extreme FOMO" among Amazon sellers to articulation TikTok adjacent if it nary longer exists successful the U.S. adjacent year, Barnum Smith said.  

"Whatever the aboriginal looks similar for TikTok Shop, they're blessed to instrumentality that wealth present and get portion the getting's good," Barnum Smith said.

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