TikTok’s E-Commerce Foray in US: Rapid Growth Challenges Amazon’s Dominance

In a striking display of rapid expansion, TikTok’s online stores in the United States have surged to 30,000 as of October, a dramatic increase from just 5,000 in July, according to EchoTik data. This growth underscores the initial success of TikTok’s foray into the U.S. e-commerce sector, marking a bold challenge to Amazon’s dominance.

EchoTik’s analysis reveals that TikTok’s U.S. e-commerce market experienced robust growth in October, with total sales climbing from US$140 million in September to US$200 million in October, a 43% year-on-year increase. This surge, from a modest US$27 million in July, signals TikTok’s burgeoning potential in the U.S. market.

A notable strategy by TikTok involves the introduction of "local small stores" in the U.S., specifically designed to entice Amazon sellers with annual revenues exceeding US$2 million. Products ranked within Amazon’s top 100,000 are granted preferential visibility in TikTok’s marketplace. Approximately 20% of TikTok’s top sellers have migrated from Amazon, as per one seller’s observation.

"The initial wave of successful TikTok merchants primarily comprised Amazon’s cross-border sellers," noted a U.S.-based TikTok service provider. "TikTok’s platform offers cost-effective traffic acquisition and is currently incentivizing with attractive rebates and discounts."

American local brands are also carving out a significant niche on TikTok Shop. EchoTik’s data highlights The Beachwaver as TikTok Shop’s top-selling U.S. store in October. Previously ranked sixth in the beauty and care category in July, The Beachwaver’s sales have already surpassed the ten million dollar mark.

Founded by celebrity hairstylist Sarah Potempa, The Beachwaver, an American curling iron brand, boasts over a decade of history and a robust presence on social media platforms such as YouTube, TikTok, and Instagram.

In September, TikTok announced the U.S. launch of its e-commerce service, TikTok Shop. This development introduced a trio of store formats – local, cross-border, and fully managed – all competing for the attention of U.S. consumers.

A method for quickly creating popular products on TikTok in the U.S. involves connecting with hundreds of influencers and using an aggressive approach to rapidly gain popularity – if the seller distinctive products and sufficient inventory.

Many of the TikTok stores have cross-border operations. When TikTok Shop first opened its doors to cross-border merchants, most chose to use "virtual warehouses" for product testing and cost reduction.

"Virtual warehouse shipping" means shipping from China in small packages to the U.S., but the users only see U.S. logistics information. The main advantage of virtual warehouses is that they save on the storage costs of stocking goods in overseas warehouses, thereby reducing certain inventory risks. TikTok has been cracking down on this practice during the past couple of months.