How TikTok Shop is winning over major brands

0:09Hello and welcome to the Modern Retail Podcast, our show that covers the ways the retail industry is changing and modernizing. I'm senior reporter Gabriela Barkho. I'm here with my co-host Melissa Daniels. Today, we're talking about TikTok Shop. Specifically, we're getting into the major growth that we're seeing on the platform, fueled in part by big name brands finally joining, like Ulta and Sally Beauty, among others, which both joined in March. TikTok Shop officially launched in 2023 and since then it's become a huge growth engine for startups looking to tap into young, trendy audiences. But now it seems like everyone is popping up there.

0:57Here with us today is Modern Retail's Alison Smith, who covers TikTok Shop and is going to be talking to us about all the ways that the platform has evolved in the last couple of years since its launch.

1:11Melissa Daniels:Allison, welcome to the show. Thanks for having me. Thank you so much for being here. I can't wait to hear more about what you've been reporting on in this space. Your stories are always really salient and breaking a lot of news about what is a very emergent space. You had recently caught up with TikTok shop representatives at Shop Talk earlier this year in Vegas. Your story from that showed that sales from big name brands, which is qualified as those with at least$30 million in annual revenue increased 97 % year over year on TikTok Shop. I feel like that's really telling that this is a big focus for them.

1:49Yes. So this is a trend that's actually been building for a while. Sales from big name brands that most households would recognize had been growing on the platform last year. and the data they shared with me at ShopTalk really just solidified this trend. And it just reflects the fact that more brands are taking the platform more seriously and seeing it as a real sales channel.

2:19Melissa Daniels:Yeah, that makes a lot of sense. And I think that's why we're seeing so many more brands come on because they see the growth and it's starting to be one of those places where they're asking themselves, hey, is this an opportunity to drive more sales and get more customers? Just for some context, TikTok Shop has now made up nearly 20 % of social commerce, according to eMarketer. That's an area that's traditionally been dominated by Meta's Facebook and Instagram. And so seeing TikTok Shop become a major player in social commerce overall, or at least a bigger player, I think is starting to catch the eye of retailers who maybe were once averse to something that seemed really experimental.

3:02Melissa Daniels:But I'd love to hear from you, Allison, on why we're seeing more brands head to TikTok shop. Why some of these bigger name brands like Ulta, Sally Hansen are getting onto TikTok shop and selling there? Yeah, it's a good question. And I think the long and short of it is just simply that TikTok shop has proven itself as a shopping destination. When it first launched in September 2023, it was still new. It was nascent. it hadn't really proven itself as a place where consumers would go to buy things. They were definitely there watching, I don't know, dance videos during the pandemic, but there wasn't much data to support actual shopping intent or behavior.

3:43And something that TikTok shop executives actually told me when I caught up with them at ShopTalk last month was that TikTok shop also logged more than 103 billion U.S. searches with e-commerce intent in 2025. And transaction volume rose nearly 80 % year over year. So that tells you that people are going to this platform to buy things, not just to be entertained. And I guess ideally, it's a bit of both. So I think that's really the main reason. Yeah, Alison, you know, we all talk to brands every day. And I'm curious what you're hearing, but something I constantly hear is that the sort of like something that you would maybe call an impulse purchase or something on the lower end maybe of price points are doing a lot better.

4:36I think we saw that the top categories are like beauty and wellness, for example, or beauty and personal care. So is there a reason for that? And what other categories do you feel like are standing out right now that are doing well? I know food is another one that I'm hearing a lot about these days. Yeah. So I think impulsivity and price point both have a lot to do with it. You already pointed out that beauty and personal care are really the winning categories on TikTok shop. And there's a few reasons for that. One, they just tend to be a lower price point. And they're also really well suited for an impulse purchase.

5:16You know, if I'm consumer on the TikTok app and I see an influencer I follow who I admire telling me about this new product and maybe she has the same skin concerns with me or what have you, I just might impulsively click on that link and buy that product for myself because, again, it's not a big price commitment. And I think that's really well reflected, too, in the fact that recently two really big retailers joined TikTok shop and opened their own storefronts on the platform, and that is Ulta Beauty and Sally Beauty. And the fact that these are the first two retailers to join the platform, and they're both specialized in beauty, says a lot about what's popular on the platform.

6:00But to your other question, beauty and skincare are by no means the only popular categories. TikTok shop has also recently made a concerted effort to drive more beverage and food sales on the platform. And electronics are also big, I think. Like last year, Samsung actually joined the platform as well. Yeah. Speaking of some of the retailers, Alta, Sally Hansen that you mentioned that have joined recently. We have been wondering, you know, whether the playbook changes when you are, you know, this like multi-billion dollar retailer versus like, you know, I often speak to like startup founders, you know, maybe like a three or four person company where one person is in charge of the TikTok shop content.

6:53I guess this episode is really going to be focused on like, how is that scalable? Like, how do you adapt that playbook that's been working the last couple of years to something like, I don't know, maybe one day like Walmart or a Target. So yeah, I don't know. Melissa, what are your thoughts here? Because I know you've also spoken to brands about this.

7:14Melissa Daniels:Yeah, I mean, just going off of what Allison was sharing about the categories, I feel like there's an intrinsic link between the kinds of products that sell well and the kinds of content that people want to watch on TikTok. Like when I think TikTok, I love watching sort of get ready with me or makeup videos. And, you know, recipes are also a really big thing, which I think is playing into that rise of food. People also consume a lot of fitness content on TikTok, which explains why health and wellness related products are doing well. And I think that's a part of the playbook that no matter the size of your brand, you can kind of find your people, especially when we start to think about how much of this is being driven by affiliates or user generated content, or even brand content.

7:57Melissa Daniels:But you know, I've heard from brands that it's like you don't necessarily have to have a huge organic following in order to do well on TikTok shop based on how you position yourself. I think we're also seeing brands experiment with TikTok shop just to see like what works. One surprising company that's on TikTok shop, or it surprised me anyway, is ThredUp. You know, it's a peer-to-peer resale platform. They are already their own marketplace in a way. And yet they have started selling their quote-unquote sellout kits on TikTok shop, which are the kits consumers can use to send in their old clothes and ThredUp will sell them for them.

8:38I thought that was a really interesting example of how different brands that you really might not expect to be on TikTok shop are testing to see what works.

8:46Melissa Daniels:Yeah, I think that's fascinating too. We talked to Kristen Brophy recently from ThredUp at our Modern Retail Marketing Summit. And she talked a little bit about that. And basically, the brand figured out that the cleanout kits could do well because, you know, paid ads weren't really working for them on the platform. That wasn't doing much. But then they found this other way where, hey, you can clean out your closet and get some credit for your old clothes through ThredUp. That messaging kind of worked. And I'm thinking, well, you know what, gosh, there's got to be a lot of people scrolling TikTok for like organizational content or secondhand content or, you know, curated closet content.

9:25Melissa Daniels:And so if you're plugging into those hashtags and those creators, you can sort of find people that will funnel into your clean out kit sales. Yeah. Speaking of, maybe this is a good time to talk about the strategies that are working to drive sales, which Allison, maybe you can talk a little bit about how that's evolved in the last couple of years. Maybe something that was working in 2023 is not anymore. But, you know, we have the main buckets are affiliate, which are usually the creators on the platform that are pretty much selling on behalf of the brand. There's also incentives from TikTok shop itself and like other subsidies like discounts, for example.

10:07And then, of course, you've got the live streaming, which is the sort of like QVC-esque social commerce format that a lot of brands are testing. That one obviously takes a little bit more effort because you do need to set up lives and, you know, you have to basically host these sessions. But yeah, how do they all differ, I guess? And how can brands, I guess, utilize each of them or maybe a blend of all? Yeah, I guess I'll start with the subsidies part first, because that was one of TikTok shop's earliest strategies just to, they were new marketplace and they needed to get brands of any kind and size onto the platform.

10:43And the way you do that is by attracting them with subsidies, like, you know, we'll pay for your shipping or we'll pay for your discounts, that sort of thing. And they've really scaled back those efforts now that the platform is a lot more mature and again, has really legitimized itself, improvement itself as a real shopping destination where real brands are now selling. And instead of offering subsidies, once TikTok shop started scaling that back, the strategy they really started leaning on was, like you said, Gabby, live streams and really encouraging brands to go live more. Before the live feature sales on TikTok shop were really about short form pre-recorded videos.

11:25And data shows that that's actually still the dominant way people prefer to buy products on TikTok shop. But TikTok shop has made a concerted effort to get brands to go live more. And this is where big brands and small brands differ in a noticeable way. Small brands are more likely to go live and sell products live than a bigger brand. Not to say bigger brands don't. Crocs is big on live streaming, live selling. So is Paxun. These are pretty young, hip brands. But in general, big brands are pretty wary of live streaming. And it makes sense. It's a new selling format that maybe these brands aren't as comfortable with or familiar with.

12:08There's a lot that can theoretically go wrong with the live stream. There's a lot that can be unplanned.

12:14Melissa Daniels:You can't have seven comms people monitoring your live stream and telling you what you can't say. Exactly. Yeah. That's not as efficient. Whereas if you're the founder, it's like up to you. Go live, right? Yeah, exactly. And for a lot of those small brands, like consumers and followers want to hear from those founders because that's who they have a sort of like maybe a parasocial relationship with. Yeah, we have a couple of examples of that where we recently spoke to brands that are, you know, sort of like small to medium size. Melissa, I believe you have heard from Portland leather goods about this, about why TikTok shop has been a winning format for them.

12:54I spoke to Behave, which is a candy startup recently that launched at Target where they were basically on the verge of bankruptcy two years ago. And the founder literally white knuckled it and started just posting videos every day for a month and started selling out their candy. and eventually buyers came calling. And so it's interesting that spectrum is really wide, right? And then obviously now you've got the altas of the world wanting to join this format. So it's going to be really interesting because like you said, that scrappiness, that like front-facing camera, the live selling, the interacting with the viewers is such a big part of TikTok shop.

13:37So it'll be interesting to see as it matures whether that unpolished look will stay intact.

13:44Melissa Daniels:Yeah, I think that that is really something to watch. When I spoke with Portland Weather Goods about their TikTok strategy that they really leaned into this spring, one of the first questions I asked them was, well, why now? You know, this has been around for a minute. And basically they had their eye on the platform, but they wanted to make sure that when they decided to go into TikTok shop and really start trying to make it a sales channel or even just an awareness driver, they had, you know, a real strategy. So they basically made like an army of content creators and an affiliate strategy. And that they really gamified that affiliate strategy, right?

14:21Melissa Daniels:And they said, okay, we're going to have a one-week blitz where we're going to have contests. People who get X amount of views first are going to get X amount of dollars, you know? And they had people who already loved the brand and already had their own products that They didn't even have to seed. So that I thought was really sharp because it's like, let's start strong and go from there. I mean, they had made, you know, a million dollars of sales within 20 days of starting that blitz, if I remember my reporting correctly. And, you know, that's after doing like, you know, just a few thousand without any marketing.

14:55Melissa Daniels:Right. So there's big changes that you can make once you put a little strategy behind it. But your point about it being unpolished or, you know, just more authentic, you know, more content creator, front-facing camera, selfie style, that's what the affiliates do. And that's what they do best. And that's what works for them and their followers. And so I think brands are seeing that. You know, to that end, it's like I do think like many other sort of platforms or online digital experiments, there's a wait-and-see approach for the bigger brands. because they maybe have more to lose going on something that's a little more untested.

15:30Melissa Daniels:But it's like you can almost have a parallel track of where you see sales really starting to grow on TikTok shop and some of these more mature brands joining, right? Because they're seeing that it's working. And then they're seeing examples of how to just kind of like build out your network and find where your place is. I should have mentioned this earlier, but another really big reason as to why bigger brands, including retailers, are joining the platform is because the TikTok ban went away. It's no longer a threat. And that was a factor that was contributing to that wait and see approach. Yeah, I know.

16:00Melissa Daniels:It's like so obvious. I should have brought this up before, but I was like, oh, great. Yeah, there was like a whole year where we thought the platform was going to disappear or something like that, right? Yeah. A wait and see approach makes a lot of sense for, yeah, these big, giant retailers who are not going to just jump in to anything. I guess that brings me to the last portion of the discussion, which is like, what role is TikTok shop going to play in any brand's omni-channel strategy? because I don't know, I kind of get flashbacks to like Amazon, maybe five, six years ago, where there were a lot of brands that were just very staunch about, we're not doing Amazon, we're not doing Amazon.

16:44And then eventually they realized you have to do some sort of Amazon, right? If you're like a packaged goods brand, for example, or even a D2C brand. So I do wonder whether TikTok shop will go that way, where it will eventually just be a part of everybody's strategy. But I guess I wonder what role that is because sometimes I hear from marketers the other day I was talking to and it was like, you know, there's misconception that TikTok shop is a marketing channel, but they actually, some of them view it as a sales channel because of like, let's say the live selling aspect. So that bleeding or that overlap to me is so fascinating because if you're a brand, you have to figure out how to blend the two, right?

17:28Is this an awareness channel or is this like, we're going to get a million dollars in sales today because it's Black Friday kind of channel? There's many brands that got started on TikTok Shop. They are homegrown there. That's their native platform. And they've since grown and expanded elsewhere. But I think for a lot of the bigger, more established brands that are joining TikTok Shop, for them, it's just another sales channel for them. And maybe it started out as a marketing channel because of the viral nature of TikTok, the amount of social media users that are there. But I think brands do really see TikTok shop as a legitimate sales channel now, not just a marketing channel.

18:07And many of these brands that I talk to sell on Amazon and TikTok shop. And there's a halo effect that comes from selling on both because someone will see something on TikTok and they'll actually go to Amazon and get it. or at least that's something I consistently hear from brands.

18:24Melissa Daniels:Yeah, I think that's a great point, how you can use it as a sales channel, but it also is serving as this broader awareness and discovery tool that can ladder people into other areas of your business. You know, when I talked to Portland Leather, we talked about this point and it was like, well, you know, these more net new customers that you're seeing on TikTok shop versus your loyalists who are more DTC, right? But they're working to get that retention out of the TikTok shop buyer by sort of like offering them loyalty points where it's like, oh, you bought this on TikTok shop. But if you join a rewards program, we'll give you the points for that purchase in your rewards account to try to incentivize future purchases on D2C.

19:07Melissa Daniels:It's funny what you said about products going viral, too. They had had a bag that they released last year. That was a bit of a sleeper hit. you know only some people liked it didn't really crack the top top 10 but an affiliate did a video about it during their blitz and it totally popped off and then it was like in the top 10 sellers that week you know and long-time listeners of the modern retail podcast know I'm a PLG head so you know it was interesting to me because I was like oh yeah that like people weren't really like scooping up that bag it didn't sell out like others did but then because this affiliate video did really well, it created that halo effect of sales throughout the business.

19:48So I guess with that, what do you guys think the bigger brands joining TikTok shop will mean for all of these smaller like homegrown brands as Allison puts it? Like is the competition going to get bigger? Is it going to get more expensive like every other channel when bigger companies join. I am curious to see that dynamic because, you know, for the smaller startup-esque brands, I feel like, you know, this was their home turf for a long time. Yeah. I think both of those things are definitely true. I was actually at a TikTok shop event in, I want to say November. It was before the holidays. And I was talking to a brand that basically got started on TikTok shop and being on the platform just kind of turbocharged their business practically overnight, as TikTok Shop has been known to do for small brands.

20:38And we talked a little bit about how, you know, it's great that these big brands are joining the platform now because it legitimizes TikTok Shop as a platform, but it does make the platform obviously more competitive for these smaller homegrown brands. And so I think smaller brands are going to have to get a little more creative about how to stand out on the platform. And maybe a big part of that will also be retooling sort of the entertainment aspect of going live or the videos they post. Because that's something brands have been trying to figure out on TikTok shot too, is that it's just how to sell things over video.

21:13It's again, a pretty new concept here in the West. It's obviously big in Asia and it's gaining traction here, but obviously not as big. And so I think we'll see smaller brands just try to get more creative to stand out more in the algorithm. And then to your other point, bigger brands during the platform is already raising prices. I actually did a story about that a few months ago. So I got some data from this third-party e-commerce analytics firm, and it showed that year-over-year average unit prices were going up. And that was probably a reflection of bigger brands joining the platform, and maybe also to brands raising their prices because tariffs were a big concern last year.

22:03Melissa Daniels:well and maybe some of the um incentives that you referred to earlier some of those co-branded promotions kind of reaching their end life or not being as widely used um as they once were i mean i've never fully completed a purchase on tiktok shop before but i've explored it and the times that i've been really close to biting the bullet are times when it's like oh that's a brand i love and it's 50 % off if I buy it here right now. And those kinds of incentives, I think, did do a lot from a consumer standpoint as far as getting people comfortable using it. But now that they have a solid base, maybe those aren't going to be as widely used.

22:44Melissa Daniels:And then you'll see that price competition between the big brands and smaller brands again. Okay, well, the big question, is TikTok shop a must have or a nice to have channel for brands at this point? Now that we're all, you know, two and a half, three years in, I guess I'll go first to answer my own question. But to me, it's, it depends, I think what kind of brand you are, what category you're in. I remember speaking to, you know, a sort of higher end jewelry brand. I was like, maybe like a lab grown diamond brand that sell necklaces that, you know, go from like three to$300 to$1 ,000. They're like, oh, a TikTok shop barely even registers for us because it's just not a type of product that people buy on there, right?

23:32That's like a very considered purchase. You want to touch and feel before you, you know, impulsively buy at 2am. So that's what I mean by it depends on what kind of brand or retailer you are. But I'm curious to hear your thoughts. Well, you stole my answer, Gabby, because I was going to say the same thing. I agree with that. I think it's increasingly becoming a must-have channel the same way that I think for many brands, Amazon is a must-have or need-to-have channel. But we've seen plenty of brands still do well not selling on Amazon, and I'm sure the same will be true for a TikTok shop as well.

24:10Melissa Daniels:right yeah um i'm gonna stick with the nice to have category i think you know it's only a must if you have the resources to do it well right you know if you're a startup beauty brand and you have a really strong content creator engine and you know there's people who love your brand that you can get um you know as an affiliate or through affiliate platforms like yeah you should probably be on there and you'll probably have pretty good results if you can you know take those strengths and make them live. But I don't think it's something that will break, you know, a business that's been around for 10 years.