TikTok Shop, a marketplace embedded within the app, hosts around half a million sellers, many of them small businesses. What does the reversal of the ban mean for them?
Over the past week the media has been flooded with stories from TikTok influencers and users, but there was another element in play: sellers on TikTok Shop.
Driven by the app’s popularity, TikTok’s ecommerce marketplace has grown rapidly since its launch in September 2023, attracting approximately 500,000 sellers who are making millions in sales per month, including $100 million in a single day on Black Friday 2024.
For many of these sellers, TikTok is their main or only sales channel and they have built their business around the app’s unique ecommerce platform which uses content rather than searches to connect with customers, and allows the 170 million users in the US to shop directly from videos.
TikTok Shop’s 2024 economic report said that the app drove $15bn in revenue for seven million small businesses in the US, and 88% of businesses say their business grew after promoting it on TikTok.
The challenge for these businesses is that no other platform matches what TikTok offers. Influencers might have been able to find a new home on a video-sharing platform like RedNote or YouTube, but sellers need a platform that combines videos with ecommerce – without this, the economic impact would be devastating.
The app went dark for approximately 12 hours on Sunday, but is now back up and running. We asked sellers to explain why TikTok is so important to their business.
“There’s nowhere else like it”
Alice Ochoa, owner of Texas-based D and A Beauty, has been selling on TikTok Shop for 18 months, and says the loss of the platform would have been huge. Although she sells on her own website, the majority of her sales are made through her TikTok business. “TikTok does a lot to promote stores and of course you can run livestreams” said Alice, “there’s nowhere else like it.”
Pitched as “social commerce” TikTok Shop offers shops a new way to sell, and one that can’t be easily replaced by another app. Sellers have built highly effective brands around a business model of engagement via video, followed by in-app sales of products promoted in their content.
Livestreaming, a feature that allows sellers to broadcast live videos in real time, takes this to the next level: in June 2024, TikTok Shop hosted its first $1 million livestream for one of its sellers.
The algorithm is “genius”
Mark and Alicia Powell run Champs Tea Shop, a business based in Mississippi, selling nutritional teas on TikTok. He employs nine people and sells on Etsy as well as his own website, but TikTok is his main channel.
They hit a milestone on Friday: their TikTok Shop had been running for 180 days and they have sold over $1.1m during that time. But they didn’t feel like it was something they could celebrate, with the ban deadline looming.
Mark puts his success down to the unique TikTok algorithm, “It is a genius piece of technology.”
Phenomenal growth
Akbar Ahsan, co-founder of Storfund, said “Growth on TikTok Shop in 2024 was phenomenal; we saw sellers apply for financing right up to the moment TikTok went dark, sellers were desperate to keep their TikTok Shops.”
Storfund’s financing is designed to help sellers restock faster and meet high demand. This autumn, sellers using Storfund experienced 11% sales growth on average, far outpacing the rest of the US economy.
Jordan Ellingson’s company Valley Chase in Minnesota was the first user of Storfund on TikTok Shop and he described the service as “game-changer”. Mark agreed, saying his business could have not reached their current sales revenue if it were not for Storfund’s advances and the release of their “on-hold” amount on 1 October.
Get in touch to find out how to get started with Storfund on TikTok Shop.
