Reimagining Retail: How TikTok Shop Alters Livestream Shopping If It Stays, and What Happens If It Disappears

On today's podcast episode, we discuss how TikTok Shop has changed the way people shop on social media, how the brands who sell on the platform will be impacted if TikTok goes away, and what they should be thinking about next. Listen to the conversation with our Senior Analyst Sara Lebow as she hosts Principal Analyst Sky Canaves and Vice President and Principal Analyst Jasmine Enberg.

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Episode Transcript:

Sara Lebow (00:00):

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Hello, listeners. Today is Wednesday, February 5th. Welcome to Behind the Numbers: Re-imagining Retail, an eMarketer podcast made possible by Zeta Global. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Sara Lebow. Today's episode topic is the state of TikTok Shop. Before we get into that complicated topic, let's meet today's guests. Joining me for this episode, we have retail podcast regular, our analyst, Sky Canaves. Hey, Sky.

Sky Canaves (00:50):

Hi, Sara.

Sara Lebow (00:51):

Good to have you. Also with us, someone who's not on the retail podcast as often, but we love to have her, it's Jasmine Enberg. Hey, Jasmine.

Jasmine Enberg (00:59):

Hey, Sara. Hey, everyone.

Sara Lebow (01:01):

Welcome back. Okay, let's get into it. TikTok was set to be banned in the US on January 19th. The app even shut down briefly in what, to me, felt very clearly like a publicity stunt. The president, then, signed an executive order allowing for a 75-day extension on the potential ban, which leaves us here in this confusing, limbo period. There's so much to say about the ban, that we could not possibly get to in this episode. I want to look specifically at TikTok shop and where we're at. So, my question is, if TikTok does go away in those 75 days or sooner or further, how would it impact the brands that sell on TikTok shop? Sky, why don't you go first with this one?

Sky Canaves (01:44):

Sure, so I think it really depends on the brand, their size, and how much sales they're generating from TikTok shop already. There are some smaller brands that have been early adopters on TikTok shop. They've gone all in, and they've become very successful and even become top sellers in their categories. One is like Guru Nanda pulling oil, Halara, as activewear brand, is another. So, these would be among the most vulnerable, and then there are much larger brands like PacSun and Tarte Cosmetics, that have established a successful presence on TikTok Shop and also sell a lot, but they have many more options in terms of how they can reach customers. They would take a smaller hit, and then there are a lot of brands, I think, that don't sell on TikTok shop or have just started to, and some of those brands might be pausing or waiting to see if it's really worth investing in the channel, because there's no point in making that big investment, both in time and resources, for a channel that may not survive or that could pose brand safety risks, even if it does.

Sara Lebow (02:52):

Yeah. Halara is a good example. They're sort of like, my understanding is kind of like a Gymshark like Activewear brand. I've been seeing them a lot more in Instagram ads as well, so I think it's clear that they're trying to have a presence outside of TikTok shop as well.

Sky Canaves (03:08):

Right, and that's wise. I think everyone is looking at their alternatives right now to anticipate both an audience migration and a creator migration, as well as the brand migration.

Jasmine Enberg (03:20):

Yeah. I think that's right. I think that's true for brands that sell on TikTok shop or any brand that uses TikTok in any capacity whatsoever. I mean, they're all looking for alternatives and putting together contingency plans. I saw this article actually in the information the other day about an agency called Ghost Agency, which is specifically focused on TikTok shop, and it said that it had shut down its operations already because of the volatility. And so we, haven't seen a mass exodus of creators, merchants, or advertisers from the platform, but I do think a lot of them are starting to second guess how heavily they're relying on TikTok.

(04:02):

I think there's a lot of disillusionment as well among creators. I mean, Sarah, you're right, it was a publicity stunt to shut down TikTok and then bring it back and, in many ways, it worked well for TikTok in order to be able to show just how popular it was among users, and it gave Trump a political victory, but that could be short-lived. And I know we're not going to talk a lot about TikTok's alignment with the Trump administration, but it is going to be hard for the app to shake off the association with Trump, depending on how the next 75 days or so play out.

Sara Lebow (04:41):

Yeah, and those 75 days are also confusing, unclear if this executive order was even constitutional. So I think it's just difficult to make any sort of prediction there.

Jasmine Enberg (04:51):

Right. I mean, TikTok is operating in somewhat of a gray area right now. The law is still on the books and it's internet service providers and app stores that just have to trust that they won't be facing those hefty fines. As we're speaking, Google and Apple do not have TikTok available for download or updates in their app stores, which also then is detrimental to TikTok's growth, right? It can't add any new users, and existing users can access that, but they can't update it, which could degrade the experience if this continues.

Sara Lebow (05:29):

So, if TikTok shop does go away, is there a competitor that could fill its space? I've heard about META, YouTube, Amazon, Shein, Temu, RedNote. Is there another TikTok?

Jasmine Enberg (05:41):

There isn't an exact replica for a TikTok shop, right? I mean, it has this really unique blend of technology, of media, of community that really has been kind of the way that it's been able to drive sales, and we haven't really, that would be really difficult for any platform to replicate. I think Meta and other social platforms are going to capture some of that shopping behavior, but there's a long list of other beneficiaries, and it's also a really good moment right now for a lot of social shopping startups. We're seeing companies like whatnot and ShopMy really start to raise tens to hundreds of millions of dollars with investors betting that those are places that shoppers from TikTok might migrate to. I think, ultimately, we're going to see a lot of fragmentation within the shopping landscape if TikTok shop were to disappear.

Sky Canaves (06:38):

Right. I think, because TikTok really showed how social commerce can work in a new way in the US, among US consumers, and it's broadly based on the roadmap of its sister app, Douyin in China, which in just a few short years became one of China's top E-commerce players, and that's in a very, very competitive online retail market in particular. It is that layering, starting with that strong entertainment and creator content foundation, with very seamless commerce integration.

(07:09):

So, I found transacting on TikTok shop is superior to what other social platforms have been able to offer, because it's an in-app experience with the integrated payments, and there's very little interruption to the user experience of being on TikTok, discovering products, and then being able to buy them, but I think there will be a lot of competitors who rise up and try to take advantage of the opportunity that TikTok shop has presented, particularly because the social buyers are there. Our forecast is that number surpassed 100 million at the end of 2024 and will grow by a few million more this year, so everybody's looking at that opportunity and how to make the most of those buyers who are predominantly Gen Z and millennial shoppers.

Sara Lebow (07:09):

Yeah.

Jasmine Enberg (07:56):

And I think your point, Sky, about creators is spot on, right? I mean, TikTok really put creators first within the shopping experience, and we're seeing platforms from Meta, all the way to some of these social shopping startups really offer incentives to a lot of creators to get them to their apps, and they're betting, of course, that if they bring the creators over, audiences and shoppers will follow, but that remains to be seen.

Sara Lebow (08:21):

Yeah. Putting creators first feels to me like one of the key differences between TikTok Shop and Meta's long-since abandoned Instagram shop tab. I kind of think that we might see something similar to that shop tab come back now that Meta has seen TikTok's success play out, and Meta and YouTube will probably see some initial benefits from people migrating from TikTok, but I really think that the Chinese E-commerce companies might have the leg up here, because that's another advantage TikTok shop has, is its direct ties to Chinese e-commerce.

Sky Canaves (08:57):

That's a strong possibility, particularly I think Temu could be a dark horse in this race. It's predominantly a shopping app, and it's really used TikTok and other social platforms as a marketing channel, but it could very well seek to establish its own social platform. Its sister app in China, Pinduoduo, had a lot of social features like group buying where you get your friends and family members to get in on a deal together, so there's definitely more social aspects of Pinduoduo in China that Temu hasn't yet rolled out. Livestream shopping is another feature that it incorporates.

Sara Lebow (09:37):

That's a good thing to bring up, because something that has been blowing up on TikTok is livestream shopping. Other platforms have tried that for so long and not seen the same success. What happens to live commerce if TikTok shop goes away?

Jasmine Enberg (09:50):

I think it will be a huge setback for live commerce in the US. I mean, a lot of the platforms or social platforms have tried and failed. I mean, Meta shut down live shopping on Instagram and Facebook back in 2022 and 2023, and there's a lot of underlying reasons for this. It was a time when their ad business was not doing well, and it was shutting down a lot of commerce related features, but we do know that it really wasn't a mainstream shopping activity for its users.

(10:20):

I think TikTok really figured out how to make live shopping work again by putting creators first, and it has been a big boon, especially for a lot of creator-founded businesses, but I think the reason that live shopping worked or works so well on TikTok is because it's integrated into the TikTok ecosystem, right? So, you already have this wide base of users, shoppers, and creators, as well as the technology to support it all. Without that, I do think we'll see players like [inaudible 00:10:52] pick up some of that behavior, and there's still going to be use cases for live shopping, but I just don't think that it's going to be as prominent as it has been on TikTok shop.

Sky Canaves (11:03):

I would agree for the short term, but I think long term it's definitely going to take off more with the younger generations, because what we see is Gen Z and Gen Alpha as well are really video first, digital natives, and they interact with the online world, so heavily through video, it's going to come pretty naturally to shop via video. I think TikTok Shop was able to capitalize on that, putting the live stream shopping into the video feed and promoting it heavily with deals and discounts, and engaging content as well in the creators, so it's really going to come down to who can offer the best, seamless, and fun experience for those social buyers.

Sara Lebow (11:47):

We're talking a lot right now about if TikTok goes away. I mean, it might not, but whether or not there is a TikTok ban, how has the platform changed how people shop via social media?

Jasmine Enberg (11:58):

Well, I think we've talked about this a couple of times in different ways already on this podcast, but it's really kick-started this creator driven commerce. What we're seeing is that shopping, really, across the board, is becoming more social and creator driven, and I don't think that that's going to change with or without TikTok. I mean, we're seeing shoppers across platforms be inspired to buy from creator content. We're also seeing creator content really moving off of social media into other channels, whether that's CTV, retail media, or in store, and we're also seeing creator products being launched. And so I think that that is going to continue to shape and reshape our shopping behavior, whether or not TikTok remains in the US.

Sara Lebow (12:49):

Yeah. I think that creator products is a great point, and that's something that a lot of YouTube creators or creators that have started on YouTube are really invested in, so that's definitely a place where we'll continue to see that. What about the brands that are currently selling on TikTok shop or aren't? What should brands do about TikTok shop right now to prepare for the uncertain future?

Sky Canaves (13:11):

I think they still have to wait and see, because there is a pretty steep learning curve to succeeding on TikTok shop. Most brands work with partner agencies. As Jasmine mentioned, one of those agencies is shutting down because it doesn't see the opportunity there being as compelling anymore, and it's also a very affiliate-oriented model. Some of the brands that do best have actually invested in having a very founder-led presence on the platform, so that may not be feasible for many brands. I think looking at other platforms, making sure that they're diversified across social following, where users are, and looking to those would probably be the best options. We may well be surprised by where users and buyers end up, as we saw the great TikTok refugee migration to RedNote, which was a purely Chinese oriented app that suddenly got a huge American following for different reasons. I don't know if that means brands need to be there-

Sara Lebow (14:17):

No.

Sky Canaves (14:17):

Probably not to target the US consumers. It's great for targeting Chinese consumers.

Sara Lebow (14:22):

Right.

Sky Canaves (14:22):

Because it is a leading lifestyle platform there, but I think where the social users and buyers end up will ultimately surprise us.

Sara Lebow (14:31):

Yeah. In my opinion, that is why it's important for brands that are partnering with creators, which is most brands, to partner with creators and influencers who have followings across platforms. You don't want to just partner with someone who has a million followers on TikTok, but is under investing in Instagram, or doesn't have a following that will follow them to other platforms. Awesome. Well, that is all we have time for today. Thank you both for being here. Thank you so much, Sky.

Sky Canaves (14:58):

Thanks, Sarah. Always a pleasure.

Sara Lebow (15:00):

Pleasure to have you. Thank you, Jasmine.

Sky Canaves (15:02):

Thanks for having me.

Sara Lebow (15:03):

Thank you to our listeners and to our team that edits the podcast. We'll be back next Wednesday with another episode of Re-imagining Retail: eMarketer Podcast, made possible by Zeta Global. And on Friday, join Marcus for another episode of Behind the Numbers: eMarketer podcast, Made possible by Zeta Global.