Key facts
- TikTok Shop accounted for about 2% of US online retail spending in July.
- This market share is greater than that of major retailers like Target, Costco, and The Home Depot.
- TikTok's share of US online retail spending has grown relatively linearly since its launch.
- The company has invested heavily in its e-commerce business, including shipping and logistics.
- Shoppers over 35 represent the fastest-growing age demographic by year-over-year spend on TikTok Shop.
TikTok Shop is rapidly gaining ground in the US online retail market, with its July spending exceeding that of major retailers like Target, Costco, and The Home Depot. According to data from customer-intelligence firm Consumer Edge, TikTok Shop accounted for approximately 2% of US online retail spending in July, a substantial increase from about 1.2% a year prior. This growth is described as 'massive' by Michael Gunther, SVP of Research & Market Intelligence at Consumer Edge, who noted the platform's significant market share gains since its launch.
TikTok is making a concerted effort to compete with giants like Amazon and Walmart in the e-commerce space. The company has introduced an Amazon Prime-like membership program offering free shipping and other benefits, and provides managed services to sellers for video creation and advertising. Last year's Black Friday Cyber Monday week saw over $500 million in US sales for TikTok Shop, and it has recently onboarded prominent brands such as Samsung, Disney, and Ralph Lauren.
While TikTok's growth in July might be partly attributed to Amazon Prime Day occurring in a different month compared to the previous year, Gunther indicated that TikTok's market share expansion has been relatively linear. He emphasized the significant scale of these moves, given that TikTok Shop was virtually non-existent a few years ago.
Despite its rapid ascent, TikTok's US retail spend remains considerably lower than Amazon's approximately 35% market share and less than a third of Walmart's roughly 7% share. However, TikTok has been steadily increasing its presence against smaller competitors as its platform matures. Since its 2023 launch, the company has invested heavily in its e-commerce infrastructure, including shipping and logistics, and has onboarded hundreds of thousands of sellers and creators.
Consumer Edge's analysis indicates that a group of power users, those making 20 or more purchases in the second quarter, drove about 30% of TikTok Shop's total spending, despite representing only 5% of the buyer population. Additionally, shoppers over the age of 35 are emerging as a key demographic, showing the fastest year-over-year spend growth in the second quarter.