Key Takeaways:
- TikTok achieved a major win during the 2023 holiday shopping weekend, generating a record $100 million in US sales. TikTok’s potential ban may be one part of what spurred the surge in shopping activity, as consumers rush to make purchases before the app’s shutdown.
- Temu is pursuing high-end brands to join its marketplace, using events like the Footwear Show New York Expo to network and pitch premium brands. This is in line with its competitors like TikTok Shop that launched a luxury resale category this year, and Shein, who is also trying to bring luxury brands on board.
- Despite their controversial reputation, the e-tailer’s gamification and discovery features (which increase consumer spending) could make it an appealing option for brands given the current struggles in the luxury market.
TikTok’s Black Friday sales triple ahead of potential US ban
This week, as the dust settles after Black Friday and Cyber Monday, TikTok Shop has reported a record-shattering $100 million in sales in the US over the annual shopping weekend.
For those not familiar, TikTok Shop blends short, engaging videos that encourage spontaneous shopping. It’s this winning combination of captivating content, influencer-driven marketing, and integrated commerce that has given TikTok the lead over rivals YouTube and Instagram.
In their announcement, TikTok boasts: “Fueled by both familiar and new creators within TikTok’s extensive community, there were over 4 billion #tiktokshopblackfriday views and 3.5 billion #tiktokshopcybermonday across the platform to help inspire shoppers.”
What’s behind these staggering numbers? Aside from the app’s design, one reason could be the urgency of shopping before the possible TikTok ban in the US becomes a reality. Last week, a federal appeals court upheld the Biden administration’s order for the Chinese-owned app to either sell off its US assets or face a ban, with national security risks as the rationale. On the 9th of December, TikTok filed an emergency motion for an injunction to stop the ban from taking effect on the 19th of January 2025 – until their appeal of the most recent decision is heard by the US Supreme Court.
In case things do not go in its favour, TikTok Shop has been expanding in alternative markets, this week going live in Spain and Ireland. These jurisdictions join the United States, Indonesia, Malaysia, the Philippines, Singapore, Thailand, the United Kingdom, and Vietnam.
According to Bloomberg, TikTok had been working on launching its shoppable content in major European markets throughout 2024. Although the feature was tested in the UK in 2021 with limited success, the original rollout plans for Spain, Germany, Italy, France, and Ireland were delayed as the company redirected its efforts toward the US.
TikTok Shop lands in Spain with a range of features that will allow sellers to connect with their audiences. This includes LIVE Shopping that allows sellers and creators to integrate products into a livestream session; direct access to purchase products in the “For You” feed; “product showcase” where shoppers can read reviews and purchase directly from a favorite brand’s profile; an affiliate program where creators can connect with sellers through new commission-based product marketing opportunities; and new advertisements that will increase the scope for sellers to promote their TikTok Shops.
The Interline has previously written about what the ban might mean for fashion if it does happen in the US. For one, technology platforms with comparable business models could stand to gain from its absence in digital advertising. Then, for brands and creators, the challenge would be in migrating their audiences to alternative platforms, a task that is far from simple. This is particularly true for fashion businesses, whose key audience are younger consumers that exclusively use TikTok, making it difficult to redirect them to other social media channels.
Temu’s play for luxury brands faces challenges and competition
Elsewhere in the US, another game is afoot: Temu is aiming to recruit more high-end brands to its marketplace lineup.
ModernRetail reports that last week, more than 70 footwear brands from around the world gathered at the Park Lane Hotel in Manhattan for the Footwear Show New York Expo, and among them was a surprising addition: Temu. The e-commerce retailer sponsored the daily morning coffee and tea breakfast during the three-day expo, using the event as an opportunity to connect with the premium brands present, aiming to bring them onto the platform.
Temu is undoubtedly looking at the success of TikTok Shop and taking note, as the latter launched a luxury resale category earlier this year. Temu’s biggest competitor, Shein, has also endeavored to get luxury brands on board to sell directly through them. Although they haven’t reached their goal yet, the tide could turn, much like how Amazon – initially slow to attract luxury brands – now features high-end labels like Estée Lauder and Oscar de la Renta.
However, Temu has built a reputation that will be tough to shake off, making it challenging to win over premium brand targets. This week alone, the Financial Times reported that the EU is planning to take action against the rising volume of packages from Asian online retailers like Temu and Shein, which are bypassing customs checks amid a surge in e-commerce. Then in Asia, some Temu children’s clothing has been found to contain up to 622 times the legal limit of toxic substances, according to the Seoul Metropolitan Government. And Vietnam has suspended Temu’s operations after the company missed a government deadline to register by the end of November.
But its addictive gamification and discovery features, which encourage increased consumer spending, may be especially appealing to brands right now – particularly given the current struggles within the luxury market. From Temu’s perspective, there’s also a growing pressure, as the de minimis exemption (a trade regulation that allows companies to avoid duties and taxes for imports below $800) could soon be amended..
Even if Temu falls short in securing luxury brands, a TikTok ban in the US would sideline the platform entirely, and it would be a whole new ballgame for e-commerce and all its players.
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