TikTok Shop’s Journey and Success in Cultivating Customer Loyalty

TikTok, known for its entertaining videos, has now stepped into the world of online shopping with its new platform, Shop. And it’s making quite an impression, ranking second only to Amazon in customer loyalty, according to data from Earnest Analytics.

Earnest, which keeps track of credit and debit card transactions, discovered that about 27% of TikTok shoppers returned to make another purchase within five months of their first buy. This places TikTok Shop ahead of other e-commerce platforms like Temu, Shein, and Etsy, as well as social-commerce channels like Whatnot, Flip, and Instagram Checkout. Only Amazon outperformed TikTok Shop in retaining customers, with approximately 36% returning for another purchase within the same timeframe.

Since its rollout in the US in September, around one in ten US households have made a purchase on TikTok Shop, indicating its rapid adoption among consumers.

Michael Maloof, head of marketing at Earnest, attributes TikTok Shop’s success to its existing massive user base. Unlike other platforms that spend billions on advertising, TikTok leveraged its already engaged audience to build its customer base.

Moreover, TikTok Shop’s launch timing, coinciding with the holiday season in fall 2023, likely played a significant role in its success. With Black Friday and Cyber Monday promotions, including discounts and credits, TikTok attracted shoppers looking for holiday deals.

A key ingredient in TikTok Shop’s success is its recommendation algorithm. Tailored to users’ preferences, it suggests content based on their past engagements, including purchases. This personalized approach encourages repeat sales, with over 81% of TikTok Shop’s February sales coming from returning customers.

Nicole Rechtszaid, co-founder of Ghost Agency, a TikTok Shop partner, highlights the platform’s role in driving impulse purchases. With an average transaction size of $40, TikTok shoppers tend to make one or two purchases a month, typically buying one item at a time rather than filling up a cart.

TikTok Shop’s rise underscores the power of social commerce and the influence of recommendation algorithms in driving consumer behavior. By tapping into its engaged user base and offering a seamless shopping experience, TikTok has quickly become a go-to destination for online shoppers, revolutionizing the way we shop online.