Newegg Commerce Inc. fully embraced TikTok Shop as part of its live shopping strategy over the 2023 holidays. The technology retailer held a 24-hour livestream shopping event on the platform for Cyber Monday, with great success, it said.
“TikTok is a great way to get Newegg in front of people who have not shopped from Newegg before,” director of Newegg studios Drew Roder said.
With the marketplace poised to take on a bigger role in ecommerce in 2024, other retailers are considering whether to join and how to best leverage it.
Newegg is No. 57 in the Top 1000. The Top 1000 database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales.
The rise of TikTok Shop
TikTok Shop launched in the U.S. in September 2023 with more than 200,000 sellers and 100,000 creators sharing products through its affiliate program, a spokesperson said.
TikTok Shop is accessible through shoppable videos fed to users through the “for you” page. Creators can tag products in videos and live feeds that viewers can purchase directly within the app. TikTok users can buy products recommended by influencers and creators on the app, who make commissions based on sales they’ve promoted. It also has a “Shop” tab set up more like a traditional ecommerce website, and it offers a fulfillment service, too.
The ByteDance-owned marketplace hasn’t publicly released any total sales figures. In November alone, 5 million new customers made purchases through TikTok Shop during the marketplace’s holiday promotions, TikTok said. During that time, users made 262,000 shoppable short-form videos using Black Friday and Cyber Monday hashtags, leading to 2.51 billion views. Shoppable livestreams drove 22.8 billion views during that period.
TikTok has potential to continue playing a large role in shopping decisions, especially for younger female consumers. It has 150 million U.S. users.
“TikTok users have proven themselves to be voracious consumers,” Ellyn Briggs, brands analyst at Morning Consult, previously told Digital Commerce 360.
TikTok is essentially a shopping guide for consumers who are already primed to spend more than the average person, both in stores and online, Briggs says. It’s also a form of brand discovery for Gen Z, a group more likely to say it is open to purchasing from new brands than any other generation, at 77% based on the Morning Consult data.
Newegg’s experience on TikTok Shop
To grow its foothold, TikTok Shop launched in the U.S. with appealing terms for retailers. It offered free listing and zero commission to retailers who initially joined. Newegg was one of the early adopters, in part because of its positive history with live shopping.
Newegg was already generating millions in dollars in live shopping through TikTok and other streaming platforms before the launch of TikTok Shop, Roder said. The benefit of TikTok shop is that it compresses the purchase experiences, removing roadblocks from a potential customer’s journey.
“Someone can see a product introduced to them by the company that sells it and they don’t even have to go to another website. They can go from awareness to action, the whole funnel, in 30 seconds,” he said.
Gaming products, including controllers, are top sellers for Newegg on TikTok Shop.
Newegg’s top-selling products on TikTok have been gaming related, producer Ben Tibbels said. The retailer is best known for selling computer components, but TikTok Shop customers skew younger and toward gaming items, he said. Gaming controllers and other tools for co-op games have been very popular, he said.
Newegg customers were quick to adapt
Tibbels noted the relative ease with which TikTok users were willing to make purchases through the marketplace even as it was new.
“I don’t think that there was a hesitancy,” he said. “TikTok did some really attractive first-time buyer coupons and offers, and it very quickly became a strong place for people to shop.”
That was especially advantageous in Q4 of 2023 around the holidays, as consumers were drawn to TikTok-subsidized deals on the app.
The tech retailer’s TikTok Shop sales don’t rely solely on new customer discounts, though.
“We still see repeat customers,” Roder said. “A lot of folks tune back in for specific hosts. They develop that emotional connection that isn’t always just with a product but it is also with their hosts.”
Newegg also takes requests from customers on item categories to bring into its TikTok Shop, he added. In other words, “engagement is the name of the game on TikTok,” he said. Newegg has a team dedicated to affiliate marketing, and it’s not unusual for employees to spend hours a day on the phone with creators discussing strategy and answering their questions. The strength of TikTok sales depends on the strength of their relationship with their audience, Roder said.
Other retailers’ TikTok Shop results vary
As a technology retailer, Newegg has to stay on top of emerging platforms like TikTok Shop, Roder said. Other retailers have found more mixed results.
NightCap, the scrunchie designed to prevent spiked drinks, no longer sells on TikTok Shop.
“In the beginning, TikTok Shop was great for us,” CEO and cofounder Shirah Benarde said.
At first, the app pushed NightCap’s videos out, and they regularly went viral. Then, as the marketplace became more saturated, views took a nosedive, she said. NightCap’s account would be flagged for violating rules like mentioning the word “website” or “Amazon,” she said. The account would be banned for 24 to 48 hours at a time after these instances. Ultimately, selling on TikTok Shop wasn’t viable for NightCap, which is focusing on its direct-to-consumer website and Amazon sales now, she said.
Meanwhile, Vera Bradley is taking a more cautious approach to TikTok Shop. The accessories retailer benefits from TikTok without directly needing to post, thanks to organic traffic from creators, chief marketing officer Alison Hiatt told Digital Commerce 360.
Videos with the “#VeraBradley” hashtag have 105 million views to date on the platform, leading to better brand awareness. It also works directly with influencers on posts.
“Most brands have to work with influencers in some form or fashion. I think it’ll continue to be a strong trend,” she said.
Joining TikTok Shop is one of Vera Bradley’s priorities for 2024.
“We know more and more people are discovering brands and interacting with their favorite brands” on TikTok, she said. “So why not just make it an easy experience if they find something that they want to buy via TikTok Shop?”
Vera Bradley ranks No. 277 in the Top 1000.
Where will TikTok Shop go in 2024?
TikTok reportedly has big plans to grow its ecommerce reach in the U.S. this year. A Bloomberg report found that TikTok aims to grow U.S. ecommerce sales to $17.5 billion in 2024. Even more videos could become shoppable, as the social media app is testing a feature that identifies and links products in any posts, not just those from influencers. TikTok previously confirmed it was using artificial intelligence (AI) to scan videos for products and suggest similar items available for purchase through its marketplace.
Retailers will have to grapple with higher costs as TikTok’s initial promotions to attract sellers expire. The marketplace announced referral fees will increase to 6% in April, then grow again to 8% in July.
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