TikTok Shop is second only to Amazon in a key measure of customer loyalty

🌈 Abstract

The article discusses how TikTok's e-commerce platform, TikTok Shop, is retaining customers better than some of its rivals, such as Shein and Temu, based on data from Earnest Analytics.

🙋 Q&A

[01] TikTok Shop's Customer Retention

1. What are the key factors that contribute to TikTok Shop's advantage in customer retention?

• TikTok Shop has low customer acquisition costs compared to other platforms like Temu, which spent $2 billion on Facebook and Instagram ads.
• TikTok's entertaining video content and recommendation algorithm help drive repeat purchases, as the algorithm shows users more content related to products they've already bought.
• TikTok Shop's launch timing in the fall of 2023 coincided with the holiday shopping season, giving it an advantage.

2. How does TikTok Shop's customer retention compare to other e-commerce platforms?

• Around 27% of TikTok Shop customers made a repeat purchase after 5 months, outperforming platforms like Temu, Shein, Etsy, Whatnot, Flip, and Instagram Checkout.
• The only platform that outperformed TikTok Shop was Amazon, with around 36% of customers making a repeat purchase after 5 months.

3. What are the typical shopping behaviors of TikTok Shop customers?

• TikTok Shop customers make an average of 1-2 purchases per month, with an average transaction size of $40.
• They tend to make impulse purchases of single items rather than building a cart of products like on other e-commerce sites.

[02] TikTok Shop's Growth and Performance

1. What percentage of U.S. households have made a TikTok Shop purchase since its launch in the U.S. in September? According to Earnest's analysis, about 1 in 10 U.S. households have made a TikTok Shop purchase since September 2023.

2. What percentage of TikTok Shop's sales in February came from repeat customers, and how does this compare to earlier months? In February, over 81% of TikTok Shop's sales came from repeat customers, up from 64% in November.