TikTok Shop is driving more online sales in the US than Target and other major retailers

TikTok Shop is rapidly gaining market share from major US online retailers like Target, Costco, and Lowe's, according to a recent analysis by Consumer Edge. In July, TikTok Shop captured approximately 2% of total US online retail spending, up from around 1.2% a year ago. This represents a significant leap in market share for the app, which is centered around short videos and entertainment rather than traditional e-commerce.

Consumer Edge, a customer-intelligence firm, analyzed US credit and debit card transaction data and found that TikTok Shop's share of online retail spending surpassed that of established players like Target, Costco, and The Home Depot in July. Michael Gunther, SVP of Research & Market Intelligence at Consumer Edge, noted that this growth is substantial and TikTok is serious about competing with giants like Amazon and Walmart.

The company has introduced its own Amazon Prime-style membership program, offering free shipping and other perks, as well as managed services for sellers who need help creating videos and advertising their products. During last year's Black Friday and Cyber Monday week, TikTok Shop generated over $500 million in US sales, and has onboarded major brands including Samsung, Disney, and Ralph Lauren.

Despite facing competition from Amazon Prime Day, TikTok Shop's share of US online retail spend has grown relatively steadily since its launch. Gunther emphasized that these moves are truly remarkable, given that TikTok Shop started from zero a few years ago. The app's share of US online retail spending remains far behind Amazon's, which holds around 35% market share, but it is slowly catching up to smaller competitors.

TikTok Shop's growth can be attributed to a group of power users who made 20 or more purchases in the second quarter of this year, driving about 30% of the platform's overall spending. Older shoppers, particularly those over the age of 35, have also contributed to TikTok's increasing market share, with their spending growing faster than that of younger users.