Amazon Briefing: How brands are preparing for TikTok Shop’s Prime Day-like sales event
This is the latest installment of the Amazon Briefing, a weekly Modern Retail+ column about the ever-changing Amazon ecosystem. More from the series →
Brands on TikTok Shop are gearing up for a busy July as the video-sharing app looks to take on Amazon’s Prime Day, one of the largest sales events in the U.S.
Starting on July 9, TikTok Shop will offer discounts on thousands of apparel items, beauty products, books and decor during a summer sale dubbed “Deals for You Days.” Brands including L’Oréal Paris, Maybelline New York and Too Faced will offer exclusive deals during the event. The announcement came mere days after Amazon revealed that its annual Prime Day sale will happen on July 16 and 17 this year.
Amazon debuted Prime Day in 2015, and since then its popularity among shoppers has pushed other retailers to hold competing sales of their own, all generally around the same time as Prime Day. Now, TikTok is jumping on the bandwagon, as well. What’s more, the platform is helping to subsidize discounts for select brands to sweeten the deal.
It’s all part of TikTok’s effort to become a significant e-commerce player in the U.S. and bolster itself from a potential nationwide ban. Earlier this year, Bloomberg reported that the social media app was looking to grow the size of its TikTok Shop business in the U.S. tenfold to as much as $17.5 billion this year. TikTok launched the U.S. version of its e-commerce operation in September as part of an ambitious plan to crack the code of social commerce in the States.
“It’s a pretty savvy move on TikTok’s part, because TikTok Shop launched with a really big splash last year with very heavy promotions that drove a lot of commerce right away,” said Sky Canaves, a retail analyst at eMarketer. “It’s really an opportunity for TikTok to put itself out there as a big e-commerce player that’s going to participate in the tentpole sales events of the year.”
Despite the young platform’s growing pains – like bugs and counterfeits – TikTok Shop is gaining momentum. More than one-fifth of marketplace buyers in the U.S. made a purchase on the platform in the seven months after its official launch, according to eMarketer. In June, TikTok Shop made its first $1 million in sales during a single livestream hosted by Canvas Beauty founder Stormi Steele, who will be hosting more live shopping events during TikTok’s July sale.
Emarketer’s Canaves expects beauty will be a top-performing category on TikTok Shop during the event. If so, the platform faces stiff competition from Amazon, which has made a concerted push to attract more beauty labels to its brand portfolio. Amazon touted several of its top beauty brands, including Kiehl’s and Clinique, when it announced the dates of this year’s Prime Day. Emarketer data show Amazon’s sales of personal care and beauty products are outpacing the growth of overall e-commerce sales for those categories in the U.S.
“For TikTok, beauty is where it’s really been able to draw a lot of name brands and even premium brands to participate in TikTok Shop, whereas brands in a lot of other categories have been a little hesitant,” said Canaves. “That just speaks to TikTok’s strength as a platform for beauty – all the way from discovery to product research and to being able to make purchases of beauty products directly through the platform from the brands themselves.”
For brands, TikTok’s July sales event is an opportunity to seize on the platform’s virality to get more products in the hands of deal-hungry shoppers. To help with that, TikTok Shop is subsidizing some discounts on select products. It marks a return to form for TikTok Shop, which courted sellers to its platform when it first debuted by offering to foot the bill for discounts and shipping. Since then, TikTok Shop has rolled back some of those offerings and raised its seller fees to reduce spending. The Information reported that TikTok Shop was on track to lose more than $500 million last year.
Not all brands on TikTok Shop will get subsidized discounts from the platform during its July sales event. While TikTok Shop is covering the cost of some discounts, such offers are on an invite-only basis. In other words, only select brands and products will be chosen to receive them.
Sophia Monetti, who heads social and influencer marketing at Texas-based brand BK Beauty, said in an interview that the company is offering 20% off its full catalog of 74 products during the July sales event. TikTok won’t be subsidizing any of that, but two of BK Beauty’s best-selling products – a foundation brush and a concealer brush – were offered additional coupons to be paid for by TikTok. The coupon range varies. While BK Beauty’s foundation brush will be discounted an additional 15%, its concealer brush will be discounted only another 10%.
On top of that, TikTok Shop is offering what Monetti called “co-funded coupons.” For example, the platform is offering $40 off of purchases of at least $149, in which case the brand covers half the cost of the coupon, and TikTok Shop pays for the rest.
“This is the most subsidies I’ve seen from them since we got on TikTok Shop last summer,” said Monetti. “We’re choosing to hit our best sellers a little bit harder with the discounts, which comes out of our pockets more, but in turn it creates more brand awareness and keeps customers coming back for more.”
Similarly, Ronak Shah, CEO and co-founder of New Jersey-based collagen brand Obvi, isn’t necessarily expecting TikTok’s sale event to drive profits. Rather, he is planning to be “extremely aggressive on pricing” in order to attract more customers to his brand.
“One hundred percent, this event is about product discovery and getting more products in the hands of people,” said Shah. “If I make a couple bucks – great. As long as I don’t lose money, I’m happy.”
TikTok Shop’s July sales event comes at a time when shoppers are particularly price-conscious thanks to sticky inflation and high interest rates, and that could be a boon for TikTok Shop sellers. Nearly half of TikTok Shop buyers surveyed by eMarketer flagged discounts as one of their top reasons for making a purchase, while another 24% cited the platform’s generally low prices.
Despite TikTok Shop’s growing popularity, Shah, who also sells on Amazon and is participating in Prime Day this year, expects Amazon to make up the lion’s share of sales. He predicts that during these July sales events, 20% of his overall sales will come from TikTok Shop, while Amazon will dominate the rest.
Amazon news to know
- Jeff Bezos plans to sell $5 billion of Amazon stock as the tech giant’s share price hit a record high, according to a filing disclosed late Tuesday.
- Amazon has become the first company not to use a global standard for verifying carbon offsets, opting instead to support the development of a new standard, according to Reuters.
- Amazon plans to use the same trade rule as Temu and Shein to import goods sold on its upcoming bargain section, exempting it from paying tariffs, The Information reports.