TikTok Shops

Last week, and into this week, the big headline from Dan Frommer’s Consumer Trends Report was that TikTok Shop is now bigger in the US than Shein and Sephora.

Pretty incredible start.

What’s equally incredible to us, though, is where people are repurchasing their TikTok Shop buys. According to a consumer survey run by Frommer, 74% those who made a purchase via TikTok Shops and repurchased the product did so via TikTok Shop:

On the other hand, though, this shouldn’t be that incredible at all. When it comes to purchasing products, consumers are more likely to repurchase the product at the same place they bought it the first time—thanks to “behavioral” loyalty.

While we spend a lot of time in DTC talking about loyalty, we often fail to define it. If you were to attempt to do so, though, you might start with further defining loyalty into at least two types:

• Attitudinal. Loyalty driven by a customer’s brand preference. Usually rooted in emotion.

• Behavioral. Loyalty driven by a customer’s actions. Rooted in repetitive behaviors (i.e., repeat purchases).

For the most part, it feels as if DTC often aspires to build “attitudinal” loyalty with customers. And that’s great. Attitudinal loyalty is the stuff great brands are made of. But behavioral loyalty can be just as effective (it’s what subscription revenue is built on, after all), and usually overlooked.

Through this lens, how you might view loyalty programs, then, is interesting—and perhaps a little different.

Loyalty isn’t just incremental. It’s protective, even a bit defensive.

Consider: When PE Science launched its loyalty program, it did so to give customers a reason to buy direct instead of buying from Amazon, which could be considered more convenient and already had the benefit of having a huge amount of behavioral loyalty for a multitude of products.

Buying direct is worth 20% more margin to PE Science, so finding a way to hold interest matters a lot.

And even where margin isn’t a consideration (after all, most are willing to trade some margin for more scale), there’s also the advantage of owning the consumer data that comes with a direct sales channel. (As the multitude of reasons have been well documented over the years, I won’t recount them here.)

And while TikTok Shop is a far cry from Amazon’s scale (and therefore has less engrained behavioral loyalty), the speed at which it’s growing is something that’s worth considering.

Among our customers, we’ve seen TikTok Shop adoption 2X and revenue from TikTok Shop 4X YoY in December (and we’re only two-thirds of the way through the month). They’re also trending to be doing twice the volume of Facebook/Instagram shops within the next couple months. By indexing these figures, you can see the incredible trajectory TikTok Shops are on from a revenue basis. In fact, 64% of Stamped’s largest brands on Meta Shops are already bigger on TikTok Shops, and it's usually not even close. Nearly half of them are 10X bigger on TikTok Shops than they are on Meta Shops.

It is, to be sure, too early to tell how persistent this consumer behavior is, but it does seem to point to a truth for brands: New retail channels will continue to drive scale at the expense of margin, and DTC will continue to protect that margin. Loyalty might just be a way to play some defense along the way.