Six months after its launch, TikTok Shop has sold greater than $1 billion price of products – a few of questionable quality, including counterfeits.
From Cyrus FarivarForbes contributor
EEarlier this week, a girl who goes by the name “Tokyo” went live to tell the tale TikTok and stood in front of a large, anatomically correct mouth in front of over 100 viewers watching her in real time. “Listen to gum health and ensure fresher breath! This can lighten and brighten your smile by two and a half shades!”
She was hawking a $7.49 mouthwash alternative called Pulling Oil, which is currently the top-selling item on TikTok Shop. Manufactured by her employer, an organization called GuruNanda, Pulling Oil has sold greater than 1.5 million copies across TikTok’s e-commerce section and has grossed over 11 million in sales since TikTok Shop launched within the US in September 2023 brought in hundreds of thousands of US dollars. in line with TikTok. Every time a customer places an order, Tokyo rings a silver bell.
According to the American Dental Association, the train oil, which consumers are encouraged to swish of their mouths for 2 to 10 minutes twice every day, has no proven medical profit. GuruNanda’s website specifically states that it cannot eliminate tooth decay or reverse periodontal disease – claim the influencers who promote it often make.
THE BEST SELLING ITEMS IN THE TIKTOK SHOP
Sellers have even made hundreds of thousands selling dietary supplements and possibly counterfeit headphones.
TikTok declined to reply Forbes’ Questions in regards to the effectiveness of GuruNanda’s product, amongst others.
In its first six months of existence, TikTok Shop was flooded with a wide range of low-priced and, in some cases, knockoff products which are more prone to be found at a dollar store than a mainstream retailer. For example a $5.35Car air freshener“With scents like “Barbershop” and “Fruity Cereal,” over 729,000 units were sold. An 18 dollar priceSurprise 3D dragon egg” has sold over 150,000 units.
“If I knew the precise reason and the formula, I might do it [these videos] every single day of my life.”
TikTok Shop already exists approaches a projected annual revenue of around $4 billion, based on sales figures from YipItData, an analytics company. This would put it on par with Abercrombie & Fitch when it comes to size recorded $4.28 billion in sales last yr.
The most successful products within the TikTok Shop are sometimes clothing, beauty or health. A $25 bottle of 60 inchesMultimineral sea moss“Capsules have sold over 205,000 units; a $14”Detangling hair brush” has reached over 853,000 units sold. But above all, they’re low cost. Two brothers in Brooklyn have made greater than $1 million in sales homemade lemon turmeric soap ($4.50 plus shipping) in only five months. “We work from 4 a.m. to midnight,” said 25-year-old Rusty Fields Forbes.
Even the founding father of GuruNanda, maker of the wildly popular Pulling Oil, is not sure why he’s had such an enormous hit on TikTok with a product his company has been selling in regular drugstores for years. “If I knew the exact reason and the formula, I would do it [these videos] every day of my life,” Puneet Nanda, who was was recently named spokesperson for TikTok ShopForbes said.
Virality is built into the app itself, but TikTok Shop has also encouraged other creators to harness the appeal of a successful product by marketing it themselves – in exchange for a commission on each sale. This in turn promotes virality. “It’s a more democratic, much messier reimagining of QVC,” says Dan Frommer, retail analyst and editor of The latest consumerwrote in a recent newsletter.
For some consumers, this popularity is an indication of quality. “[GuruNanda] was one of the top selling products on TikTok Shop, so I assumed it was a good product,” said Dillon Latham, a 19-year-old TikToker from Virginia Forbes. He said he earned over $3,000 in commissions from promoting GuruNanda products.
But the inconsistency has made the platform less attractive to larger corporations. “This is terrible for regular brands because none of this is reproducible,” said Juozas Kaziukėnas, CEO of Marketplace Pulse, an independent e-commerce analytics firm Forbes. “It’s like replicating user-generated content, there’s no formula – but when it works, it works beautifully.”
“Chinese companies no longer just make our fast-selling, cheap products; You rise quickly and effectively and also become a dealer.”
Worse still, there are plenty of fakes on the market. You should buy a fake Apple Watch, available for just $6 (over 253,000 sold) or a set thereof $23 Lenovo Thinkplus X15 wireless earbuds (over 233,000 units sold) that the corporate doesn’t sell within the U.S. (“It could be either a Gray market import or a counterfeit“but we can’t tell from the image/link alone,” said Wendy Fung, a Lenovo spokeswoman Forbes by email. Apple didn’t respond Forbes’ Request for comments.)
Laura Perez, a TikTok spokeswoman, said Forbes in an email that the corporate “continually enforces.”[s] Strict rules against counterfeit products, invest[s] strong in detection and reporting and deployment[s] an IP protection center for brands.”
Larger corporations have been “more cautious about TikTok Shop because of the risk associated with the platform and the fear of counterfeits and counterfeit products,” said Jasmine Enberg, an analyst at eMarketer Forbes. And some American brands have struggled to realize traction: Estee Lauder’s Double Wear Foundation ($49)for instance, has barely sold over 100 units.
That could spell trouble for TikTok’s e-commerce ambitions if it tried to compete with the true giant of online commerce: Amazon. The company is reportedly expected to achieve $17.5 billion in U.S. sales in 2024 Bloomberg. But for now, it seems more focused on tapping into the identical market as two fellow China-based e-commerce competitors: Shein and Temu, which have grown extremely quickly by selling low-priced clothing, home goods and other low-cost items.
“Temu is already about the same size as Shein was a year ago, and TikTok Shop is already about the same size as Temu was a year ago,” Frommer wrote in the identical newsletter. “Chinese companies no longer just make our fast-selling, cheap products; You rise quickly and effectively and also become a dealer.”
Still, TikTok Shop’s early growth has slowed to some extent. Accordingly YipItDataTikTok Shop’s revenue rose from $261 million in October 2023 to $349 million in December 2023, essentially the most recent month for which data is obtainable. But between January and February 2024, sales within the TikTok shop stagnated.
Another challenge to its growth: rising fees for sellers. On April 1st, TikTok behaved its referral fees – the cut it takes on a given sale – from 2 to six percent, with one other increase planned to eight percent on July 1.
Even its biggest success story gave TikTok Shop a headache.
Live broadcasting was a money loser, Nanda said, given the price of constructing a set, not to say the time he wasted taking his staff away from their regular duties (a few of them front desk and other administrative duties). Plus, it’s tiring to speak for hours in front of the camera, he said.
“They don’t like doing this,” he said Forbes Last month. “We’ve messed up three people in the last five days.”
But GuruNanda’s boss feels he has no selection if he desires to proceed riding within the vicious cycle of TikTok virality and keep his own fakers at bay: “There have been too many scammers who have lost their lives,” said he and hawked counterfeit versions of his oil.
“They said, ‘This is the real product,’ and associated the fake product with it,” he said. “We started making lives so we could own the space instead of letting someone cheat on it.”
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