TikTok is a leading entertainment platform, with more than 1.5 billion active monthly users globally. With the launch of its e-commerce platform, TikTok Shop, it successfully fuses entertainment with shopping and is reshaping global e-commerce.

Unlike traditional e-commerce, which begins with search and relies on off-platform marketing, social commerce platforms like TikTok Shop—integrated with TikTok—offer a closed-loop consumer journey from discovery to conversion, using engaging content and powerful algorithm to drive impulse purchases (see Figure 1). They combine marketing and sales into one seamless channel.

Figure 1

Since its launch in 2021, TikTok Shop has expanded into 16 countries, and in 2024, it generated over $30 billion in gross market value. It is already one of the leading e-commerce platforms in Southeast Asia and has been growing rapidly in the US despite ongoing regulatory uncertainty. Its Chinese counterpart, Douyin Shop, offers a glimpse at TikTok Shops’ growth prospects: In China, Douyin was the second-largest e-commerce platform in the fast-moving consumer goods (FMCG) category in 2024, and its FMCG sales value had over 80% CAGR from 2021 to 2024 (see Figure 2).

Figure 2

Although TikTok Shop may seem more expensive to operate than traditional e-commerce platforms, it’s important to remember that TikTok Shop, together with TikTok, serves as both a marketing engine and a sales channel. A reasonable benchmark is comparing total spend on TikTok and TikTok Shop to the sum of marketing platforms, such as YouTube and Instagram, plus traditional e‑commerce platforms, such as Amazon and Shopee.

Winning on TikTok Shop requires a new set of core capabilities: Conversions are driven by high volume of compelling content, across both short videos and livestreaming formats—amplified by affiliate partnerships—rather than search engine optimization and fulfillment. Brands need to develop a new playbook for TikTok Shop:

• Mission: Define TikTok Shop’s mission and strategic role, unique from your traditional sales channels
• Product: Create a fit‑for‑TikTok portfolio, enabled by agile innovation
• Content: Create high volumes of impactful content—at speed, including brand-generated content and professionally generated content, enabled by affiliate collaboration, across both short video and livestreaming formats
• Operations: Flexibly leverage TikTok’s traffic tools to drive reach and conversion, execute data-driven performance marketing with continuous optimization, and ensure excellent mall operations
• Enablers: Adopt fit-for-purpose enablers, including agile ways of working, digital/social-first talent, metrics and feedback loops, and technology and AI capabilities
• Omnichannel play: Manage your products and channels, including Tiktok Shop, as a portfolio, not individually, and build new tools that allow brand and channel investments to be allocated dynamically

It’s clear that TikTok and TikTok Shop are fueling the growth of social commerce. Waves of insurgent brands are leveraging TikTok and TikTok Shop to leapfrog incumbent players, rapidly gaining share and posing a serious competitive threat to incumbents. Meanwhile, the momentum of TikTok has prompted peer platforms to evolve to include short-form content features (e.g., YouTube Shorts, Instagram Reels, and Snapchat Spotlight) and has spurred the emergence of local alternatives like Kwai, Josh, and Roposo in key emerging markets. Therefore, building mastery in TikTok and TikTok Shop is no longer optional, but essential for building brand relevance among the next generation, defending against insurgent challengers, and staying ahead in the era of rising social commerce.

We are closely tracking how this plays out across sectors and geographies and are in ongoing conversations with leaders navigating this shift.