Nike ranks No. 9 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers.

Nike’s digital retail strategy

Chief financial officer Matt Friend said Nike consumers spent more time in brick-and-mortar locations in the quarter.

“But 90% of their shopping journeys are starting with digital,” Friend said. “And so we continue to believe that our digital and physical strategies of serving consumers are the right strategy to serve demand as we look forward.”

In North America, Nike Digital sales grew 4% in the retailer’s first quarter. Nike Digital refers to sales made through the retailer’s websites and apps.

At the same time, Nike Digital sales in Europe, the Middle East and Africa decreased 2%. And they decreased 3% in Asia Pacific and Latin America. In Mexico specifically, though, Nike’s “digital business delivered double-digit growth,” Friend said, without revealing more.

“We’ve increased the size of our supply chain in the last few years to be able to address the growth that we’ve seen in our business, both overall and in digital,” Friend said.

To improve that efficiency, he said, Nike has reduced digital split shipments so consumers don’t get two deliveries for the same order. It has also invested in “regional service centers that are closer to where consumer demand is.” In other words, it has improved its fulfillment by opening distribution centers in strategic areas.

Nike Digital sales in China

In the Greater China region, Nike Digital sales grew 6% in Q1. The footwear brand held a three-day sports festival called Sportchella in China.

“The team amplified the impact of the festival by partnering with Tmall to create the first Nike Super Brand Week, which drove more than 2 billion impressions,” Friend said. “And this partnership seamlessly integrated the events with a digital shopping journey that generated very strong consumer response and engagement.”

Tmall is an Alibaba-owned marketplace, along with Taobao. Taobao ranks No. 1 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the largest such marketplaces by gross merchandise value. Tmall ranks No. 2.

Nike App increases Nike sales

The Nike mobile app had “strong growth,” Friend said. Nike mobile app traffic had high single-digit growth in the quarter, he said.

“We saw member activity continue to increase both in terms of engagement and buying behavior and a higher basket size, a higher AOV,” Friend said.

That drove “sustained momentum on the Nike mobile app” as loyalty members increased their buying frequency in the quarter, he said.

“We continue to see a growing structural advantage as more consumers start their shopping journeys with us on mobile,” Friend said.

Nike Direct revenue

Friend said member engagement through Nike Direct grew double digits in its Q1 compared with the year-ago period. Average order value through Nike Direct sales increased, but he did not specify how much.

Nike Direct refers to the retailer’s direct-to-consumer sales (online and offline). It grew 6% year over year in the first quarter.

In North America, Nike Direct grew 7%, led by 11% growth in physical store sales. Nike Direct sales grew 10% in China. They grew 6% in Europe, the Middle East and Africa, and 3% in Asia Pacific and Latin America.

How much does Nike make in a year?

For the fiscal first quarter ended Aug. 31, 2023, Nike reported:

• Revenue grew 2% to $12.94 billion, from $12.69 billion in the year-ago period.
• Profit also grew 2%, to $5.72 billion from $5.62 billion the year before.
• Similarly, Nike Digital sales grew 2% year over year in the quarter.
• Nike Direct, or the retailer’s direct-to-consumer sales (online and offline), grew to $5.4 billion. That’s a 6% year-over-year increase.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Nike report.

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The ecommerce platform reported revenue of 52.3 billion yuan ($7.2 billion) in its fiscal second quarter. It beat the average analyst’s estimate of 43.3 billion yuan. Net income increased a faster-than-projected 47%.

Growth among peers

PDD’s growth surpassed its Chinese peers and underscored how the company that once trailed far behind Alibaba Group Holding Ltd. and JD.com Inc. has in recent years used promotions and inroads into lower-tier cities to grab market share from more established rivals. It created Temu, featured with much fanfare during this year’s Super Bowl, to try to replicate that sales success abroad. Executives declined on Aug. 29 to get into specifics about Temu sales progress or financials, except to say the focus now was to fine-tune its strategy.

At home, Chinese consumer sentiment was improving, executives said. That defies warning signs of financial stress and a broad downturn across the world’s No. 2 economy.

“Our business is closely tied to the overall consumption market,” co-CEO Zhao Jiazhen said. “We noticed continued improvement in the macro trends and also consumers’ increasing willingness to shop.”

Mixed financial results from the country’s online commerce and media leaders have cast doubt over a recovery for the world’s biggest internet arena. This month, Alibaba and JD.com both reported faster-than-anticipated growth for the second quarter. Meanwhile, social media giant Tencent Holdings Ltd. recorded sales and net income that missed analysts’ estimates.

In PDD’s case, increasingly fierce competition in China and aggressive strides overseas may pressure profitability.

PDD soars as results show strength, resilience

JD.com rolled out a $1.4 billion discount spree in March to capture new users, igniting a price war. Alibaba also launched a “value-for-money battle” to lure buyers and merchants. Investors worry that PDD’s aggressive spending — now a sector-wide phenomenon — will further hurt bottom-line growth.

Amid intensifying rivalry at home, PDD is turning outward for growth, following the playbook employed by ByteDance Ltd.’s TikTok and fast-fashion phenom Shein. In September, PDD debuted its Temu bargains platform for U.S. sales, then quickly rolled it out to other places like Canada and Europe.

The results were “more resilient than expected considering the softening macro environment in China,” Citigroup analysts wrote after the report.

Morgan Stanley says PDD is “the only ecommerce play that can deliver alpha” in China, as the company outgrows peers because the monthly use of its app is increasing while Temu expands to more countries. Temu was ranked the top shopping app by downloads in the U.S., Australia and Germany over the past three months, according to market research firm Sensor Tower.

But so far, the fledgling platform has been a drag on margins. PDD acknowledged in its annual report last year that Temu requires “substantial” resources to grow. While traffic on the app has risen, it probably accounted for less than 1% of PDD’s sales in the second quarter, Bloomberg Intelligence analysts estimated.

Biggest players in the Asia ecommerce game

Shein Group Ltd. ranks No. 2 in the Asia Database. That’s Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales. Shein is behind only JD.com Inc. in the Asia Database.

Pinduoduo offers an app-only marketplace to Chinese consumers. But because it doesn’t operate an ecommerce website, it is not included in Digital Commerce 360’s Asia Database rankings. Temu, which launched in September 2022, did not have a significant impact on Pinduoduo that year. Moreover, Temu didn’t have a high enough gross merchandise value (GMV) or sales to make the global online marketplace rankings this year.

What Bloomberg Intelligence says about Temu sales

PDD’s non-GAAP operating margin in the second quarter likely narrowed from 34% a year ago as cost increases exceeded revenue growth. Marketing expenses surged 45% in Q1 amid increasing competition in China’s ecommerce market. And the increase probably continued in Q2, countering profit gains from economies of scale gained with the expansion in operations. PDD might also have incurred higher personnel costs in Q2 to support the enlarged domestic and overseas operations, which would have cramped profitability.

“PDD likely raised investment in Temu, its overseas ecommerce platform, as it enters new markets in Europe and Asia including Germany, France, Japan and South Korea. Yet Temu probably contributed less than 1% of the sales in Q2, we estimate,” said Bloomberg analysts Catherine Lim and Tiffany Tam.

Temu is now locked in a lawsuit with Shein, alleging the rival violated antitrust laws by using threats and intimidation to block clothing manufacturers from working with the fast-rising upstart. Shein has also sued Temu in the U.S., alleging trademark and copyright infringement as well as “false and deceptive business practices.”

PDD has also drawn scrutiny over potential data security risks, after Google’s Android app store suspended downloads of its Chinese shopping app Pinduoduo while it investigates alleged malware in unsanctioned versions. Google didn’t mention Temu, which remains available to download.

Check back for more earnings reports.

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The Singapore-based retailer already generates a large portion of its sales in the U.S. It’s trying to shift to an Amazon-style marketplace where sellers can list their own products alongside those Shein manufactured. Forever 21 products will be available to Shein’s 150 million online customers, according to a statement.

Closely held Shein has been considering going public, according to reports. Shein will also have the option to test in-person shopping experiences at Forever 21 locations in the U.S. The Asian retailer has built a business worth $66 billion almost entirely online.

Shein Group Ltd. ranks No. 2 in the Asia Database. That’s Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales. Forever 21 is No. 121 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers.

Shein expands further through Forever 21

In the deal, Shein acquired about one-third of Sparc Group, which owns Forever 21 through a joint venture. The venture also includes Authentic Brands Group Inc. and Simon Property Group Inc. In return, Sparc Group became a minority shareholder in Shein. Specific financial figures weren’t disclosed.

“The powerful combination of Simon’s leadership in physical retail, Authentic’s brand development expertise, and Shein’s on-demand model will help us drive scalable growth and together make fashion more accessible to all,” Shein’s executive chairman Donald Tang said in a statement.

Shein sells some of its fashion products for less than $5, helping it quickly rise to prominence in the ultra-low-priced apparel market. Shein has also unseated brands like Forever 21 and Charlotte Russe that were popular in the early 2000s.

The retailer, which produces the majority of its products in China, has faced scrutiny in the U.S. as lawmakers question its opaque supply chain and use of forced labor. There are also ongoing concerns about its carbon emissions due to the sheer volume of low-cost clothing, often made from polyester, that it produces annually.

Forever 21, which had 800 stores at its peak and relied on a mall-based strategy, struggled as more shopping moved online. It was acquired out of bankruptcy in 2020 by a consortium of brands including Simon Property and Authentic. The partnership with Shein could be a way for it to expand its online reach and get its name in front of Gen Z shoppers, who are Shein’s most loyal customers.

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GigaCloud launched its B2B marketplace in January 2019 by focusing on the global furniture market. It has since expanded into such additional categories as home appliances and fitness equipment. The GigaCloud B2B marketplace debuted as a public company in the U.S. a year ago.

For the second quarter ended June 30, GigaCloud grew revenue to $153.1 million. That’s a 23.5% increase from $124.0 million in the second quarter of 2022. The company also posted its first consecutive quarterly profit. Second-quarter net income was $18.4, up from $6.1 million.

GigaCloud B2B marketplace

The marketplace company operates warehouses in four countries across North America, Europe, and Asia; it operates 21 warehouses worldwide. They total over 4 million square feet of storage space and cover 11 ports of destination, with over 10,000 annual containers.

GigaCloud says it uses artificial intelligence software to generate seller ratings and credit profiles through volume data. The AI software optimizes routing by organizing incoming orders and rebalancing inventory levels within the warehousing network, the company says.

And the GigaCloud B2B marketplace software platform includes flexible trading tools. With them, sellers can set prices based on quantities, delivery dates and fulfillment methods. Buyers have the option to purchase merchandise individually or in bulk, the company says.

“We are seeing our momentum continue to grow at both the 1P and 3P level in our GigaCloud marketplace as we execute on our strategy and further our market leading position as a trusted global B2B ecommerce brand,” says GigaCloud CEO Larry Wu.

GigaCloud earnings and revenue

For the first half ended June 30, GigaCloud Marketplace reported gross merchandise value of $607.5 million for all transactions, up 32.4% from $458.8 million a year earlier.

Total GigaCloud revenue was $280.9 million in the six months ended June 30, an increase of 18.8% from $236.5 million in the six months ended June 30, 2022. The increase was primarily due to greater market demand for large parcel merchandise, leading to increases in our GigaCloud Marketplace GMV, sales volume and number of sellers and buyers, the company says.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

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The apparel/accessories retailer grew its digital sales 14% in Q4 and 24% in the fiscal year. Nike Digital sales accounted for 26% of total sales in fiscal 2023.

In pre-pandemic 2019, Nike Digital sales accounted for 10% of total sales. Nike Digital refers to sales made through the retailer’s websites and apps.

Nike ranks No. 9 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers.

Fourth-quarter Nike revenue increased 5% compared with the prior year, to $12.8 billion. Full year revenue increased 10% compared with fiscal 2022, to $51.2 billion.

John Donahoe, president and CEO, said consumers want digital and physical access to the brand.

“They use different shopping occasions to use different channels,” Donahoe said. “Consumers expect us to know who they are, and consumers have said to us they want a consistent and seamless experience. And so that is what has driven our marketplace strategy.”

Nike Digital sales

In North America, Nike Digital sales grew 17%. And in Europe, the Middle East and Africa (EMEA), Nike Digital sales grew 24%.

In China, Nike Digital sales declined 12% “as consumer buying continues to over index in brick-and-mortar versus the prior year,” said Matthew Friend, executive vice president and chief financial officer, in the retailer’s Q4 2023 earnings call.

Meanwhile, Nike Digital sales in Asia Pacific and Latin America (APLA) grew 9%.

Based on Nike Digital sales accounting for 26% of total sales, Digital Commerce 360 estimates Nike ecommerce sales to have reached about $13.3 billion in fiscal 2023.

“We continue to invest to grow based on the fact that the consumer continues to choose to shop in our stores and in our digital channels — or at least to engage in our digital channels — before they go try to find the product that they want in the wholesale marketplace,” Friend said.

Traffic analysis

Nike’s digital conversion traffic decreased 5.8% in the Q4 FY 2023 compared with Q4 FY 2022, according to a Similarweb analysis. Similarweb monitors website traffic.

In May 2023, while Nike held 42.5% digital market share, the largest among the top 10 sports apparel brands, its share declined 6.2% compared to the previous year, according to Similarweb. Nike traffic to the Dick’s Sporting Goods website decreased 3.4% year over year in Q4 2023.

“With the COVID-19 pandemic functioning as a catalyst, Nike’s shift to DTC sales accelerated, and the company began employing a combination of scaling back wholesale partnerships while expanding direct channels like the Nike website and Nike app,” wrote Sneha Pandey, insights manager at Similarweb. “However, with pandemic ecommerce tailwinds slowing down and market dynamics changing, Nike has had to re-evaluate its distribution strategy and move toward a better balance between DTC and wholesale.”

Source: Similarweb

Direct-to-consumer sales

Sales through Nike Direct, which refers to the retailer’s direct-to-consumer sales (online and offline), grew 15% year over year in the fourth quarter. Nike Direct grew 18% year over year in the fourth quarter; Nike Direct revenue reached $5.5 billion in fiscal Q4 2023. For the full fiscal year, Nike Direct revenue increased 14% to $21.3 billion.

Nike DTC sales in its physical stores increased 24% in Q4.

In North America, Nike Direct sales revenue grew 15% in Q4. Nike Direct sales grew 28% in EMEA. In China, Nike Direct sales grew 19%. Meanwhile, Nike Direct sales in APLA grew 9%.

Nike Q4 2023 earnings summary

For the fiscal fourth quarter ended May 31, Nike Inc. reported:

• Fourth-quarter revenue increased to $12.83 billion. That’s up 5% from $12.23 billion in the previous fiscal fourth quarter.
• Nike Direct revenue was $5.5 billion, up 15% from the year-ago period.
• Nike-owned stores grew 24%, and Nike Digital sales increased 14%.

For the full fiscal year ended May 31, Nike reported:

• Total revenue was $51.22 billion. That’s up 10% from $46.71 billion in the previous fiscal year.
• Nike Direct revenue was $21.3 billion, up 14% from the previous year.
• Nike Digital sales grew 24%, and Nike-owned store sales grew 14%.

Percentage changes may not align exactly with dollar figures due to rounding.

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ByteDance Ltd.’s signature video service has begun pitching itself as a cost-free marketplace in a series of seminars and meetings with Chinese manufacturers and exporters. It’s dangling free listings, shipping, zero commissions and even warehousing to all comers: a tactic likely to disrupt a market now dominated by fellow Chinese-owned rivals Temu and Shein, and potentially undercut even Amazon.com Inc.

The stepped-up aggression move stems from TikTok’s effort to recast its image and grow its ecommerce platform, as the US weighs a ban on its core social video platform ahead of the elections. Its entry into online shopping promises to further shake up a market for cheap Chinese-made goods now led by fast-fashion upstart Shein and PDD Holdings Inc.’s Temu — which themselves carved out that niche with surprising speed in just the past two years.

TikTok will help Chinese merchants access its one-billion plus users by handling everything from marketing to logistics and invoicing, ByteDance sales managers said in live-streams. As envisioned, merchants submit product info and ship their goods to a Guangzhou warehouse and the company will take care of the rest, the employees said. TikTok’s advantage is that it’s already installed on 150 million devices in the US. It occupies an increasingly dominant share of mobile users’ time, to the detriment of services like YouTube and Instagram.

TikTok marketplaces already running outside US

TikTok has already rolled out full-fledged marketplaces inside its main app in the UK and Saudi Arabia, leveraging that “full-custody” model, and it’s planning a similar service in North America in coming months, they said. Representatives for the company declined to comment.

TikTok’s ecommerce business is already quadrupling annually and expected to hit $20 billion in gross merchandise value by the end of this year. Much of that growth is powered by Southeast Asia, where TikTok had its first major success in twinning online entertainment with in-app shopping. But for months, TikTok has also been preparing a full launch of ecommerce in the US, where it faces intensified scrutiny over its Chinese ownership.

Taking on Shein, Temu and — in the long run, Amazon — on US turf could present TikTok a lucrative avenue but also a big challenge.

Like elsewhere, TikTok Shop is a constellation of mini-stores linked to the profiles of influencers and creators, and users typically discover these stores through their content feeds. There’s also a “Shop” tab on TikTok’s main page that takes users to something more akin to a traditional shopping site — — a third-party marketplace or online bazaar that it now hopes to populate with Chinese vendors as well as big global brands.

Push into the US

The company hopes to push TikTok Shop to its US users, but more recently it has increased efforts on running that centralized marketplace, two people familiar with the matter said. That’s both because smartphone users in Western markets aren’t used to the idea of shoppable content, and because TikTok learned and applied lessons from Temu, they said. They asked to remain unidentified discussing internal deliberations.

Temu launched in 2022 in the US and quickly topped download charts before expanding to more places like Australia and Europe. It’s recruited Chinese sellers of everything from kitchen mops to hair clips using the full-custody model. It then generates revenue by taking a cut of sales.

Gaining merchants

While TikTok is poaching merchants in a similar spirit, it’s pledging zero fees — at least for now. To set TikTok’s offering apart, ByteDance salespeople also claimed they won’t push merchants to sell at a loss.

“Some rival platform only wants low prices, is that a good thing?” one of them said during a June 27 livestream on Douyin. “We don’t lack traffic, what we lack are good products and suppliers.”

It’s not uncommon for ecommerce platforms to waive fees to build an initial base: Alibaba Group Holding Ltd. employed that approach in China to great effect in its early years. Shein, which is building its own third-party marketplace, is also waiving commissions on a selective basis.

But TikTok stands out with its reach and engagement. Its tactic is already winning over some merchants. Frank Yan, who runs apparel factories in Guangzhou, is now producing dresses and T-shirts for the short-video app after months of trials on Temu. Both platforms survey merchants on pricing, then pick the most competitive offers, Yan said. But Temu has at times pushed the envelope too far, he added.

“It’s a vicious cycle where everyone has to join the price war,” he said.

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Shein Group Ltd. is No. 36 in the Asia Database. The database is Digital Commerce 360’s ranking of the top ecommerce retailers in the region by web sales.

Temu is on the rise

Spending on Temu was 20% higher than more established fast-fashion retailer Shein in the U.S. in May, according to Bloomberg Second Measure, which analyzes billions of credit and debit card transactions. Temu is an ecommerce marketplace backed by China heavyweight PDD Holdings Inc.

This online marketplace with Chinese origins has been Apple Inc’s top iOS app in America during most days in 2023. That’s based on metrics including downloads, engagement and retention, according to mobile app researcher Apptopia. Flash sales and bargain-basement prices on everything from kitchenware to shoes are drawing in new customers.

It’s had more global iOS downloads than any other shopping app in the six-month period after launch, Apptopia data show.

The data makes Temu’s initial North American sales target look modest: Report at least a single day of gross merchandise value topping Shein by September 2023, to mark the anniversary of entering the U.S. market.

Chinese brands are gaining ground in the US

Temu is the latest in a slew of Chinese-backed brands seeking to woo price-conscious American shoppers. They’re winning customers despite tension between Beijing and Washington on everything from spying allegations to human rights, along with the U.S.’s desire to shift global supply chains away from what it sees as over-reliance on China. With Temu, PDD is hoping to replicate a formula of low prices and a social media marketing blitz that’s been successful in the mainland with the app’s Chinese twin, Pinduoduo.

But cracking the U.S. won’t be easy. Amazon.com Inc. still dwarfs Chinese brands in the U.S. Consumer spending on the platforms are only a fraction of the western giant, according to Bloomberg Second Measure.

Amazon is No. 1 in the Top 1000. The database ranks North American web merchants by sales. Amazon is also No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces.

A different business model might be necessary for the American market

There’s growing skepticism as to whether copying and pasting its Chinese formula will reward Temu with sustained success on the other end of the Pacific. Long work days — often stretching to more than 12 hours a day and already a source of widespread complaints back in the mainland — are also common to maintain the pace of expansion, according to people familiar with the matter.

And unlike Shein, which produces its own branded fashion items, Temu is a third-party marketplace. It’s more similar to Amazon. Just a fraction of customer spending ultimately translates into its own revenue.

In the same month Temu topped Shein in U.S. spending, the fast-fashion retailer launched its own online marketplace in the country, allowing other merchants to sell their products.

The brand’s app store ranking is likely due to downloads triggered by app install campaigns or advertising, said Adam Blacker, Apptopia’s director of content and communications.

“The current economic environment is certainly helping Temu as consumers are looking to get the same things they need for less in order to combat inflation,” he said. But “will the music stop when the paid ad machine shuts off?”

US concerns 

Just months after its U.S. debut, Temu is battling scrutiny from American officials. They say they fear potential data security risks, after Google’s Android app store suspended Pinduoduo, citing malware concerns. Montana — the first state to outlaw ByteDance Ltd.’s Tiktok — has also moved to ban several other apps with Chinese origins, including Temu. The Montana law says they may “provide personal information or data to foreign adversaries.”

Shein also moved quickly to stem a threat to its dominance. The retailer sued Temu in a U.S. court in December, claiming the app “willfully and flagrantly infringed” on its trademarks and engaged in “unfair competition and false and deceptive business practices,” including using Shein’s copyrighted images as part of its own product listings.

To reduce costs, Temu demands suppliers offer ultra-low prices. Suppliers with the lowest bids win orders. The practice angers some Chinese factory owners who say they’re forced to sacrifice quality to score contracts.

One Guangzhou-based apparel factory owner who asked to be identified only by his surname, Ye, said his usual practice when working for Temu was to take photos of the app’s most popular items and look for suppliers who can provide the cheapest raw materials. The practice is leading some parts of China’s supply chains into price wars, he said.

Still, those concerns haven’t deterred U.S. shoppers. In arguably its biggest move into the U.S. mainstream, Temu made its Super Bowl ad debut in February, running 30-second spots featuring a shopper dancing in an array of cheap, glamorous outfits.

“Temu’s app performance is almost unprecedented,” said Apptopia’s Blacker. “But it’s too new and we don’t know the outcome for Temu yet.”

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Earnings before interest, tax, depreciation and amortization, or EBITDA, jumped 79% to about $25 billion in 2022, the report said. It cited two investors briefed on the numbers. Tencent reported EBITDA of 164 billion yuan ($23.9 billion) for 2022 in its preliminary earnings statement. Meanwhile, Alibaba’s figure for the same period is about $22.7 billion, according to Bloomberg-compiled data.

Bloomberg reported last week that ByteDance’s revenue surged more than 30% to surpass $80 billion in 2022. That matched the tally at archrival Tencent, after twin video platforms TikTok and Douyin drew eyeballs and advertisers from social media incumbents.

Alibaba owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). JD.com is No. 4.

ByteDance and the TikTok ban

That double-digit growth topped most of the global internet leaders including Meta Platforms Inc. and Amazon.com Inc., underscoring the resilience of ByteDance’s business at a time Washington is threatening to join India in banning TikTok, which a growing number of government agencies across the world are wiping from official phones.

The U.S. is mulling a ban of the short-form video app because of alleged national security risks. Concerned regulators worry TikTok’s parent company, ByteDance, shares private user data with the Chinese government. A TikTok ban has been proposed before. In 2020, the Trump administration publicly mulled banning the Chinese app and banned it on many government devices.

ByteDance’s profit last year came despite mounting losses at fast-growing TikTok, according to the Financial Times. TikTok has amassed more than 150 million monthly users in America, spurring concerns about China’s access to the data it gathers. Its chief executive sat through a hostile congressional hearing, during which he did little to sway some of the loudest critics.

Douyin, though, remains ByteDance’s biggest cash cow. The still-robust growth at the world’s most valuable private tech firm could boost confidence among investors shaken by recent global events. The Chinese social media behemoth was valued at around $220 billion in a recent private-market investment by Abu Dhabi AI firm G42, down from the $300 billion that TikTok’s owner set during a September share buyback program.

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The U.S. is mulling a ban of the short-form video app because of alleged national security risks. Concerned regulators worry TikTok’s parent company, ByteDance, shares private user data with the Chinese government. A TikTok ban has been proposed before. In 2020, the Trump administration publicly mulled banning the Chinese app and banned it on many government devices. 

TikTok transformed into an ecommerce powerhouse

Since 2020, TikTok has become more popular among U.S. users. The app reached 150 million monthly active users in March 2023, up from 100 million in 2020. In that period, TikTok became a shopping platform for many users, prompting retailers to spend big on advertisements. TikTok was charging up to $2 million per day for ads taking over its homepage in 2021, Bloomberg reported. In 2022, TikTok rolled out a shopping feature in the U.S. and debuted plans for U.S. fulfillment centers, signaling plans to further cement its role in ecommerce.

A TikTok presence is particularly important for retailers looking for young consumers. In 2022, 83% of U.S. teens used TikTok at least monthly. 16- to 25-year-olds spend three times as much time on TikTok as on the next most popular social media website, according to September 2022 data from Measure Protocol.

TikTok is ThredUp’s smallest social platform

Secondhand apparel marketplace ThredUp has an active TikTok account of nearly 31,000 followers. It regularly posts memes, videos describing the harms of fast fashion, and collaborations with influencers like Nava Rose, who has nearly 6 million followers. Over Valentine’s Day, ThredUp used Rose’s videos to direct viewers to the “Dump fast fashion” shop of items Rose curated. ThredUp uses AI to surface similar items to the ones Rose selected.

For Noelle Sandler, chief marketing officer at ThredUp, TikTok is just one avenue to reach customers.

“We have a nice collection of platforms and content that we’re sharing across,” including Instagram Reels and YouTube, she told Digital Commerce 360. Though ThredUp’s TikTok audience is engaged, she said, it’s the smallest of the retailer’s social networks. A TikTok ban would be a blow, but not a huge one.

“I’m hopeful that TikTok gets to stay,” she said.

But if it doesn’t, she said, she believes influencer content will continue to perform well on other platforms.

Shein benefitted from organic TikTok videos

Fast fashion retailer Shein is one of the brands most closely associated with TikTok, but global head of strategy and corporate affairs Peter Pernot-Day brushed off concerns about a possible ban.

Shein ranks No. 12 in Digital Commerce 360’s database of the top online retailers in Asia.

With the help of TikTok and the thousands of user-generated “Shein haul”  videos, the brand became the most-visited apparel retailer website in the world, according to SimilarWeb. Though TikTok deserves at least partial credit for making Shein a household name in the U.S., the company doesn’t view TikTok as more essential than any other advertising method.

“It wasn’t so much influencer strategy as it was organic,” he said, as users who weren’t paid influencers posted their Shein purchases online in hopes of gaining followings.

“We‘re a consumer of advertising platforms. We’re active on Snap, Meta, Google ads,” TikTok is just one more place to buy ads, Pernot-Day said. He compared it to Shein’s new billboards in the Paris subway, as another way to reach customers where they are. If TikTok is banned, though, Shein might lose some of that organic awareness cultivated online.

A TikTok ban would be disappointing for Pacsun

Clothing brand PacSun is active on TikTok, with 2 million followers. The retailer prides itself on being on the cutting edge of ecommerce technology, from working with virtual influencer Miquela to creating a shoppable Metaverse store in Roblox. PacSun was also one of a handful of retailers to test out in-app checkout in TikTok in the U.S., co-CEO Michael Relich said.

PacSun ranks No. 252 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers.

Like Shein, PacSun initially saw TikTok as a venue for organic content made by users who just wanted to show off their purchases. By 2020, PacSun was promoting user-generated content with hashtag challenges.

“Wherever the customer is, we want to be there,” Relich said, stressing the importance of remaining relevant with Gen Z and Gen Alpha customers. For PacSun, that includes TikTok, and he would be “disappointed” in a ban. 

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The post Executives from Shein, ThredUp, and PacSun weigh in on a potential TikTok ban appeared first on Digital Commerce 360.