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How the TikTok Shop Became the Dollar Shop of the Internet

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Six months after its launch, TikTok Shop has sold more than $1 billion worth of products – some of questionable quality, including counterfeits.

From Cyrus FarivarForbes contributor


EEarlier this week, a woman who goes by the name “Tokyo” went live on TikTok and stood in front of a giant, 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, a company called GuruNanda, Pulling Oil has sold more than 1.5 million copies through TikTok's e-commerce arm and has had sales of 1.5 million since launching TikTok Shop in the US in September 2023, according to TikTok grossed over $11 million. 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 in their mouths for two to 10 minutes twice daily, has no proven medical benefit. GuruNanda's website specifically states that it cannot eliminate tooth decay or reverse periodontal disease – something the influencers who market it often claim.


The best-selling items in the TikTok Shop

Sellers have even made millions selling nutritional supplements and possibly counterfeit headphones.


TikTok declined to respond Forbes' Questions about the effectiveness of GuruNanda's product, among others.

In its first six months of existence, TikTok Shop was flooded with a variety of low-priced and, in some cases, knockoff products that are more likely to be found at a dollar store than a mainstream retailer. For example, a $5.35 “car air freshener” with scents like “hair salon” and “fruity granola” sold over 729,000 units. An $18 “Surprise 3D Dragon Egg” sold over 150,000 units.

“If I knew the exact reason and the formula, I would do it [these videos] every day of my life.”

Puneet Nanda, CEO, GuruNanda

Based on sales figures from YipItData, an analytics firm, TikTok Shop is already approaching projected annual sales of around $4 billion. That would put the company on par with Abercrombie & Fitch, which reported sales of $4.28 billion last year.

The most successful products in the TikTok Shop are often clothing, beauty or health. A $25 bottle of 60 “MultiMineral Sea Moss” capsules sold over 205,000 copies; A $14 “hair detangling brush” has sold over 853,000 units. But above all, they are cheap. Two brothers in Brooklyn have made over $1 million in sales in just five months selling homemade lemon turmeric soap ($4.50 plus shipping). “We work from 4 a.m. to midnight,” said 25-year-old Rusty Fields Forbes.

Even the founder of GuruNanda, maker of the wildly popular Pulling Oil, isn't sure why he's had such a huge 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 recently named spokesperson for TikTok Shop, told Forbes.

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,” Dan Frommer, retail analyst and editor of The New Consumer, wrote in a recent newsletter.

For some consumers, this popularity is a sign 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 companies. “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.”

Dan Frommer, The New Consumer

Worse still, there are a lot of fakes out there. You can buy a fake Apple Watch available for just $6 (over 253,000 units sold) or a set of Lenovo Thinkplus wireless “It's a gray market import or counterfeit, but from the picture/link alone we can “Don’t recognize that,” said Wendy Fung, a Lenovo spokeswoman Forbes by email. Apple did not respond Forbes' Request for comments.)

Laura Perez, a TikTok spokeswoman, said Forbes in an email that the company “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 companies 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 gain traction: Estee Lauder's Double Wear foundation ($49), for example, barely sold more than 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 reach $17.5 billion in U.S. sales in 2024 Bloomberg. But for now, it seems more focused on tapping into the same 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 same 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. According to YipItData, TikTok Shop's revenue rose from $261 million in October 2023 to $349 million in December 2023, the most recent month for which data is available. But between January and February 2024, sales in the TikTok shop stagnated.

Another challenge to its growth: rising fees for sellers. On April 1, TikTok increased its referral fees – the cut it takes on a given sale – from 2 to 6 percent, with another increase to 8 percent planned for July 1.

Even its biggest success story gave TikTok Shop a headache.

Live broadcasting was a money loser, Nanda said, given the cost of building a set, not to mention the time he wasted taking his staff away from their regular duties (some of them front desk and other administrative duties). Plus, it's tiring to talk 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 choice if he wants to continue riding in 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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