Launch On TikTok Shop The Right Way (Based On The Data) — Alex Nisenzon | Why TikTok Shop Is Outpacing Amazon, How Creators Fuel TikTok Sales, Why Impulse Buys Thrive On TikTok, How To Prep With TikTok Data, Why Mid-size Brands Succeed (#409)

In this episode, we explore how TikTok Shop is changing online shopping and what brands need to know to succeed. 

Alex Nisenzon is the CEO of Charm.io, a platform that tracks over 4 million direct-to-consumer and TikTok Shop brands. He shares key data insights about what works and what doesn't on TikTok Shop, including why brands need to work with thousands of creators to drive real sales. 

Learn about the biggest product categories, pricing strategies, and how TikTok Shop compares to Amazon and other platforms. 

Topics discussed in this episode:  

• Why TikTok Shop is growing faster than Amazon. 
• How creators, not brands, drive TikTok sales. 
• Why impulse buys lead on TikTok—for now. 
• What makes TikTok videos drive sales. 
• How to prep for TikTok Shop with data. 
• Why mid-size brands win on TikTok. 
• What price points work best on TikTok. 
• How Charm.io tracks TikTok Shop trends. 
• What bundling and creator tactics work. 
• Why TikTok boosts both sales and awareness. 
  
  

Links & Resources 

Website: https://www.linkedin.com/in/nisenzon/
LinkedIn: https://www.linkedin.com/company/charm-io/
X/Twitter: https://twitter.com/CharmAnalytics

Get access to more free resources by visiting the show notes at
https://tinyurl.com/2mf3ex8r 

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Transcript

[00:00:00] Hello, welcome up to another episode of the e-Commerce Coffee Break podcast. As you probably know, TikTok shop is growing fast and changing how people shop online makes videos quick, buying the greater influence and everything together. And for DTC brands, this is a big chance to boost sales, but it's [00:00:20] also easy to get lost in the crowd.

So today in this episode, we will talk about and find out more about how you can launch a TikTok shop and how to drive real sales and. Looking into the data to make this work. Joining me on the show today is Alex Nisenzon. He is the CEO of Charm.Io, a platform tracking over 4 million DTC and TikTok Shop brands.[00:00:40] 

He's here to share what the data says about what works, what doesn't work, and how you can set up yourself for success. So I'd like to welcome him to the show. Hi, Alex. How are you today? Hey Claus. Thanks for having me. I'm doing well. Alex TikTok shop has reshaped e-commerce in a very short time. What unique factors make it such a game changer compared to [00:01:00] platforms like Amazon and Shopify?

Yeah, great question. So, you know, I, I think that I. A lot of people, uh, when they think about social commerce, right, they think about more traditional social media driving advertising exposure for brands. But what's really unique about TikTok Shop is they're the first [00:01:20] platform, especially in, in the US and Western markets, to really nail the experience of generating e-commerce sales directly in that social experience.

And, and when you think about, you know, um. Amazon and all these other, other platforms, right? They're, they're obviously massive and achieved massive, [00:01:40] massive success, but they really don't have that social connectivity and experience. And I think, um, since TikTok shop has launched, there have been other platforms that have tried to bring into the fold, you know, experiences like live stream shop.

Or or video shopping. And they really haven't [00:02:00] seen much traction. And I think the reason TikTok shop did so well is because they started by really building a strong social network, right? People are on there because they appreciate the authenticity that comes with the platform. They appreciate. The experience, uh, and the content that's on the platform.

And so then when they [00:02:20] introduced e-commerce as a part of that, it, it came in a very organic way where it's not just like, here, let us sell you all this stuff and we're gonna put video content on top of it to, to make it a little bit less, uh, abrasive. It, it's more of. It just so happens that some of the influencers and creators you're [00:02:40] following happen to also be, you know, recommending some products that you can buy right there.

And I think that's, that kind of organic flow is what's really resonated with consumers and driven to its success. Mm-hmm. No, I totally agree. And I think this kind of organic user generated content building trust with influencers helps it [00:03:00] selling products. Uh. What makes it more likely that people will buy while scrolling?

I think that's a bit of the, the key that you get the sum stock so that they basically stop and then go into a shopping mode. What's the key there? Yeah, so, so look, I, I, I think it's about, uh, a, a few different [00:03:20] factors, right? One is, I think it's that coming from creators that you trust, right? So going back to that building, the trust and the relationship that users have with the creators and the, the content that they're following.

The second is that the content is engaging. So when you, when you. See, you know, for example, beauty products being applied to [00:03:40] someone and, and you see the outcome in real time of the before and after. And that experience that that person went through it, it's really relatable to the end customer. It captivates them and it makes them, you know, see the potential of what that product can offer them.

And I think that resonates. Right. Um, I think a another piece is that a lot of the [00:04:00] products that are sold are at. Pretty, uh, uh, affordable price points. Uh, you know, there's this misconception that everything that's sold on TikTok shop is really cheap. That's actually very not true. We've done analyses and there's millions of dollars of sales of products in the a hundred and $200 plus price point, but for the most part, a lot of the products [00:04:20] sold are in the 15 to $25 price point.

I think $19 was the average, or $18 and 60 cents or so. Um, and so it's generally pretty affordable goods that consumers are seeing there. And so when you have this kind of perfect storm of, you know, creators that you trust and content that's engaging and products that [00:04:40] are, are, are, are reasonably priced, you, you end up being feeling pretty comfortable making a purchase.

Now I think this impulse buy as they're called are, are very important there. But I also read that a lot of people use TikTok not only for entertaining themself, they use it as a search engine. Is there a chance that people are looking intentional for products? [00:05:00] You know what they are. But what I'd say is that we see that a lot more in Southeast Asian markets where the platform is more mature.

So to give you a little background on, on TikTok shop, it, it launched at the end of 2022. First in Southeast Asian markets, um, in Indonesia, uh, Thailand, Malaysia, uh, [00:05:20] and, and you know, some of those regions. And there, it's matured to a point where now consumers are using it for everyday shopping, you know.

Products that you would buy at your local, you know, grocery store or your local pharmacy. They're buying on TikTok shop, um, toothbrushes, toothpaste. You know, we had a client that [00:05:40] was inquiring about, um, they wanted to track the sales of diapers in Vietnam and, and I thought this is gonna be like a total disaster.

I'm like, who's buying diapers on TikTok shop in Vietnam? And I was so wrong. There are tens of millions of dollars of diaper sales. On TikTok shop in Vietnam. I mean, I was blown away, right? Like you just [00:06:00] don't equate the two in the US yet, right? Like that's not where I, I just had a, a kid, uh, uh, four months ago, I would not think to go to TikTok shop to buy diapers.

I don't think my wife would let me, but even, even if she did, I don't think that that would be my natural place to go. And, and so in the US it is still mostly, like you said, you know, impulse buys or [00:06:20] categories, like the top category is beauty. Women's wear products do very well. Health products do very well, but it's not really like your everyday essentials like we see in, in, in some of those Southeast Asian markets and places where it's more mature.

Um, and in the US you know, it launched at the end of 2023. I. It, it originally and it's [00:06:40] already achieved massive scale. So, so TikTok shop did about seven and a half billion dollars in GMV last year. And globally it did 27 billion in GMV. And just to give you some, some frame of reference, 'cause I love this analogy.

It took Amazon about 15 years to get to the scale that it took TikTok shop about 24 [00:07:00] months to get to. So you could just see how quickly things are moving and obviously, you know, TikTok shop has, has the advantage that more. Consumers have mobile devices now. You know the, it's a lot more proliferated than it was when Amazon was launching and coming to market, but pretty fascinating.

It's fascinating and I, I spent a couple of months last year in [00:07:20] Southeast Asia, and you're right, I mean, they have apps that I have never heard of and people are on these apps. These are the major apps and they do literally everything on these apps. So I ended up having six more apps on my phone when I left Southeast Asia than before because there was no way to do it the, let's say, Western style, because they're just using that to also have a very different behavior, [00:07:40] which I think makes it interesting for brands that, that are going global.

That are going multi-country, multi-language, and whatsoever to look into this data. And I wanna talk a little bit about data. So at I owe you track formally DDC and TikTok shops, I mean that's a massive number. How are you collecting and organizing all this data? I. [00:08:00] Yeah, great question. So essentially, you know, to, to give you some of the background there, right?

We felt like there were so many brands coming to market all the time and nobody really had visibility into who's new in beauty or apparel, what's driving their growth. And we really wanted to find a way to use publicly available [00:08:20] signals. That were indicative of a brand's traction in the market. So, you know, how big is a brand's audience on social?

What is their engagement like on social platforms? Right? What are their sales like on TikTok shop and all these different metrics. And so we, we use, uh, web crawling and, and different collection techniques to acquire vast [00:08:40] amounts of data and then synthesize it into scores and, and. And different metrics, um, to help our customers understand how quickly brands are growing in a certain market, um, how successful they are, and ultimately what's driving that performance.

And then in the case of TikTok shop, we even go down to analyzing, you know, things like video [00:09:00] level performance. Um. Individual creator performance and, and, and ad spend estimates for, for brands so that if you're launching on TikTok shop, you actually know what it's gonna cost to play to be effective, right?

Not just, you know, um, what products you should be launching at what price points, but what does an average advertising budget look like for [00:09:20] somebody who is, you know, a top performer in your category. You already answered my next question there, but I want to take one step back. So if I'm a brand, I'm probably selling on Shopify or I'm own store at selling on Amazon, I want to go into TikTok shop.

What are the first steps? What's kind of the research process before I really [00:09:40] go and start my shop? Yeah, so I think the first thing is, is really understanding the opportunity, right? And, and that's really sizing the category. The first step always starts with. The products that I'm selling, how big is that market on TikTok shop?

And there's not like a threshold [00:10:00] where if it's below a certain amount, it's a bad thing. That actually could give you an advantage. 'cause you could be a really big fish in a very small pond. Right? If they're, if you're the first player to enter. Especially 'cause TikTok shop is still pretty in their pretty early innings.

Um. However, what I'd say is, you know, all of these brands, the first thing they wanna understand is how big is the [00:10:20] category? And who's leading in the category today? Right? How big is their share? Are we talking about a very fragmented market? Are we talking about a market that's growing very quickly? Is it pretty, uh, stagnant?

Um, in the case of TikTok shop, everything is growing very quickly since, since it's launched. So, um, that that's a, a pretty, uh, [00:10:40] regular insight that we see. But then also, you know, how. Big, are those top players? Are they, you know, is it, is it really lopsided in, in the category where you have one or two, two big brands that are capturing, you know, 30, 40% share?

Or is it that, you know, even the top brands are still capturing a very small, small [00:11:00] share relative to the whole category and, and there's, you know, enormous opportunity to to, to still win and be successful there. I wanna talk a little bit 'cause they all have the data there, uh, about demographics. Um, TikTok for me, it's like younger, younger generation, but if you tell me that in certain countries they're buying diapers, that tells me, oh, that's a complete different [00:11:20] age group.

What brands or what products work really good on TikTok? It's a great, great question. You know, I, I read this stat that TikTok had put out, I think it was around six months or so ago, that something like 40% of the users in the US are above 40 years old or [00:11:40] something like that. And I was really shocked to hear that.

I mean, that's, that's like a, I, I I would've totally not guessed that to be the case. Right. Um, I, I might be a little off on the percentage, so don't quote me there. But the, the re the reality is, is that there's all different types of products for all different age groups in general, though, as I mentioned that the [00:12:00] biggest category is beauty by far.

Um, it's been in, you know, the top category since TikTok shop launched within Beauty, the top. Subcategories are makeup, so cosmetics products, um, personal care, uh, accessories. So, you know, curling irons and things like that for your hair do very, very [00:12:20] well there. Um, and then, you know, other big categories are ones like health where vitamins and supplements are just massive on TikTok shop.

I mean, I, I can't even. Try to pronounce the ingredients and the different stuff they sell, but one I know is Ashwagandha. That one's very popular there. [00:12:40] Um, they have a lot of, you know, different, um. Energizing powders and, and you know, um, different tea type drinks and beverages that you mix. So those do very, very well there as well.

Um, and then obviously apparel, uh, is particularly women's wear, that that's another massive [00:13:00] category there. Uh, you know, athleisure is very, very big. There's a brand called h. That's done tremendously well on TikTok shop. Um, another one I believe called Comfort, that that's been slowly, slowly gaining traction too, and some shapewear brands as well that are doing very well.

When it comes to the marketing strategies, [00:13:20] is it mainly through influencers or are brands directly there with, with their own marketing campaigns? It's, it's almost all creators to, to, you know, to, to really drive scale and be successful. We did an analysis recently where we looked at the top. 1000 brands within [00:13:40] beauty and health categories, and within that top 1000 top performing, you know, top selling brands, we, we segmented it to the top 100 versus the bottom 900.

So if you think about it, even the bottom 900 are still very, very successful, right? We're talking about the top 1000 as a whole, as a whole grouping here. And what we found was that the [00:14:00] top 100 used six times as many creators on average. A as the bottom 900 out of those top 1000 did, and the average number of creators that those top 100 was work were working with is 5,000 over the last 12 months.

And when you look at the top performing shops, they're working [00:14:20] with upwards of 8,000 creators, um, at a time. And, and it's really crazy, right? I mean, you have 8,000 different influencers that are promoting your products in their videos and their content. And I think that. Kind of highlights a couple of really interesting dynamics that we see on TikTok shop.

One [00:14:40] is that medium sized brands tend to perform better on TikTok shop than really large brands. And the reason for that is I. We believe because large brands have very strict brand guidelines and they're very strict about who they want representing their brand. And in a [00:15:00] platform where sales are directly correlated based on our analysis to how many creators you're working with, it's almost impossible to manually verify and, and, you know, uh.

Pick and select every single creator that you want representing you. Right? If you think about like a traditional, [00:15:20] large brand, you know, like Gucci or one of these big players that, that, you know, if they're running a, a campaign in the real world, right? They're gonna be vetting every single person in that campaign and making sure their agency is making sure it aligns with their brand image and what.

They're trying to, you know, convey in messaging and all of that. You can't do that. You [00:15:40] can't have that kind of control. And so, uh, on TikTok shop, you need to be willing to let go of some of that control to achieve real scale. And so that's why we see this. Kind of emergence of these medium sized brands as the top performers, because they're really the ones that are willing to cast a wide net in terms of the creators they're working [00:16:00] with.

I mean, some other mind blowing stats, is that out of the these top 100? Uh, uh, uh. Top performing shops across beauty and health, they got an average of 370 million views on their videos in, in total, across all of these creators that they were working with. So think about that [00:16:20] insane scale that they achieved.

I mean, that's just like, I mean, that would cost. So much money to do with traditional advertising, and here you can do it by, you know, having some of these creators reaching very small audiences, right? Some of these can be micro influencers, essentially reaching small audiences at a time, but you're working with a [00:16:40] large scale of them and hitting different pockets of audiences, uh, over time.

Um, and, and it, it's really, you know, miraculous on average, they, they generated about, um, I think it was like. 14 million in sales, um, across this top 100, uh, over a 12 month period. So it's, it's [00:17:00] pretty, pretty insane numbers. Absolutely. It's mind boggling. And, and for me as a dinosaur in marketing, uh, this is, is just something completely new to me.

And it also shows you that this platform at TikTok is so very different to how Amazon runs, how e-commerce marketing for like Shopify runs and whatsoever. So I. [00:17:20] Massive opportunities there. I think high speed and completely out of the box marketing strategies there. Now talk me through how Charm IO helps with all of this with the data and how brands can facilitate this data to become successful.

I. Totally. So, so look, you know, we are trying to provide insight and visibility into [00:17:40] everything that's happening in e-commerce, right? And, and on TikTok shop, that means helping our customers understand how big any category or subcategory is in any market. For TikTok shop, what are, uh, what is each shop doing in terms of its sales volume?

How many units it's selling, you know, total sales. Generated in [00:18:00] GMV, what products are selling at what price points helping you understand your product assortment that you should launch with, whether you should do bundling. Bundling is a big, big strategy. A lot of sellers take on TikTok shop. Um, and then ultimately what really moves the needle is the creator side, right?

So, so we can actually show you what creators are driving, how [00:18:20] much revenue for every single seller, um, what creators each seller is working with. And, and, and how many views they're getting on their campaigns, how much ad spend they're, they're, they're, uh, spending on their campaigns and all of that. So it's really an end-to-end blueprint on how to be successful on the platform.

And we're providing that insight not just to brands [00:18:40] themselves, but to investment firms that are looking to invest in consumer brands and are using TikTok shop data as another place to source and diligence investment opportunities and to retailers. We work with, you know, Ulta and QVC and large retailers that use our data.

For merchandising and they wanna see what's trending on these platforms. 'cause that's gonna inform [00:19:00] their decisions about how to optimize their assortment and what they bring in stores. Mm-hmm. Talk me through who's the person who works with Charm io and how much time, how does their normal day look like?

How much time do they spend on the platform? Yeah, so that really depends on how mature social commerce is for the [00:19:20] brand, right? In in some cases, it's really the e-commerce, um, manager or, or, or head of e-commerce that that's responsible for licensing the data. Um, and, and they're. Ma maybe managing several channels beyond just TikTok shop, where TikTok Shop is just one of them.

And in larger organizations that we work with, it can be a [00:19:40] dedicated social commerce team where they actually have a carved out function specifically focused on this. Right. Or, or on TikTok shop and, and Meta and other platforms. And they're really looking at a, you know, what should my strategy be in terms of the assortment I'm bringing on the platform and how, how I'm.

Uh, setting up my operations there for everything [00:20:00] from fulfillment to advertising and, and everything in between. And then also, you know, things like the, the creator strategy around that. Mm-hmm. I'm interested in, it's a, it's a fast moving platform. It's changing quickly. It's growing fast. Where do you see it?

It is heading to. So something that's really [00:20:20] interesting and unique about TikTok Shop is that unlike Amazon, which can be a place where consumers start a search, but also where they ultimately buy TikTok Shop is both a. Bottom of the funnel place where consumers make a purchase, but also acts as an awareness, uh, uh, [00:20:40] mechanism that drives, you know, top of funnel, um, interest that then can extend and create a halo effect to sales across other channels.

And I think one of the reasons that I. Brands are finding a lot of value in TikTok shop is that even if they're running campaigns there that aren't necessarily profitable on a per unit [00:21:00] basis within the platform, what they're seeing is that the, by generating that volume and those eyeballs on TikTok shop, um, they're ultimately seeing an a lift in sales on, on platforms like Amazon on their direct.

To consumer site and other places. And so I think that what we're gonna see is more and more brands adopting TikTok shop as [00:21:20] as a sales and awareness channel. And I also think that. As the platform matures, we're gonna start seeing some of those more, you know, everyday purchase, uh, categories become more prevalent in terms of what consumers are buying, right?

The, the, the topics we were talking about earlier with Southeast Asia and the toothbrushes and toothpaste and sleepers. [00:21:40] Um, I think we're gonna start seeing more of that over time in the US and, and I'm, I'm looking forward to seeing kind of that, that shift start to happen. Yeah, I think it's very important what you just said, that people basically might find products there and then because of trust or I don't know, even convenience because they're Amazon Prime clients, they then, at the end of the day, buy on [00:22:00] Amazon, which makes sometimes very difficult to find out where the business is actually coming from as a merchant, because it's just multi touch, multi-touch points to get there.

Yeah. Now, talk me through the, um, onboarding process for a new user of Charm io. What steps are involved? How long does it take to get up and running? I mean, it's, it's very quick because we don't actually have to integrate with anything on the [00:22:20] customer side, right? They basically, um, do tell us what email address is gonna be the user.

We give them access and they're up and running. We do an onboarding session and we also, uh, one of the things we really lean into is insight sessions with our team. We we're appreciative of the fact that we're. Kind of the experts on our data and, and we want to make sure to lend that [00:22:40] expertise. And so in addition to onboarding and training with our customers, we also provide at least, uh, at least semi-annual insight sessions for all of our users.

And so that's where, you know, they can tell us, here are the things that we're thinking about or that important to us, and we'll, and we'll, uh, kind of put together an insights presentation to take them through our perspective on [00:23:00] their business opportunities on, on the platform. You mentioned before that fashion is big, supplements are big.

Who's your perfect customer? Perfect customer would be large CPGs, uh, or, you know, or beauty brands and, and anyone kind of selling in those key verticals. Hmm. Okay. That makes sense. [00:23:20] Cool. Alex, before our coffee break comes to an end today, is there anything you wanna share with our listeners that we haven't covered yet?

No, I think that's it. I think we covered a lot and I'm pretty sure quick time here. It really was a coffee break. No, I think you really touched on the most important things and I learned a lot. Um, I'm not selling on TikTok shop. I'm very interested on the [00:23:40] platform itself and how it evolves and I. I think some of the facts you gave were really, really surprising how it works and, uh, what kind of impact it has.

Where can go people, uh, where can people go and find out more about you? Um, they can just go to our website, charm.io. Um, there can reach out to me on LinkedIn if you're gonna post, uh, my LinkedIn [00:24:00] with the, with the, when you publish this, or yeah, our website is a great place to go. We'd be happy to speak to anyone.

Okay, cool. I will put the links in the show notes and you just won't click away. Alex, thanks so much for your time today. I think that was a really good insight. I hope a lot of people will reach out and, um, optimize their TikTok strategy. Thanks so much. Appreciate you. Thank [00:24:20] you.

Hey, Klaus here. Thank you for joining me on another episode of the e-Commerce Coffee Break podcast. Before you go, I'd like to ask two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show. It'll also make it easier for others to discover the podcast.

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