Big brands are wary of TikTok Shop’s livestreaming bet

Since TikTok Shop launched in the U.S. in September 2023, the social media app has recruited 500,000 merchants, including top brands like Estée Lauder, to its e-commerce platform. But a quick perusal of the “Live” tab in the app — a feature on the app that lets users broadcast live videos and interact with their audience in real time — will surface predominantly small brands or individual sellers hawking their wares.

That’s because live shopping is still a nascent part of the retail landscape in the U.S., and the number of major brands on TikTok Shop remains few and far between. The ones that have signed up are too hesitant to embrace live shopping. There are plenty of reasons for that, the biggest one being that there are many risks baked into TikTok Shop’s platform, like the unpredictability of going live to an audience of 150 million users. Many big brands are still waiting on the sidelines to wait and see how their smaller competitors fare with live shopping, multiple agencies said to Modern Retail. All told, it’s putting a damper on the TikTok Shop’s e-commerce pitch to brands. 

“Any agency trying to push live selling on a big brand, it’s like, you can go die on that hill, have fun, because there are just things that you literally can’t mitigate,” said Jake Bjorseth, the founder of Trndsttrs, a marketing firm. 

At an event in New York on Oct. 23, Nico le Bourgeois, head of U.S. operations for TikTok Shop, emphasized how many more brands will be participating in the platform’s holiday-related sales during Cyber Monday and Black Friday.

“We’re going to have more brands, like big brands that everybody knows, but also a lot of great small businesses that have built the audience on TikTok and now represent large gross merchandise volume,” he said in an interview with Modern Retail.

Yet, there are still no major brands with significant sales on TikTok, according to research from Marketplace Pulse. Goli Nutrition, a vitamins and supplements brand, is the top brand on TikTok, as of data published Sept. 26. Its sales exceeded $7 million over the past 30 days, per Marketplace Pulse, citing TabCut. As such, TikTok Shop is behind on its target to reach $17.5 billion in gross merchandise volume this year in the U.S., Bloomberg previously reported. 

‘The juice is not worth the squeeze’

The very nature of live selling is likely giving many brands pause.

“Your average person, even a great creator, it’s pretty hard to talk nonstop for two hours and not slip up and say the wrong thing,” Bjorseth said. “So I think there’s just so much risk associated with livestreaming that the juice is not worth the squeeze, if you will, for a lot of these large, publicly held companies.”

One agency executive, who requested anonymity in order to preserve their relationship with TikTok, said there is an unpredictability associated with livestreams and creators. They cited cases when affiliates have failed to follow the guidelines given to them by brands. They described one instance where a creator linked to a different, cheaper product to game the algorithm and go viral. 

Another reason for hesitancy boils down to bureaucracy. Multiple sources told Modern Retail that branding is very important to major consumer companies, and it is a very common practice to have a rigorous internal content approval process. The relative newness of live shopping on TikTok Shop complicates that approval process. 

“The bigger the brand, the more the layers of bureaucracy in between,” said Nicole Rechtszaid, co-founder and co-CEO of Ghost Agency. “And so it just gets really challenging for them to actually activate, because you need to have like every lever pulled, and usually there is one that cannot be pulled to make TikTok work.”

Discounting is also an issue for big brands. TikTok Shop recommends brands and affiliates livestream for a minimum of two hours, multiple sources told Modern Retail. But to keep users engaged during that time, brands need to incentivize their audience with perks like flash deals, discounts or a gift with purchase. 

“There is often this strange political pricing system that we’ve encountered where brands at a certain level don’t want to discount their pricing on TikTok because they’re worried that might affect their relationship with a retailer like Ulta or Sephora,” Rechtszaid said. “With big brands, that’s a limitation.”

In Rechtszaid’s view, hesitancy from major brands to embrace livestream is a microcosm of their relationship with TikTok Shop as a whole. 

“You’ll often see big brands struggle on TikTok Shop because there’s not really any novelty or excitement to buying it through TikTok Shop,” she said. “It’s something that people can literally just walk down the street to go buy or go to the mall to buy.” 

Big brands can mitigate that by selling exclusive products on the platform, but many aren’t willing to make that kind of investment, Rechtszaid said. 

Put together, brands of any size don’t want their time — or their money — to be wasted. The cost is high for brands to hire agencies to produce a livestream on their behalf. Given that only 14% of adults in the U.S. have bought something from live shopping, according to eMarketer, there’s often a high probability that a livestream event won’t pay off. 

“There’s nothing more demoralizing than setting up a studio set, setting up a script, running a livestream and then being on there with your talent on camera, and only freaking four people are in there,” Bjorseth said. “Oh, you just spent $1,000 to literally do nothing for me. That’s amazing.”