Most Brands Still Unprofitable Despite TikTok Shop Growth
TikTok Shop transaction volume has grown significantly, but some brands continue to face pressure from marketing and operating costs and have yet to achieve profitability.
What are the key facts?
- 1Beauty and personal care leading
- 2L'Oréal acquired Color Wow
- 3High marketing costs
- 4Korean beauty performed strongly
What happened?
Inc. reported that TikTok Shop continues to grow, with beauty and personal care accounting for a significant share of transactions on the platform. The report said Korean beauty brands have performed relatively strongly on the platform, while competition among brands has driven investment in content marketing for related categories.
The report also noted that although some brands have achieved sales growth on TikTok Shop, they have not yet reached stable profitability, with marketing and operating costs putting pressure on margins. The article also mentioned industry developments such as L'Oréal's acquisition of Color Wow, reflecting beauty brands' continued interest in social-commerce channels and their growth opportunities.
What does this mean for cross-border sellers?
Sales growth on TikTok Shop does not equal profit growth. Beauty and personal-care sellers in particular must absorb costs for samples, creator partnerships, advertising and fulfillment. Looking only at sales volume while ignoring product-level contribution margin is a common pitfall and can force a store to trade profitability for scale. Highest-priority action: Calculate actual gross margin by product this week after commissions, advertising and fulfillment costs, and pause campaigns that cannot achieve profitability.