The data: Small businesses are flocking to TikTok Shop.

• Its US marketplace currently has 215,000 sellers with less than $15 million in annual revenues, up 25% YoY, TikTok told Modern Retail.
• In the UK, more than 200,000 small and midsize businesses have set up shop on the platform to boost discovery and sales.

Behind the numbers: TikTok’s popularity among small businesses is no surprise given the platform’s large and engaged user base, which can turn small brands into overnight viral successes. One such company, Mavwicks Fragrances, went from generating $300,000 to $400,000 in annual sales to $32 million within the first year following its TikTok Shop launch, founder Megan Reep said at a TikTok Shop event. While that’s not the norm for most brands, the possibility of making it big quickly is a major draw for smaller companies looking to establish a market foothold.

Despite TikTok Shop’s efforts to onboard larger, more established merchants, discovery on the marketplace is tilted in favor of smaller sellers.

• Nearly three quarters (72%) of TikTok Shop users discovered small businesses on the marketplace in the past 12 months, compared with 40% for midsize and 33% for large brands, per a GlobalData survey.
• Nearly two-thirds (67%) of online shoppers surveyed cited TikTok Shop as their preferred channel for product discovery—ahead of Amazon (57%) and search engines (35%)—underlining the marketplace’s importance for both emerging and established brands.

Implications for retailers: TikTok Shop is rapidly becoming one of the platform’s most popular features. In the US, 43% of users have used the marketplace—more than the number who have used an effect or added trending audio to their posts, according to an April Morning Consult survey. In the UK, more have used TikTok Shop (50%) than have uploaded a video (32%) or followed a brand account (44%).

While selling on TikTok Shop comes with its own set of challenges—including the need to produce a constant stream of content and adjust to highly volatile demand—brands that choose to opt out could face declining relevance as AI platforms make traditional methods of discovery less reliable.