TikTok, once the world’s top app in downloads and consumer spending in 2023, is experiencing a slowdown in user growth. With its popularity, TikTok ranked fifth in monthly active users, trailing behind Facebook, WhatsApp, Instagram, and Messenger.
New data suggests a deceleration in TikTok’s growth, raising questions about the impact of its e-commerce venture, TikTok Shop.
Sensor Tower’s data reveals that TikTok’s monthly active user growth dropped from an average of 12% year-over-year per quarter in 2022 to just 3% in 2023. This change coincides with the launch of TikTok Shop in the U.S.
The Shop, which began testing in November 2022, expanded in early 2023 with brands like PacSun and Revolve joining. Although the official U.S. launch was in September 2023, TikTok Shop aimed to convert the influence of TikTok videos into real-world sales.
TikTok Shop’s integration has led to user complaints. Business Insider reported in November that users felt the app was becoming an “ad-filled wasteland.” Reddit discussions echoed these sentiments, with users frustrated by the increase in product-focused videos.
With these challenges, the Shop Seller app, powering TikTok’s e-commerce, showed robust growth, with a 230% increase in users year-over-year as of Q4 2023.
Instagram, having removed its Shop tab and live shopping features in early 2023, might benefit from TikTok’s user dissatisfaction. Meta’s decision reflected broader industry trends, indicating that social commerce, including live shopping, constituted only about 5% of total U.S. e-commerce sales in 2022.
While TikTok Shop has stirred user discontent, it hasn’t led to a significant shift to Instagram Reels. Instagram’s monthly active user growth remained consistent, and TikTok’s revenue continues to grow, although its downloads have been stagnant or declining globally and in the U.S.
This situation presents a complex challenge for TikTok as it navigates the balance between e-commerce integration and maintaining user engagement and satisfaction.