TikTok Shop battles Shein and Temu in Latin America’s e-commerce race

Yareth Zuñiga’s boutique in Ciudad Victoria, in northern Mexico, is usually filled with items from Chinese e-commerce sites SheiniSheinFounded in China in 2008 and headquartered in Singapore, Shein is a fast fashion brand that grew rapidly through exposure on social media.READ MORE and Alibaba. In recent months, her stock has dwindled as new import taxes for Asian goods have caused shipping delays. She has instead turned to another e-commerce platform: TikTok Shop. 

Since its launch in Mexico in February, TikTok Shop has drawn sellers like Zuñiga, an administrator at a public elementary school, who is able to make an income simply by promoting products on the platform without having to keep an inventory.

“It helps me grow and reach more people,” Zuñiga told Rest of World. Whereas earlier, TikTok had been little more than a place for her to share tidbits from daily life with her 46,000 followers, its e-commerce feature has now become a lucrative economic opportunity, she said.

Hundreds of sellers in Mexico have flocked to TikTok Shop in recent months, even as the app faces pressure in the U.S. A national security law passed last year requires TikTok to divest its U.S. business from its Chinese parent company ByteDance, or face a ban. President Donald Trump has delayed the ban thrice, with a deadline for this month extended by 90 days.

Facing uncertainty and slower sales in the U.S. because of trade tensions, TikTok has turned its sights to the south, launching first in Mexico, and then in Brazil — earlier than some analysts had forecast. 

The e-commerce marketplace in Latin America is expected to exceed $1 trillion by 2027, a 100% increase from 2023, according to Payments and Commerce Market Intelligence, a market research firm. TikTok, with more than 111 million users in Brazil, and 81 million in Mexico — the region’s top markets — has an advantage over rivals Shein and Temu, which have an established presence in the region, said Carlos Corona, chief growth officer at Mindgruve, a digital market agency.

“TikTok Shop already has the organic traffic these other platforms are fighting for,” Corona told Rest of World. TikTok Shop has “a huge competitive advantage” in Mexico, which is among the top five countries with the fastest growth rates on TikTok, he said.

Alongside users, these countries also have fast-growing markets for advertising. Brazil and Mexico are the largest markets for advertising for TikTok after the U.S. and Indonesia, according to media agency We Are Social.

Still, TikTok Shop will have to contend with well-established e-commerce giants: MercadoLibre is the dominant platform in the region, while Amazon remains a powerful player in Mexico and Brazil. Shein, launched in Mexico in 2018, and Temu, which arrived in 2023, also have loyal fanbases. With the de minimis loophole closed in the U.S., Shein and Temu — which enable cheap goods to be shipped to customers directly from China — are also serious about Latin America. 

In Mexico, Shein has become a household name thanks to the 3.1 million-strong catalog sales industry. Many of the sellers have incorporated products from the company into their stock.

Its success has also made it a target. To protect local industry from cheap Asian imports, the Mexican government in December announced a 19% tax on items from countries with which it does not have a free trade agreement, including China. The move has hit many Shein and Temu resellers.

TikTok Shop might be able to get around its Asian rivals’ challenges in Mexico, Javier Huerta, a manager at FlowPagos, a platform that helps businesses manage online payments, told Rest of World. One way is cross-docking, where goods bypass traditional storage, or by selling products that are already in Mexico — regardless of their place of origin. This could lure sellers away from platforms such as Shein, Temu, and Facebook Marketplace, he said.

TikTok Shop also has a lower barrier to entry. Valentina Sanchez, a college student in Mexico and a longtime fan of Shein, dreamed of becoming a brand ambassador for the company but her requests went unanswered. In February, she became an affiliate for the newly launched TikTok Shop. Since then, Sanchez has sold cosmetics and clothing on the platform — even going viral for a video in which she modeled garments. She now makes $150 in monthly commissions, Sanchez told Rest of World.

To help sellers make the jump from Shein and Temu to TikTok Shop, several agencies offer advice on social media platforms. IndiePro Marketing, a digital marketing company in Mexico, created a discussion group on Facebook ahead of TikTok Shop’s launch to teach users how to sell and earn money on the platform.

“You can work with 500 or 1,000 creators based on exchanges [free samples], leverage these communities already made for you,” Oscar Fraijo, IndiePro Marketing’s associate director, told Rest of World, referring to the loyal followers the creators have accrued. Now, “all the barriers to purchase have been removed.”

In Mexico, TikTok Shop will become one of the biggest e-commerce giants in the next two years, according to Huerta. For now, the platform offers free shipping throughout Mexico and discounts of up to 50% on first purchases. TikTok Shop’s commission for sellers is currently 6%, well below Shein’s 16% and comparable to AliExpress’ 5% to 8%. 

In Brazil, TikTok Shop could corner nearly 10% of the e-commerce market by 2028, a recent report from Banco Santander predicted. The platform will square off with MercadoLibre and Temu, the two most popular marketplaces, according to Conversion, a Brazilian e-commerce research firm.

Besides fierce competition, TikTok is also not free from the kind of regulatory scrutiny that has threatened its operations elsewhere. Last month, Brazil’s first lady complained to Chinese President Xi Jinping about the potentially harmful effects of TikTok on women and children. This month, a majority of Brazil’s Supreme Court judges said social media companies are liable for content posted by their users.

While social media companies await Brazil’s move, TikTok Shop has called its product launch campaigns in Mexico “a significant” success that has exceeded expectations, and hailed its results as “impressive.”

“The importance of finding success in Latin America is quite clear,” said Corona. “It’s one of the most vital markets for growth.”