TikTok Shop has quietly become a retail powerhouse, with Americans now spending more on the social media platform than they do at Target or Costco's online stores.

The fast-growing shopping arm of the social media powerhouse captured around 2 percent of US online retail spending in July, up from 1.2 percent a year earlier, according to Consumer Edge data.

That puts TikTok Shop ahead of the online operations of major retailers including Target, Costco and Home Depot – a remarkable rise for a platform that only officially launched its US shopping service in 2023.

In contrast, the report's July numbers revealed that Target and Costco hold approximately 1.3 to 1.4 percent of the market, while Home Depot hovered around one percent.

TikTok's growth has been fueled by the way it blends shopping with entertainment, allowing users to discover products through videos and creators rather than deliberately searching for something to buy.

The platform's growth has been driven in large part by its network of creators, who can link directly to products through TikTok Shop.

Creators can promote products from their own affiliated seller accounts or earn commissions by promoting items from other brands on TikTok's marketplace.

Affiliate creators have become particularly important, often testing products on camera and demonstrating them for shoppers before directing viewers to buy.

This fostering of collaboration is a push-and-pull of affiliate creators collaborating with sellers to earn commissions from orders they generate by using their links.

This symbiotic marketplace also has the added benefit of attracting more repeat shoppers, particularly due to shoppers' loyalty to certain creators. 

Customers who made at least 20 purchases during the second quarter accounted for around 30 percent of TikTok Shop spending, despite making up just 5 percent of buyers.

And it is no longer just younger Americans driving the boom. 

Shoppers over 35 were the fastest-growing age group by year-over-year spending in the second quarter, suggesting TikTok Shop is broadening beyond its Gen Z reputation.

TikTok has been aggressively expanding its shopping business, adding major brands including Samsung, Disney and Ralph Lauren and rolling out an Amazon Prime-style membership offering with free shipping and other perks.

The platform generated more than $500 million in US sales during last year's Black Friday and Cyber Monday period, showing how quickly it has established itself as a shopping destination.

But TikTok Shop still has a long way to go to catch the biggest players: Amazon accounts for roughly 35 percent of US online retail spending, while Walmart has around 7 percent.