Explained: What is TikTok Shop?


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What is TikTok Shop? Last fall, TikTok officially launched the U.S. version of TikTok Shop, the platform’s in-app shopping system. Big brands like Estée Lauder have rushed to embrace it, and TikTok claims that 500k+ merchants are now selling on TikTok Shop. 

But for many brands and agencies, it’s hard to get a read on whether selling on TikTok is really worth it—not least because TikTok’s future in the U.S. is uncertain

In many ways, it’s probably too soon to say exactly how important TikTok Shop will be for your business. It depends a lot on your category and your sales goals. Plus, we’re still waiting for good data on conversion rates on TikTok Shop. 

Until then, you’re probably going to hear a lot about TikTok Shop. Here’s a breakdown of what to know so far. 

What are the benefits of TikTok Shop? 

Since the fall, shopping has become fully integrated into TikTok. “Shop” is now its own tab at the top of the app. Marketers can also create Shop Ads that refer viewers directly to your product listing on TikTok. 

TikTok Shop also offers its own checkout system, so shoppers can browse and purchase without leaving the app.  

But one big benefit of TikTok Shop is its extensive in-app affiliate program. This means that, when you list your product on TikTok, third-party creators can then promote it, and get a cut of sales. You don’t even have to pre-arrange the video with them. Creators can just promote any product they see listed on TikTok Shop. 

In other words, the potential of TikTok is not so much about selling to your pre-existing audience. It’s about TikTok creators recommending your product to their followers in exchange for a cut. 

Given the popularity of shopping hashtags like #TikTokMadeMeBuyIt, this could theoretically drive a lot of sales. Tons of people start their shopping journey on TikTok. Now, you can be there when they do.

How big is TikTok Shop? 

Right now, TikTok Shop has 500k+ merchants. These merchants are all hoping to get access to TikTok’s massive user base, which encompasses 170 million users in the U.S. 

Many TikTok Shop vendors sell in the specific categories that already perform well on TikTok. Think beauty, apparel, and food—the kinds of products that lend themselves well to short narrative video demos.

We don’t have good data yet on how TikTok Shop sales compare to, say, sales on Walmart or Amazon. But TikTok is far and away the biggest social commerce platform already. 

One recent study found that 68.1% of social commerce sales happened on TikTok—far more than Instagram Checkout, Facebook Shop, and other rival platforms. Again, that’s social commerce only. It doesn’t include traditional platforms like Amazon, Walmart, Shopify, and so on.

And who is buying all of those products? Unsurprisingly, customers of TikTok Shop are disproportionately young. 18-to-24-year-olds make purchases 3.2x more than the adult population average. 

How much does TikTok Shop cost? 

For now, TikTok takes a relatively small slice of commissions. Right now, sellers pay 6% for every sale—though TikTok is increasing its cut to 8% by July 2024. 

You also don’t have to manage all your listings from scratch on TikTok Shop. Shopify and BigCommerce let you sync your inventory directly with TikTok Shop, allowing you to manage your listings, inventory, pricing, and more directly from your chosen DTC platform. 

That said, the integration is reported to be glitchy, according to Modern Retail. Issues are common, and it often takes a lot of manual intervention. 

How do you ship from TikTok Shop? 

When you join TikTok Shop, you choose your preferred shipping option. You can go with either TikTok Shipping and Seller Shipping. 

TikTok Shipping. TikTok Shipping is the default option when you start selling on the app. It allows sellers to use TikTok’s own network of shipping partners. TikTok Shipping products get a “Shipped by TikTok” badge, and TikTok guarantees three-day delivery for eligible products. The platform has a “3-Day Delivery” badge that it shows to shoppers. 

Seller Shipping. If you don’t want to use TikTok’s logistics system, you can opt to use your own logistics network, called Seller Shipping. You don’t get any badges this way, but you have other benefits. 

One key point: Amazon Logistics is one of the supported shipping partners for Seller Shipping. So, through Seller Shipping, you can have Amazon fulfill your TikTok orders. That’s a big deal for brands that already sell on Amazon and that don’t want to create a fulfillment plan from scratch for TikTok. 

What else is there to know about TikTok Shop? 

There’s a lot more to cover when it comes to TikTok Shop, but for now, a few important points to keep in mind: 

The 30-day trial period. Don’t expect to go viral right away. For the first month, new sellers on TikTok Shop can’t make more than 200 sales per day. That is to limit bad actors on the platform.  

Watch your inventory levels. The beauty of TikTok is its viral potential. If a creator makes a video featuring your product and it blows up, you might see exponential sales in the coming weeks. 

But TikTok’s unique ability to catapult a product from obscurity into virality can present all new challenges around inventory levels. Your sales numbers might shoot up one week and plummet the next. 

That makes smart inventory management all the more essential. Be sure you are keeping a close eye on inventory data so you don’t get caught flat footed.

Pay attention to external links. If you want to promote your brand on TikTok but don’t want to list your products on TikTok Shop, don’t worry. For now, you can still get away with promoting your brand on TikTok and directing your shoppers externally. But keep in mind that could change soon. TikTok has been planning to ban links to outside e-commerce sites, like Amazon. 

If external links disappear, it might tip the scale in favor of wanting to at least list your products on the app, so that they’re immediately available for purchases should you have a viral moment. 

So should you use TikTok Shop? It really depends. Right now, TikTok Shop probably makes the most sense for beauty and food and apparel brands that already dominate the platform. In those categories, TikTok is a core part of the discovery process. So you’ll probably want to look into adding your listings to TikTok, too. 

But if you sell, say, car parts, TikTok Shop may not be worth your time at this point.

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