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TikTok Shop sellers in the US will soon see the platform take a bigger commission cut as it works to expand its fast-growing e-commerce business.
TikTok told sellers this week it’ll start increasing its commission from 2% to 8%, in addition to charging 30 cents per transaction, The Information reported.
The social media platform will also pull back on the subsidies it was offering some merchants, which allowed them to sell products at often extremely discounted prices, a source told the outlet. The Information reported in August that TikTok was expecting to lose more than $500 million in 2023, partly due to these subsidies.
The commission bump will be implemented gradually, with a 6% rate taking effect on April 1 before the 8% rate goes into effect on July 1. TikTok will take a smaller cut for more expensive items and some sales over $10,000. These changes are more closely aligned with, though still largely lower than, Amazon’s 8% to 20% commission, the outlet noted.
TikTok Shop, which debuted in September, has featured major brands such as Nyx and E.l.f.; its most popular categories include apparel, skin care, and hair care, Retail Brew previously reported. The shopping service has already established a $3 billion run rate in the US since its debut, putting it in potential competition with Amazon, as well as Shein and Temu.
A Bloomberg report this week claimed the company is hoping to grow its US e-commerce business to $17.5 billion this year, having held meetings in recent weeks to discuss the year’s sales goals. The outlet also reported that TikTok plans to expand TikTok Shop to Latin America this year. TikTok, however, told Bloomberg that the US merchandise sales figures it reported were “inaccurate.” The platform’s retail arm was on track to bring in ~$20 billion in global sales last year, thanks to sales in Southeast Asia, Bloomberg previously reported.
FAQs
TikTok told sellers this week it'll start increasing its commission from 2% to 8%, in addition to charging 30 cents per transaction, The Information reported.
Is TikTok increasing seller fees? ›
As of April 1, TikTok charges sellers 6% of the price of each order, up from the bargain rate of 2% last year when the platform was relying on subsidies and other incentives to convince merchants to sign up. TikTok's cut will climb up to 8% in July.
What are the seller fees for TikTok Shop? ›
Commission fees on TikTok Shop are a percentage of the total sale amount that TikTok charges sellers when a product is sold through the platform. These fees are typically set based on the category of the product being sold, and each category might have different commission rates. The cost varies from 5% to 20%.
What is the commission on TikTok eCommerce? ›
Most importantly, TikTok Shop's commission fee will rise from 2% to 8% in 2024, and will charge 30 cents per transaction, reports Erin Cabrey of Retail Brew. While this is lower than the fees charged by Amazon, it is still a lurch in that direction.
Is selling on TikTok Shop worth it? ›
Is It Worth Selling on TikTok Shop? Yes, it's worth selling on TikTok Shop. With historically low referral fees, low cost-per-acquisition, and an engaged audience of 1 billion people, there's really no reason for your brand not to be selling on TikTok.
Does TikTok Shop take a percentage? ›
While setting up a TikTok Shop seller account is free, sellers are charged commission fees per transaction based on a percentage of the total sale price. In both the UK and US, the platform starts with a commission rate of 1.8% for the first 90 days, after which it rises to 5%.
How much does TikTok take when you sell? ›
Low Commission Fees đź’°
TikTok charges much lower commission fees compared to other selling platforms. For the first 90 days, you can benefit from a commission fee of 1.8% for each product sale. After the 90 days, the fee will increase to 5%, however this is still significantly lower than most other platforms.
Is TikTok Shop losing money? ›
On top of that, TikTok Shop is expected to lose $500 million this year as parent company ByteDance invests in staff and infrastructure.
What is the difference between TikTok Shop and TikTok seller? ›
For creators, TikTok Shop offers a seamless and intuitive UI that allows you to effortlessly promote and monetize your content. On the other hand, sellers benefit from an array of seller-centric features that enable them to showcase their products and connect with customers effectively.
Why is TikTok Shop cheaper? ›
"Lots of brands and retailers do flash deals or sales that are exclusive to TikTok in the hope of attracting customers and going viral. "There are also lots of very cheap goods from China on TikTok Shop.
As a highly visual platform, TikTok is the ideal place for running ads that draw attention to your products.
How much do TikTok Shop sellers make? ›
Sellers set their own commission rates, which usually range between 5% and 20%, according to creators and a TikTok exec.
Do you get paid for promoting TikTok Shop? ›
Creators can purchase products through the TikTok Shop at a discounted price, and if they make content promoting those products, they can earn a small commission. The app makes it effortless for creators to do this. All a creator must do is film their video and attach the link to the product directly underneath.
What is the TikTok Shop commission fee? ›
TikTok Shop's fees used to be 2% plus $0.30 per sale, but will soon rise to 8% per transaction for "most items." TikTok's ecommerce efforts are about to turn a lot more profitable for the social media giant, according to a new report that claims TikTok Shop will soon quadruple its fees from 2% to 8%.
Why not use TikTok Shop? ›
It's important to understand that the TikTok Shop is a vast marketplace, and even with safeguards in place, you may encounter prohibited, counterfeit or poor-quality items.
Is Amazon or TikTok Shop better? ›
Amazon is more established and trusted, existing for decades and targeting customers who have a clear purchase intent. TikTok Shop is a newer eCommerce space married to social media and is ideal for businesses looking to reach new (and potentially younger) customers.
Why is TikTok advertising so expensive? ›
Competition: The level of competition among advertisers targeting similar audiences will influence pricing. Higher competition for ad placements may drive prices up as advertisers bid against each other for visibility. Ad performance and engagement: TikTok may adjust pricing based on the historical performance of ads.
Does TikTok promote cost money? ›
A TikTok promotion campaign can range from $3 to $1000 per day, lasting one to seven days. Therefore, TikTok Promote could cost between $3 for a one-day campaign and up to $7,000 for a seven-day campaign.
How much should I charge on TikTok marketplace? ›
Surveys of TikTok influencers suggests the average price for a sponsored TikTok video is $2,700, while influencer rates by reach are estimated as follows: Nano-influencers (1000–10,000 followers): $5 to $25 per post. Micro-influencers (10,000–100,000 followers): $25 to $125 per post.
Is there a fee for TikTok business? ›
Setting up a TikTok Business Account is free of charge and only takes a few seconds.
