TikTok has become a leader in the development of social commerce, with app users purchasing goods and services directly within the social app without being transferred to a separate eCommerce platform. It’s still early days for brands selling on the TikTok Shop marketplace, but US sellers have already made 45 million sales in the first six months of the platform’s arrival in the nation. 11% of US households have already made a TikTok Shop purchase, yet TikTok reports that more than 80% of purchasers are now repeat customers, happy with their purchasing experience and happy to do it again.
Selling on the TikTok Shop Marketplace:
- What is the TikTok Shop Marketplace?
- Why Use TikTok Shop?
- Where Can You Currently Access TikTok Shop?
- Native Ways to Shop on the TikTok Shop Marketplace
- What Fees Will You Pay to Sell on the TikTok Shop Marketplace?
- How to Set up a TikTok Shop?
- TikTok Seller Center
- Strategies to Improve Your Sales on the TikTok Shop Marketplace
What is the TikTok Shop Marketplace?
Traditionally people have used eCommerce platforms like Amazon or Facebook Marketplace, or specialized online stores, often based on the Shopify platform, whenever they have engaged in online shopping. Sure, many eCommerce stores market on social media platforms, like TikTok, but ultimately, they redirect consumers to a specialist store. Social commerce, where entire selling transactions occur in social apps, is relatively new.
TikTok Shop integrates directly with TikTok, meaning that buyers don’t have to leave TikTok to make their purchases. They can view products, communicate with sellers, and carry out the entire buying process without having to redirect to any external marketplaces. TikTok offers sellers a variety of ways to promote products and initiate purchases.
Why Use TikTok Shop?
There are obvious benefits to both brands and consumers of using TikTok Shop. Consumers can view videos for products in their TikTok feeds and buy them without having to go to a separate store or eCommerce marketplace. Potentially this can cut down the time it takes to send potential customers through the purchasing funnel.
This can be a double-edged sword from the consumer’s point of view, of course. It very much simplifies the buying process for them – they can buy something they love while watching a TikTok video. On the other hand, it increases temptation – they find that they have perhaps spent money on something they otherwise wouldn’t have purchased, while they are relaxed watching a TikTok video. TikTok Shop provides a seamless shopping experience, reducing barriers between sellers offering goods and buyers purchasing them. Potential customers can engage in all phases of the purchase from a single app.
With TikTok’s rapid rise in popularity over the last few years (1.6 billion people used the app in Q4 2023), TikTok Shop allows sellers to reach a massive audience. Depending on what you sell, you can potentially reach millions of members of your target audience. If any of your brand’s videos go viral, you might even struggle to fulfill everyone’s orders.
TikTok Shop allows brands to be closer to their customers. It provides easy communication in real-time. In turn, consumers have direct access to sellers and can offer compliments and criticism, and provide suggestions, directly.
Where Can You Currently Access TikTok Shop?
In mid-2021, TikTok introduced TikTok Shop to integrate eCommerce features into its platform. They initially trialed this in a selection of Southeast Asia countries and later that year expanded to the United Kingdom. They began testing the TikTok Shop marketplace in the United States in November 2022, officially launching it there in September 2023.
TikTok suffered a setback in Indonesia, one of the most successful TikTok Shop trialists, in September 2023, when their government introduced laws banning people from shopping directly from social media. They did this to protect traditional brick-and-mortar stores and marketplaces. “Transactions are not allowed on social media. Like television, social media is only for advertising,” Indonesian Trade Minister Zulkifli Hasan told local media. TikTok Shop resumed operations in that market in December 2023 with Tokopedia now handling transactions on TikTok Shop in Indonesia. The Indonesian government is still closely monitoring the actions of TikTok Shop in their country, with government ministers expressing concern that TikTok is circumventing the new law.
As of April 2024, you can access TikTok Shop in the United States, United Kingdom, Indonesia (still), Malaysia, Thailand, Vietnam, Philippines, and Singapore. The Chinese version of the app, Douyin, also operates a version of Shop in TikTok’s home country.
Native Ways to Shop on the TikTok Shop Marketplace
Live Shopping
Sellers can use Live Shopping to promote, sell, and engage with their audience in real time. Live shopping is excellent for demos, and you can answer questions as people ask them. Viewers can add your product to their cart as they watch your stream, and then go through the check-out process at the end of the stream.
Shoppable Videos
Sellers can create shoppable videos from which consumers can buy products directly, or as TikTok promotes it: “Create entertaining videos with your products just a tap away.” You can include Buy links on your videos that allow your viewers to purchase items directly while still watching the videos.
Product Showcase
With this feature, you can display your product catalog within a customized in-app shop. TikTok users can access your catalog by tapping the Shopping tab (a bag icon) and then make purchases from there.
Shop Tab
Here you display your products in a centralized marketplace within TikTok. This is not yet available everywhere that TikTok Shop operates.
In some markets, TikTok has added an additional shopping bag icon (marked Shop) in the row of icons at the bottom of the screen. This allows users to directly access anything related to their shopping activities. They can view orders, access their shopping cart, set an address and payment methods, and chat with merchants. This section showcases various products, and you can ensure that yours become visible here when they are relevant to a user’s habits and interests.
What Fees Will You Pay to Sell on the TikTok Shop Marketplace?
Sellers pay a Referral fee that is a specific percentage of the total order amount. TikTok stresses TikTok Shop is currently in the early testing stage in the US and the commission rate in that country will be further updated in due course. In the UK, TikTok Shop imposes a 5% commission on settled orders, including value-added tax (VAT). In the Philippines, however, TikTok sets different commission rates for different categories of stock and uses the following formula to calculate the commission fee: Commission Fee (VAT inclusive) = Commission Rate % X (Item Price - Seller Discount).
Affiliate sellers can set up TikTok Shop stores, but they have to pay an Affiliate Commission. This is a percentage of the fee charged to the seller for the Affiliate’s role in facilitating sales and promoting their products.
How to Set up a TikTok Shop?
If you are one of the nations that can access TikTok Shop, TikTok provides a localized webpage where you can sign up as a merchant on the platform.
As you can see from the above screenshot of the US Sign Up form, it includes links to a particular country’s localized Seller Terms of Service. The Sign-Up pages for other countries look similar to the US one, with the notable exception of Indonesia, where merchants now need to sign up to TikTok X Tokopedia (to bypass that nation’s new restrictions on social commerce). We have used the US details in this post, so check any local requirements if planning to set up a TikTok store elsewhere.
There are four types of TikTok Shop accounts:
- Sellers
- Creators
- Partners
- Affiliates
Sellers need to provide identification documentation before they can set up a TikTok shop. In the case of US sellers, these are:
- Individual Sellers - your legal name (including your first name and last name, with middle name optional), your date of birth, residential address, a photocopy of a valid U.S. government-issued ID (U.S. Passport or U.S. Driver's License), the ID Expiration Date, and the last four Digits of your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Business sellers – your business type, company name, Employer Identification Number (EIN), your registered business address (and any other business address). Beneficial owners of the company being registered may need to provide their legal name, date of birth, residential address, the percentage of ownership (only if "beneficial owner" is chosen), and the last four digits of SSN or ITIN (except for public companies)
- Other regions will have similar requirements (depending on whether your region requires some form of business license).
If you’re planning on selling your own products, there are no minimum follower requirements. If you want to operate as a TikTok Shop affiliate, however, you need at least 5,000 followers to qualify. Creator accounts also have additional criteria, including minimum follower counts.
If you haven’t already done so, you will need to set up a TikTok Business account as part of the registration process.
As long as you have your paperwork and operate from one of the approved locations, it is a comparatively simple process to set up a TikTok Shop. Go to your country’s seller registration portal (as shown above), fill in the relevant form, and upload your ID and other required documents.
TikTok will ask you for a bank account as part of this process. If you’re setting this up as an individual, make sure the bank account is in your name. If you’re a business seller, make sure you use a bank account in the business’s name.
TikTok Seller Center
One of the first things you will want to do after registering for TikTok Shop is to download the TikTok seller app for your phone – you can also access it on your desktop. You will use this to add your products to TikTok’s system.
TikTok requires you to undertake a few administrative tasks before you can begin adding your products. These include verifying your tax information, setting up shipping options, and adding a return address. You can either use the warehouse/pickup address for returns or add another one. TikTok makes it clear that they will block you from making any sales until you have done these tasks. Unfortunately, approval doesn’t happen instantly, and you will have to wait until TikTok reviews your documents before proceeding. Assuming all is well, TikTok will send you an email within two to six days, accepting your application. You can then link up your TikTok account to your shop, set up your store, and begin to accept orders.
You use TikTok Seller Center as a portal to organize and keep track of all your TikTok Shop marketplace transactions. This includes your store operations management, customer service and engagement, performance analysis, viewing policy updates, accessing relevant training, and more.
Strategies to Improve Your Sales on the TikTok Shop Marketplace
Make sure that your online store resonates with your brand. Upload your logo and consistently use your desired color scheme (as indeed you should do across all your marketing). Remember, you want your TikTok Shop marketplace store to tell your brand story.
If you don’t already have them, take quality pictures of your merchandise, preferably from every angle. Just because people are likely to look at your products on a small phone screen doesn’t mean that they aren’t inspecting your items closely.
Despite TikTok being inherently visual (it is primarily an app for sharing short videos after all), the copywriting you use in your catalog and on-screen ads is vitally important. You won’t use many words, but you want them to be both informative and persuasive.
Remember, however, that most people don’t come to TikTok to buy your products. They typically use the app for entertainment, not shopping. However, if you can make videos that entertain or inform your viewers but show how your product can alleviate some pain points they are facing, viewers may decide to purchase within the app. Popular video types for brands include tutorials, unboxing videos, and even fun skits with your product the “hero” that comes to the rescue.
As we mentioned above, live streams provide an excellent opportunity for you to showcase your product, while at the same time interacting with your customers. For instance, if somebody wants a close-up of your product at a particular angle you can easily oblige them.
Mastering Sales on the TikTok Shop Marketplace
TikTok Shop is the biggest social commerce move made yet by any of the large social media networks. Although people primarily use TikTok for entertainment, many users are prepared to purchase items there, without having to leave the app and use a separate eCommerce site.
However, brands must provide a reason for TikTok users to use TikTok Shop. The app’s greatest supporters come from Gen Z – traditionally the most cynical generation, distrustful of marketers. As long as a brand’s videos and livestreams don’t smell of blatant commercialism, however, and highlight the benefits of buying a product, TikTok’s users seem happy to do their shopping without having to move to another eCommerce app to facilitate things. This is a good reason why brands, particularly those catering to Generation Z, should consider selling on the TikTok Shop marketplace.
